Back in 1991, when the Internet was the esoteric province of mathematicians, physicists and military wizards, the company saw an opening for a consumer-friendly computer service and rushed to fill it. Emphasis on ContentĮven AOL critics say it would be a mistake to underestimate the vision and agility of the company's management. "We believe it is our opportunity, and to some extent our destiny, to be the company that brings this phenomenon to the masses," Case said in an interview. Modeling itself after traditional media companies, such as newspapers and magazines, AOL plans to rely more heavily on advertising and other revenue sources besides subscription fees.Ĭhief executive Case seems to acknowledge the magnitude of the challenge when he discusses the changes: He talks of the "relaunch" of the on-line service, "a new AOL." But he exudes undiminished confidence. With the campaign comes a revised corporate strategy.
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The software has been in limited distribution since June. The centerpiece of the marketing campaign, which senior AOL executives will launch today with a visit to Wall Street, is a new and fancier version of the software the user sees on the screen. "Not only does AOL not seem cool anymore, it also doesn't seem a very healthy entity," Motley Fool co-founder David Gardner wrote in a July report.
The company's growing chorus of skeptics includes the Motley Fool, the on-line personal investing adviser that rose to fame on AOL and remains an AOL shareholder despite some misgivings. The rapid subscriber turnover reflects the company's dual challenge: persuading consumers that they should be on-line at all - and then persuading them to choose America Online over a rapidly proliferating array of often cheaper Internet services. The net result was that AOL increased its U.S.
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Its fundamental problem is that, though it is spending lavishly to recruit new subscribers, it is losing members almost as fast as it is gaining them.ĭuring the last quarter 2.1 million people signed up for month-long trial subscriptions and 1.5 million people left the service 370,000 were rejected for using phony credit cards and the like.
Some analysts see AOL falling victim like Alice in Wonderland to the Red Queen effect, running harder just to stay in place. Today it has competitors everywhere, notably companies specializing in connecting customers to the Internet, the global computer network. With colorful screen graphics and content with an edge, it burst onto the scene early in the decade and gained a reputation as cool. More than any other firm, AOL is responsible for making on-line connections a mass-market phenomenon in American households in the 1990s. "Members are canceling every day in large numbers - large enough to make a significant and material difference in the bottom line," she said. Katherine Borsecnik, the vice president for content development, drove home the point. "It's mortifying to me that every day, many times this room, that many people, cancel AOL," Leonsis said. subsidiary.īut first, AOL must stem the bleeding. We can become like Disney, like Nike, like an MTV," said Leonsis, who is president of the America Online Services Corp. After the America Online roller dancers skated from the stage after the pulsing beat of the "AOL on the Move" theme song subsided after Leonsis's boss, chief executive Steve Case, 37, made his rock-star entrance in a black leather jacket, faded jeans, sunglasses and a headset microphone after Case had shouted greetings to his far-flung troops - "Hello Florida! Hello Oklahoma! Hello Israel!" - after all that, Leonsis shared his vision of corporate greatness, of a brand name synonymous with cyberspace, "the uber mega brand."
Thousands more watched by satellite link from remote locations. Ted Leonsis, a senior executive at the Dulles-based company that has amassed more than 6 million subscribers, described the perils and possibilities at a recent pep rally for employees.ĪOL's 1,500 local workers had crowded into a convention hall near the company's Dulles headquarters. begins a promotional campaign today costing hundreds of millions of dollars, the biggest battle yet in its war for the hearts and minds of computer users everywhere, a consensus is building that the world's largest on-line service is on the brink. Hilzenrath September 16, 1996Īs America Online Inc.
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