Skip to comments.AOL Reports First Drop in Subscribers
Posted on 02/03/2003 1:58:34 PM PST by Indy Pendance
NEW YORK (AP) -- After a relentless decade-long climb to more than 35 million global subscribers, the number of America Online users has slipped for the first time.
Tucked in among the more dramatic announcements in its earnings release on Wednesday, the online division of AOL Time Warner reported the departure of 170,000 U.S. users in the fourth quarter - despite the splashy release of its latest software, version 8.0.
"While AOL is still the No. 1 online service in terms of reach and time spent online, it is losing relevance steadily," said Dylan Brooks, an independent analyst of Internet service providers.
On Wednesday the company also reported a staggering $99 billion loss for 2002 and the resignation of CNN founder Ted Turner from his post as vice chairman.
But analysts believe the drop in subscribers, however minuscule, could foreshadow a gloomier future for an AOL that has been unable to make the transition to high-speed broadband from its domination of the slow-speed dial-up access market.
Figures from Jupiter Research show that AOL holds slightly fewer than one in three U.S. dial-up subscribers, but just one in 30 broadband accounts.
Brooks believes the drop in subscribers was softened by broadband customers who hung on to their AOL accounts to retain e-mail addresses. With consumers becoming more comfortable with broadband, many will flee AOL, he said.
"Their difficulty in capturing the shift to broadband can't be underestimated," Brooks said. "We could be looking back in two years and saying 'this was the beginning of the end.'"
For its part, AOL has said it has stopped simply signing up new customers for the sake of counting them.
In a conference call with analysts this week, as well as previous meetings with analysts, AOL's chief financial officer Wayne Pace has said AOL wants to concentrate on customers who actually pay their $23.90 monthly access fee, rather than those who commit only to its famous free trial offers.
AOL believes the drop in customers - all based in the United States - will be a minor blip, not the start of a major downward trend. Pace has said the company expects an overall growth in subscriber numbers in 2003.
Surprisingly, AOL's October release of its latest software seemed to have no effect on its subscriber numbers. When it released its previous version, 7.0, in October 2001, the company added two million users within months.
AOL Time Warner shares fell 34 cents, or 2.8 percent, to close Friday at $11.66 each on the New York Stock Exchange.
I tell everybody I meet that has an AOL account that AOL is owned and run by a group of scumbag American-hating LIEberal/Socialist/Marxist Bastards who are intent on destroying the US Constitution and transforming America into a Third World bannana republic.
GET OUT OF AOL, FREEPERS! THEY HATE WHO YOU ARE AND WHAT YOU STAND FOR!
I'll feel sorry for the employees who will lose their jobs when AOL shuts down, but I sure as Hell will not feel sorry for the management and owners. They sowed it, and they are going to reap it.
99 BILLION Dollars.
Believe it or not, I have actually seen businesses using AOL. Boy, doesn't that give a bad impression!!
It has one huge side benefit. No more spam.
Check your phone book for internet providers. Pick one you like and give them a try. Ask your neighbors and friends which local provider they use. Avoid the super cheap guys. $19.95 to $25.95 is about normal. That allows you 10 megs for your own web site, too.
E-mail isn't hard to change, when you get the new account, just mail everybody in your AOL address book telling them your new address and then cancel your AOL account.
The new ISP should be able to walk you through all your browser setting on the phone.
You'll never regret losing AOL.
AOL was in the right place at the right time with the right marketing strategy (saturate America with hundreds of millions of free installation discs). Installing AOL was brainless. You just popped in the free disc and you were walked through the entire process. AOL would force you to give them a credit number to bill so they never had much of an accounts receivable problem. The $19.95 a month (or whatever plan you had) was automatically taken off your card each and every month. And good luck trying to get them to stop if you wanted to take your ISP business somewhere else. So most people didn't go through the bother, they just shrugged and stayed with the inferior, clunky, ad-filled AOL interface. Most of them didn't know that it was any better anywhere else.
AOL also had some ingenious ways to hook people into staying loyal to them. The AOL "buddylist" is one of them. Most people thought that if they left AOL, they would no longer be able to use it (in fact, you can load the AOL buddylist as a third-party app with any ISP service).
So AOL built a huge subscription base of some 35 million users guaranteeing nearly $85 billion a year in revenues (based on an average $20 monthly service plan). Wall Street was impressed. AOL stock soared to incredible heights.
But the bottom line was that AOL was a very poor online service. Instead of investing some of their revenues in making the AOL experience better for their paying customers, AOL dreamed up more revenue streams, piling more and more ads into their interface and making it difficult for their users to send e-mail attachments (while slamming them with tons of spam mail).
When broadband began to take the country by storm, AOL resisted. Dial-up access was much more profitable to AOL as they were riding the telcom backbone practically for free and didn't have much overhead. If they ran out of nodes at their POP, they'd just bump people offline instead of buying more modems. AOL figured they'd keep their customer base dumbed down and thus reap many more years of dial-up profits.
Well this hasn't gone reported all that much but broadband internet, especially through cable modem, has absolutely exploded throughout the country. And AOL is very quickly being left in the dust. They are scrambling to get on the broadband train but it appears that train has already left the station. What we are about to see is the implosion of AOL. Five years from now, there will be nobody on AOL but old grannies.
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