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Is AOL Finally Crashing and Burning? 193

An anonymous reader writes "AOL's disastrous quarterly report showed cash from continuing operations was down 44% from a year ago (adjusted operating income was down 37%), as it continues a rocky transition from monthly subscription fees to advertising. (Their quarterly report also notes 'the cessation of large-scale access subscriber acquisition campaigns' — investor-speak for the fact that AOL will finally stop mass mailings of free trial accounts.) Unfortunately, AOL's advertising business 'did even worse. Its revenues declined by $110 million... every single segment is down.' AOL has already lost 86% of the 30 million subscribers it reported in 2001 — down to just 4.3 million — but advertising hasn't yet filled the gap (possibly because many AOL ads had been displayed to the users AOL no longer has). But at least, as one technology blogger notes, AOL has finally released a mobile application, 'in the new definition of "late to the party."'"
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Is AOL Finally Crashing and Burning?

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  • They still mail CDs?? Wow, I haven't gotten one in the mail since 2000. Hopefully they will get some new management, either people or new ideas, in time to save the business.

  • With AOL dead, one of the primary causes of the Eternal September is over. (People won't be geting their Usenet through AOL anymore).
  • I had no idea they were still around. What the hell do they do? Provide dial-up access?

    • Re: (Score:3, Interesting)

      AOL own a lot of websites. For example, AOL owns the blogs Engadget and Joystiq which are both quite popular.
      • The trouble for AOL is that, while those websites are popular, they are(at best) a tiny profitable segment that could never support the mothership.

        Beyond the fact that many websites don't actually run a profit, the ones that do often do because you can trivially run them with fairly low overhead. No big corporate HQ, with lightbulbs and janitors and suits, no fancy press room, just some anonymous httpd processes running at CDNs-R-US and some stringers banging away at their laptops at home. If you are luc
        • Re: (Score:3, Insightful)

          by Bigjeff5 ( 1143585 )

          Indeed, you need about 20 people to run those websites, at most, and maybe $2 million a year, tops. I don't expect ad revenue to be more than about $3 million - $4 million a year, which is enough for a couple people to get rich.

          They still have about 5,000 employees, though.

          That's 4,980 too many to be supported by their website revenues, and is why they are losing billions with a 'b' dollars every year.

          • I just hope those websites don't go down with the sinking ship. For as big of a pile of bloated shit AOL is, they're examples of the couple of things that are actually decent within that company.
            • by Tassach ( 137772 )

              With luck, they won't go away, they'll just be sold off at a fraction of what they were purchased for. About a 50/50 chance.

              Of course, if some executives get in a pissing match over it, all bets are off. I can think of one property (which shall rename nameless) that was actually making a profit, although not enough one to make some people happy. There was a turf war between that property and a semi-competing one, and the decision was made to shut it down.

              Some of the insiders who were on the losing side

    • by JSBiff ( 87824 ) on Sunday August 08, 2010 @09:39AM (#33179850) Journal

      You know, they're the people that run those "AIM" servers that you can access with Pidgin, Trillian, etc.

      • Does anybody still use AIM? Wow. That's like using ICQ.

        • Re: (Score:2, Informative)

          by Anonymous Coward

          Does anybody still use AIM? Wow. That's like using ICQ.

          Yes. In the world outside of your ten ultra-chic geek friends using XMPP, the vast bulk of people still use AIM.

          Trust me, it's a much larger world out here. You'd be afraid of it.

  • by amiga3D ( 567632 ) on Sunday August 08, 2010 @08:48AM (#33179660)
    These companies that reign on top for years like AOL always seem to be almost unable to change and adapt to new times and technology. They get locked in to their success to the point that they stagnate. When change happens they just get left behind.
    • The problem was they were raking it in too thick to want to change until it was too late. The other point is that most companies don't stay in business forever. They have been around 27 years and has made more total profit than 99% of businesses. Their time is just over and I don't think anything can reverse their downward momentum. Last one to leave AOL, please turn off the light.

      • Re: (Score:3, Insightful)

        by drinkypoo ( 153816 )

        The problem was they were raking it in too thick to want to change until it was too late.

        Acting like you are secure as #1 is the quickest way to end up in the #2 spot. It's either incompetence, or someone relevant had something to gain by not keeping AOL going.

        • by Pharmboy ( 216950 ) on Sunday August 08, 2010 @09:37AM (#33179842) Journal

          If you are making $200,000 with $1,000,000 bonuses, you have a vested interest in things NOT changing. Many businesses have higher up employees who get bonuses greater than their base salary, and those guys don't want to sacrifice short term profits for long term stability. "Why should I get my bonus cut in half due to reinvestment just to make the business stronger in 10 years, when I likely won't be here?". The bank industry is another example of how this screws up a business. Managers are more worried about their quarterly reports than the long term stability of the company.

          This is the prime example of the disadvantage of publicly owned companies. While it is easier to get capital for expansion, privately held companies tend to have longer term thinking. Dominos pizza didn't go public until 2004, and did an excellent job of expanding before then. Chick-fil-A is privately held and the 2nd largest chicken restaurant chain the in US and wildly profitable due to a long term approach to business. There are other examples as well. AOL is the counterexample, where they focused on short term gains and had little (or poorly thought out) long term planning.

          • Re: (Score:3, Interesting)

            by Bigjeff5 ( 1143585 )

            In-N-Out Burger is another one you've probably never heard of if you haven't been to the southwest. Easily the most popular fast food joint in several large cities, yet there are only a handful of them because it isn't just privately owned, it's family owned. No franchising, and probably never will be any.

            They treat their employees like gold too. Have you ever heard of a fast food place that pays its managers $100,000 a year to start? Assistant managers start at a little under $60,000. Part-time worker

            • by sconeu ( 64226 )

              Make sure to get your burger "Animal Style"

            • Re: (Score:3, Interesting)

              by Macrat ( 638047 )

              In-N-Out Burger is what McDonalds was originally. A simple burger joint that excelled at their small menu.

              here in northern California, you will often see the street backed up with cars waiting to get to the drive through. Very popular.

          • Re: (Score:2, Informative)

            You're not wrong. I worked for a business that got taken over by a private equity company. They came down and basically explained their 5 year strategy. Years 1 and 2, they weren't going to make any money. It was restructuring, investing in technology and getting the business good, and then making money in years 3-5. I was there for 18 months and they stuck to it.
          • by sjames ( 1099 )

            It's also one of the great inefficiencies in the market. AOL is still alive on nothing but inertia. The amount they're pissing away on fat executive bonuses and CDs for the landfill while they ignore the inevitable would be enough to fully fund HUNDREDS of lean and mean startups (even to .com levels) with innovative ideas.

    • It almost seems you are talking about Microsoft (yet, whether the OS market ever changes is to be seen, having an exclusive API is a powerful thing).

    • Re: (Score:3, Insightful)

      by Jay L ( 74152 ) *

      I think the companies that *don't* reign on top are also unable to adapt. Most companies do one thing well (at most) - ever - and if that one thing happens to intersect over time with what the market wants, they're successful for as long as that intersection lasts.

  • But then again the main reason I hate them is because I'm a wrestling fan and they got wrestling taken off of TBS.
    • But then again the main reason I hate them is because I'm a wrestling fan and they got wrestling taken off of TBS.

      Apparently TBS is a Turner-owned TV station, who got bought by Time Warner at some point, so it's probably more accurate to say that they had a common parent- except that AOL was sold off by them at the end of 2009, so it doesn't affect them any more. Though I assume they lost assloads on the ludicrous price they paid for it at the height of the dotcom boom anyway.

      • Apparently TBS is a Turner-owned TV station, who got bought by Time Warner at some point, so it's probably more accurate to say that they had a common parent- except that AOL was sold off by them at the end of 2009, so it doesn't affect them any more. Though I assume they lost assloads on the ludicrous price they paid for it at the height of the dotcom boom anyway.

        Technically, AOL bought Time Warner, and Ted Turner was a significant owner of Time Warner at the time coming in with acqui

  • I'm surprised they lasted this long - particularly after Warner ditched them. It's a testament to the power of people unwilling to change their email addresses mostly I bet.
  • email accounts (Score:3, Interesting)

    by newdsfornerds ( 899401 ) on Sunday August 08, 2010 @09:08AM (#33179720) Journal
    If they went under, what would happen to the millions of aol email accounts still in use? Oh, the humanity! The only time I am ever aware that aol still exists is when my 79 year-old father forwards email to me that was sent to him from one of his elderly, aol-using friends.
    • Re: (Score:3, Interesting)

      No need to knock their free email accounts. Their spam filtering may not be near as good as Google's, but they are the only other free email service to offer IMAP for accounts. Only reason I have an account still.
  • by Anonymous Coward

    Facebook, Twitter, Wikipedia, Tumblr and all the current web 2.5 (2.0 was years ago) will be replaced by the next "Big Thing", and AOL might come back as the you nostalgia you lose ISP. In 2020 you will see AOL CDs with new FirefAOL 7.0 with 1 Quadrillion free nanoseconds nanogigabit internet access for your MacOS Liger and Windows 9ista.

    Also Linux will still have 0.8% market share.

  • by HangingChad ( 677530 ) on Sunday August 08, 2010 @09:21AM (#33179762) Homepage

    ... as it continues a rocky transition from monthly subscription fees to advertising.

    Maybe they should go into chat rooms and ask for help...with the CAPS lock on, of course.

    • by baegucb ( 18706 )

      Gawd. Don't make me remember about irc back when AOL users were let onto the internet. /me slaps you with a wet trout and stuff

  • See (Score:3, Informative)

    by dino213b ( 949816 ) on Sunday August 08, 2010 @09:37AM (#33179840)

    "This year, AOL is spending $50 million to expand Patch nationally to hundreds of sites by the end of the year." []

    AOL is going hyperlocal - going to give local newspapers a run for their money.

  • AOL has always been behind the curve. They were the last BBS on the planet to hook up to the internet, and they've had a 90's retro feel ever since.

    It's time to put AOL out of its and its users' misery.

  • To use a quote from Iron Maiden: Only the good die young, all the evil seems to live forever.

    So I think AOL will be here to stay.

  • by 605dave ( 722736 ) on Sunday August 08, 2010 @10:22AM (#33180060) Homepage
    I just noticed that AOL has appeared on my credit card bill yet again. I have not used the service since the 90s, but I am still forced to call and cancel every two years are so. I have downloaded my transactions for years, and can call up all payments. It's bizarre, after two years, all of sudden a charge will start appearing again. I wonder how many of their subscribers have been repeated scammed like this.
  • I know a guy who has had an AOL account so long that in the early days it was hard-coded into the software.

  • If I go to the AOL homepage, there's just a bunch of news and articles. There's no option to subscribe. Heck, do they even still have an AOL client?

    • There's no option to subscribe. Heck, do they even still have an AOL client?

      Click the download link, and you can get to AOL v9.5 [], starting at $9.99/mo.
  • by Pezbian ( 1641885 ) on Sunday August 08, 2010 @10:54AM (#33180230)

    Brings back memories. People would call up, wait on hold for half an hour or more and end up on a call with me or any other SAVES rep:

    *ping* (female phone voice) AOL. Saves. [connect]
    Me: Thank you for calling America Online, this is Pezbian. How can I help you have an even better online experience today?
    Luser: Cancel my account. (yeah. So original.)
    What I'd say while playing Solitaire on the computer: I'm sorry to hear things aren't going well for you. Let's get started.
    What I'd be thinking: Okay so what are you? Computer-stupid, no longer in need of training wheels, sick of overpaying or just trying to make a stand?

    From there, it was a matter of talking them into staying. I probably gave away a lifetime worth of free service months in two month blocks during the few months I was there. Did it matter? No, and I'll explain why later. If you were a jerk, you got transferred or hung up on. We were taught never to hang up on lusers, but disconnecting the cord from the back of the phone didn't count as a hangup. I did it a couple dozen times when I'd get cursed at. There were often logs from previous support reps in the Merlin system regarding customer behavior so I pretty well knew who was going to be trouble and who was going to get free stuff.

    At the end of the call, there were sometimes these "Special Member Benefits" where lusers would hear a speil for something else. I got $1.25 if they would just listen to it. Some people were wise. "Do you get a bonus if I just listen to it?" "Yes I do." "Well since you've helped me so much, you're going to get that bonus." Schweet. While I was there, the SMB was a Sprint long distance deal. Yeah, for a landline. Remember those? I probably got $200 a month just off of those transfers.

    Pay: $8 an hour plus bonuses. Bonuses... boy howdy... 80+% of your income. I didn't believe it until I got my first 90-day long-term retention check. That's correct. Your long-term retention bonus was on a 90 day scale. Not a year. Why? Ultimately, it was because the revenue generated by each user for AOL was $125 a month. That's on top of the $23.90 a month they were charging for you to be their lab rat.

    I wasn't delusional enough to expect the crazy bonus checks to last forever since the dollars for banner ads (no matter how attention-whoring/seizure-inducing) boom was already crashing hard and popups/pop-unders were starting to become the norm.

    The funniest thing about working there was the special event days they'd have where Warner Bros movies that were still in theaters were screened in the call center during work hours. The techs and everyone but SAVES would be watching while SAVES saw it as a distraction from the big money. Some reps were making six figures a year. I kid you not. You were on a tiered scale where you were paid for saves per month and the more you got, the more each one paid you. Those who were making that kind of money had little time for anything else, however. 12-16 hour days non-stop. One lady hadn't had a day off in three months and slept at work sometimes, but she did make $125,000 a year this way.

    In the middle of my time there, an "All Hands" meeting was called where everyone in the callcenter went to a big reception center and got put through a big dog and pony show. It was mostly about a new SAVES pay scale change that was more focused on quantity than quality. This wasn't beneficial to my style. I was all about long term. I didn't care about the average $1.50 24-hour or pissant $.50 30-day retention bonuses. I was all about the 90-day kind that paid like $9 each if I remember correctly. I was going to take a big hit on my paychecks to the extent that it just wasn't worth keeping that job.

    It's worth mentioning that, during the Q&A portion, a butthurt tech dared ask when the tech support people were going to be paid like Saves reps. The suit on stage snickered slightly while the question was met with groans and laughter from Saves goons like myself. The

  • The dumb people who were young once and used AOL have simply not bred children who will also use AOL.

    AOL has no purpose.

    Given I have an Internet connection, what would be my reason to connect anything to a server in the AOL domain?

    • Re: (Score:3, Informative)

      by Pezbian ( 1641885 )

      Elsewhere I mention my time as a retention rep for AOL. Relevant to both that experience and your post, here's a story:

      When I started working for AOL, I already had Internet service through Comcast. While training, I asked if they seriously expected me to get a landline just so I could dial up via 56k modem when I had a 3mbps line already. Nope.

      They had the option where you could (oh wow...) run AOL over your existing connection for the same $23.90 (at the time) price. That's right. Run my free AOL emp

  • How does this stock still trade? Looking at the steadily declining graphs of subscribers and revenue, how can anyone think this is a good investment? Who is buying?

    I guess it's one of the unspoken rules of the free market; If money can move freely, it can move stupidly.

  • by RyuuzakiTetsuya ( 195424 ) <.ten.xoc. .ta. .ikiat.> on Sunday August 08, 2010 @11:51AM (#33180586)

    I just realized I'm entirely dependent on AIM. My favorite gadget blog is Engadget. Owned by AOL.

    I don't want AOL to die. :(.

  • The October that never came finally arrived?

  • TWX (Score:3, Insightful)

    by bmacs27 ( 1314285 ) on Sunday August 08, 2010 @01:25PM (#33181276)
    You all remember when AOL bought Time Warner? How backwards does that seem now?

The wages of sin are high but you get your money's worth.