A RIP announcement often gives us word of a celebrity who has passed away after they have left the public mind. The death of AOL, with its purchase by Verizon for $4.4 billion, is certainly the end of a company that is no longer what it once was. But AOL was a very big story and one worth recovery.
The fact is America Online, as it was known in the early days, was responsible for the birth of consumer communications. It was born in 1989 out of some even earlier services as a dial up–in those days, the only way to think about it–information service. Back then, the internet was government controlled and mostly limited to academics. Other services, such as CompuServe and MCI Mail, were interested mainly in businesses.
Steve Case had a very different idea. This was to be a service for millions of consumers. In its early years, it added dozens of sources of information and invited members to discussion groups. (Back then it was only text; neither audio nor video existed on dial up networks and even pictures were a challenge.) AOL lined up members by flooding the U.S. with sign up software on floppy disks, often thrown in with magazines and newspapers.
AOL was clearly a success. It did in competitors, such as Prodigy, a company created by CBS, IBM, and Sears. It invented all sorts of online conversations. Years before Reddit came up with Ask Me Anything sessions on the internet, magazines put their stories online and journalists on AOL to discuss content (I did it fairly regularly for BusinessWeek).
Email, which had been a service in academia and some businesses, became popular for the public as “You’ve got Mail” let you know about an incoming announcement. (And a movie in 1998, a remake of the better film The Shop Around the Corner.)
AOL made itself a leader in the internet business. It bought Netscape, the leading web browser and the builder of a considerable net service. Interestingly, the purchase of Netscape was $4.4 billion, just a bit (without adjustment for inflation) more than the Verizon-AOL deal.
But AOL’s secret was the company’s business still stood on dial-in calls to the service. As 2000 approached, services such as DSL and TV cable began replacing dial up. AOL remained a sign up opportunity for customers who had other connections, but there were also lots of other services, like Microsoft’s MSN and others. AOL could go on sending out sign ups, now on CDs, but the field was getting less popular.
Services were also being attacked. Once upon a time, AOL messages were for content and conversation. We even used them for quick and easy chats at work. But they were eventually overcome by SMS, not to mention services from Apple iMessage to WhatsApp.
People managed not to notice the internet group that was squeezing AOL. Case and Gerald Levin announced the merger of AOL and Time Warner, creating a massive combination of movies, television, books, magazines, and the internet.
It seemed like a great company, but it somehow never worked. Time Warner, already dealing with the problems of publishing and Hollywood movie-making, never joined with AOL effectively. Case, who had served as chairman, lost interest in less than five years and went off to focus on investments in the health business. AOL, which moved from its merged corporate headquarters in Manhattan to its old home near Virginia’s Dulles Airport, faded away. An acquisition has been expected for a long time.
One question about the Verizon purchase is the future of some AOL properties that really do not seem to fit, especially with an ongoing fight over net neutrality. Huffington Post, a major news publisher with a generally liberal tilt, and two leading tech sites, Engadget and TechCrunch, do not seem to fit well with Verizon. Re/code’s Kara Swisher reported talks were already in progress to sell HuffPo to various buyers, with the leader being Germany’s Axel Springer.
Whatever happens in the end, there appears to be not much left of AOL except ads and some members. The end of AOL is not much of a surprise.