AOL Planning Move to Ad-Supported Model

garzpacho writes "In recognition of the fact that its subscriber-based revenues continue to plummet, AOL is planning to shift to an ad-supported business model. AOL's subscriber base, which peaked at 30 million users, now has less than 19 million subscribers and is still dropping — over 800,000 subscribers dropped the service in this year's first quarter alone. In addition to seeing fewer AOL CDs, a shift to ad revenue also means some serious cuts in staff size, especially in the customer service and retention departments. From the article: 'Time Warner plans to announce a series of changes at AOL that analysts say will mark the end of the company's paid-subscriber model. The company will begin relying on advertising sales rather than monthly fees paid by customers, according to the Wall Street Journal. 'I don't know whether advertising will work, but my thinking is (the changes) are basically an acceptance of what is happening,' says Joseph Bonner, a media and telecommunications analyst at Argus Research. 'This is a reflection of reality, that they have to find some other source of revenue.''"

Is anyone paying full price right now?

[Blimey85]

My sister uses AOL and a few months ago one of her friends called AOL to cancel his service. He told the customer service rep that he couldn't afford the service any longer and was then asked how much he could afford. He said he could afford ten bucks a month and the rep asked if he would continue his service if they would lower his cost to $10. He then called my sister and told her what happened. She called AOL, got the same question, and told the person she could only afford "maybe $7 or $8 a month" and now pays $7 per month for her service. Of course she told everyone else she knows that uses AOL.

I know a lot of companies do this but most companies aren't a network of people that like nothing more than to sit around all day bs'ing on the web.

That's why I quit AOL

[krell]

Ad supported? It was the ads that made me quit AOL a few years ago. I got 60 spams per day in my AOL inbox, and there was no way to filter than other than to add a complete individual URL to the spam filter.

Fear. Lots of Fear.

[Doches]

Am I alone in thinking that this is rather bad news? We're talking about a company with a ludicrously aggressive subscription-acquisition-and-retention policy, remember -- how much worse (i.e., ad-saturated) is the web going to become once AOL becomes a major platform for adversiting?

For Whom the Bell Tolls

[Billosaur]

If the speculation and news reports prove correct, AOL's changes would be ambitious indeed. But will they go far enough, and is it possible for AOL to regain its past heft? "Will the advertising revenue ever replace dial-up?" says Bonner. "I'm not sure when and if that will ever happen. In the dial-up world, you could be all things to everybody--that worked. Now AOL needs to focus." Adds Helfstein: "The question is: What can AOL do for customers that can convince you to stop using Google or Yahoo as your homepage?"

It's safe to say that AOL has died, but the body doesn't know it yet. At one time it was a lot of people's portal to the Internet, especially in the pre-DSL days, but now I can't honestly understand why anyone keeps it. With on-demand Internet connections and browsers readily available, there's no need for this cheesy portal application, unless you're stuck using dial-up, but those numbers continue to fall rapidly.

AOL never saw the forest for the trees -- popularizing the Internet forced up connection speeds and access, and eventually they were outstripped by Yahoo, Google, and everyone else.People got tired of being kicked off and having to log back on, or paying too much on their phone bill because their "local" number was anything but. Once AOL had a large enough subscriber base, and once all those folks got a taste of the true Internet, they made demands that AOL couldn't meet, and so now they are soon to be relegated to the dustbin of history. There may come a time when people won't remember what the "A" in AIM stands for, and then AOL will be truly gone.

Ads are invasive

[Cpoff]

I know, especially in this community, Im not the only one that finds advertisements everywhere quite invasive. Im not just talking about the internet either, branding and advertising is -everywhere-. With so many online vendors changing to/emphasizing ad-supported revenue streams, I have a feeling this is going to impact sales negatively in the long run...

It gets to a point where I see so much advertising, I dont even notice it. I know sub-conciously its supposed to be planting the seeds in my mind to buy things, but my spending habits have not changed other then necessities since I first started making money... I just see this method as a failure in the long run. I think the business of the future will be successful first due to customer service, and a very close second on quality of the product. Everyone is so connected now due to the internet, word of mouth advertising should become more and more viable as a primary advertisement source, and we can finally have our mental space back...

Pure Crap

[MBCook]

I'm sorry, but that's what AOL is. I've had the displeasure of having to deal with them for YEARS.

I'll just be nice and ignore the fact that they bought and killed The Imagination Network, which was a blast.

Let's talk about their software. Their software that, to this day, takes like 30 seconds to start up, if it's feeling fast. Their software that often crashes after closing so when you think it's gone it's actually there sucking up 100% (happens almost daily on one of our computers). Let's talk about their integrated software suite that made since back when no one had a web browser but is now just an annoying piece of bloat-ware that should have been replaced 5 years ago minimum.

But they are going ad supported. You don't say. You'd think they were now based on using their software. In the last few years, they have gone to incredible lengths to cram ads on EVERY SINGLE SCREEN they display. Your mailbox? It has ads. Reading an e-mail? It has ads. Their welcome screen? Ads.

About a month ago, they started something new. When you exit AOL... an ad comes up. But it isn't just some little ad. It's as big as the welcome screen and it always seems to be for AOL.

But wait, it gets better.. that ad has a close button. And AOL doesn't exit until you press it. That means that choosing "exit" from the file menu DOESN'T EXIT AOL. This also seems to happen before you log off, so good luck if you don't have an unlimited plan for some reason and you forget about this.

I can only tell you from having to support my parents on AOL for the last 5 years or so (they've been members longer, it just wasn't so bad before) that AOL is a NIGHTMARE. It's amazingly slow. It crashes. If it gets screwed up (and it has) reinstalling often doesn't fix it. When you upgrade, it makes a new folder in Program Files and leaves the old version there, but deletes the shortcuts to it. Nothing like looking at someone's computer and seeing 5 copies of AOL. They continually add terrible software that only slows things down OUTSIDE AOL like their virus protection (we already that had), their firewall (WE ALREADY THAT HAD), and more. And there is something to be said for a program that keeps ALL the users downloaded files in some random directory by default. That was acceptable back in the Windows 3.1 days, but ever since Windows 95 those thins are supposed to be in My Documents. But instead, this are spread across the computer. Can't find a file? Did you open it in AOL? Then it isn't where it should be, it's in C:\Program Files\America Online 9.0 Security Slowdown Edition\Something\Or\Other. Also, what other e-mail client DELETES THE MESSAGES YOU'VE READ? You read a message, and when you log off it gets moved to "Read Meassages" or something like that. And the stuff in that folder, seems to get deleted. I don't know if it is the next time you log off, or after 1 week, or what. But if you don't specifically save it somewhere or keep choosing "Keep as new" (what my parents use) then it will go away FOREVER.

I've tried to switch my parents off. I've tried to get them to use IE or FireFox (instead of their constant problems in AOL). I've tried to move them over to GMail. I think I'm getting closer. I can't tell you how much easier my life would be without AOL.

Ah, AOL. You only outlived your usefulness about 7 years ago. All you've done since then is make things worse for everyone else. You were good at one point. It's telling that you've been hemmoraging subscribers for years, and the only way you managed to stay around during the boom (when EVERYONE was buying computers) was by generating 0.5% of all trash in the US with those stupid CDs that were put in EVERY MAGAZINE PRINTED.

Oh, yeah, then there is the Time Warner merger. That was a stroke of genius, huh.

Anyway, the point of this whole rambling anti-AOL post was that AOL already puts ads everywhere. Either their are raking in the cash and don't need the subscriber fees, or they are going to be in trouble when they do this because there is nowhere else to put ads except video ads in the background of the AOL window.

Uh oh

[AsmCoder8088]

Now how are they [nomoreaolcds.com] going to reach their goal?

redundant?

[paulsomm]

"planning to shift to an ad-supported business model"

Considering the amount of ads paid-subscribers endure, I'd say it's been effectively "ad-supported" for a decade now. At least, from an end-user perspective there will likely be no obvious change in AOL's appearance/presentation.

Unless they plan to replace what little remaining unique content they have with ads . . .

Re:AOL Is On Its Last Leg

[jellomizer]

The origional Draw to AOL for its popularity was the fact that AOL software did the graphics stuff relitivly fast (For the time) and offered services that you couldn't get with with BBS's (the old ones not the Message boards). After the Internet started to become popular with Dialup AOL was still doing good because it offered a competitive price and it still had a lot of AOL only features, and buisness relationships, heck it is much cheaper and profitable to put your buisness on the internet vs. trying to get it as an AOL keyword. But now that companies just use the internet directly, loosing the AOL advantage, High Speed internet connections are around the same price for faster performance. There is no advantage. People who use AOL are people who always used AOL. During the 90s the Majority of the People though AOL was the internet, and On-Line ment America On Line, Not just a buzzword for Modem to Modem comunication. There are still a population who hasn't looked for anything new and some don't realize there is anything new, there are a very few that use the remaining AOL Only features, others it is the only ISP that is local in their area.

re: Why keep AOL?

[King_TJ]

I always wonder myself, why people keep AOL. But then I look at a number of my customers who still use it.... In one case, it's a gradeschool teacher who is barely computer-literate, but expected to have her own email address in this day and age. She does the vast majority of her emailing on her Treo phone that a Sprint rep. informed her about and showed her how to use - and AOL actually is supported in the "Versamail" application included with the phone. Her worst nightmare would be having to switch to something new, and explain to everyone she knows what her new email address is. Her laptop at home has its start page set to AOL, and she knows just enough to sign in on that page and get to her stuff, double-click to view photos and videos that were too big to get on her phone, and so forth.

In another case, it's an older, retired couple. AOL came with their nearly 10-year old Compaq Presario PC that they still use with Windows '98SE. That's what they started with, and so they still use it. $15 a month or whatever is a small price to pay to stick with something familiar and to keep their same email address. (They're still using dial-up too. Just can't imagine a need to pay for anything faster....)

But ultimately, yeah - AOL is living on their (now dwindling) past success. Their customer-base is, by and large, the long-time customers who resist change and are scared of learning something new.

Re:What's the Draw?

[6ULDV8]

"If you're not drawing people advertisements won't do much."

This is entirely untrue. Advertising has become increasingly common on AOL and is a factor in driving customers away. So it will have an effect, just not the effect they are hoping for.

Re:AOL Is On Its Last Leg

[Blimey85]

I mean seriously, who uses AOL?

People like my sister and her friends. She knows pertty much nothing about a computer other than how to get AOL fired up so she can chat or check her email. For her AOL is great. For people like you and I it just gets in the way and as people learn more about computers, they have less reliance on services like AOL.

I'm surprised that AOL never had an internet appliance like WebTV from MS. My Dad has one of those and he loves it. Unfortunately the newer version is designed for broadband and doesn't work very well on dial up. I bought him the new one for Christmas '04 and it was slower than the original. It had some new features and could handle more audio and video formats but overall it didn't work very well for him so I returned it.

AOL already had a huge subscriber base and pretty decent software (the newer versions anyway). Why didn't they come out with a set top box of their own or maybe do a partnership with Tivo or ReplayTV to combine services? It seems to me like that could have worked well for them. I have no idea how well WebTV did for MS but seeing as how they made a second version I assume it did fairly well. Then again I keep hearing that they lost a ton of money on XBox and they still made the XBox 360 so who knows.

If you call to cancel

[Vengie]

They will switch you to the free plan now. I have a number of people for whom I manage their "internets!@#@@!!" and have finally gotten around to getting them all comfortable with gmail. I've had them in the "walled garden" for a while (14.95 a month AOL over Broadban plan) -- when I called to cancel for each one of them, AOL offered the same "we'll give you the service free" shtick. So if you're still using AOL, might as well take advantage now. (No clue what happens when the program is discontinued)

Re:That's why I quit AOL

[portege00]

I'm suprised you actually could quit.

http://www.nbc10.com/news/9406462/detail.html [nbc10.com]

AOL: Alright, some day when you calmed down you're gonna realize that all I was trying to do was help you... and it was actually in your best interest to listen to me.

Fucking pathetic.

Re:Is anyone paying full price right now?

[British]

Oh you can even talk them down to 0/month. I knew a woman who used AOL for a while, but never paid a cent. She called to cancel, and they just kept giving her freebie months. I'm not sure if she did it with seperate accounts or the same one over and over again.