Why Time Warner Has Fallen in Love With AOL, Again
Randall Stross writes in The New York Times:
Tech's most notorious dead man walking may be AOL. Many years have passed, however, since commentators first voiced the opinion that AOL's days were numbered (1994), that commercial online services were doomed (1995), that the more it blended with the surrounding Web, the greater the likelihood that it would lose its reason for being (1996).
Today, though smaller, America Online is not merely alive but defiantly healthy - especially when it needs to be, having recently taken a terrifying but necessary strategic step: making virtually all of its content available free at AOL.com, no subscription required.
Why AOL was so reluctant to remove the ticket booth at the front gate is understandable. Subscribers to its dial-up service pay monthly, a recurring revenue stream that is a beautiful thing to behold on an income statement. Switching more of its business to an advertising-based model means gaining higher margins but having to look forward to less of the sweet regularity of subscriber fees. AOL will also have to scrabble with the other big portals for ad dollars. The company put it off for 10-plus years, even when its membership rolls began to shrink as customers switched to the broadband services of others. But when wishful thinking failed to reverse the trend, it was forced to take the plunge.
Given this history, it is natural to assume that AOL's late start and lack of familiarity with the terrain will doom its attempt to compete. But don't assume it. The most likely outcome is success.
posted by Fergie @ 9/25/2005 01:03:00 PM
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