When I do feel a need to reply to a YouTube video, I usually do so in the comments section. But this time, with a subject that’s near and dear to me, AOL, I felt I would have more to say than one should put into the comments section of a video, so I decided to make a blog post.
First, a link to the video so you can watch and I’ll summarize the video’s thesis below.
The video’s thesis is that what ultimately doomed AOL was the company’s inflated stock price during the 2000s .com bubble, combined with its ill-fated merger with Time Warner.
I agree that this is the case, that once it became clear that AOL wasn’t going to be the sort of partner, or player, that Time Warner thought they’d be, that was it for AOL as it had been. However, I want go to into why this happened. I’ve long thought that the main reason that AOL went “away” –and was always going to go “away”– was that its business model was unsustainable in the long run. People talk now about Apple’s walled garden of services. If Apple of today is a walled garden, AOL was a fortress.
The early 90’s weren’t necessarily the earliest days of the Internet, but compared to now, they might as well be. In those days, the Internet was a great mystery outside of the smaller number of techies and geeks and nerds. There was content, but the “World Wide Web,” websites reachable through a browser, e.g. NCSA Mosaic or Netscape, was significantly much smaller than today. In fact, when I started to get online, at school, USENET, an online system that probably most people online these days seldom ever hear about, seemed to be as big and important as the “World Wide Web.”
To get to this information, you needed to have an early dial-up ISP, a role AOL would play for its own service and later on, for access to the Internet, but then you needed a web browser and know how to use it and where to go to get this information. In those days, you’d also need a USENET (news) reader to help you access any information (content) contained in that system, if you wanted it. For techies, geeks, nerds, etc., these weren’t necessarily huge hurdles to overcome.
However, to the average person, the kind of person who nowadays probably uses Facebook as their main portal to the online world, these hurdles may have been untenable. For reference, even the major search engines weren’t around. Google didn’t exist until 1998. Yahoo didn’t exist until 1994. Alta Vista until 1995. Lycos, 1994. Who else remembers Excite and Webcrawler?
The best we had before then were Gopher and Archie. You may not have ever heard of them.
Step in, AOL. AOL did three things greatly that the Internet of the time did not:
1. Make access easy
2. Organize and develop content
3. Facilitate communication
Where the Internet as a whole might have been spooky and intimidating to a lot of people, AOL was the exact opposite. The software was readily available to you as AOL put their discs literally everywhere. And you didn’t have to know how to fire up a modem. All you had to do was click on AOL and off you went. Whenever you had an issue, you could call them on the phone or, if I remember correctly, chat with them within the system.
Once you were logged in, everything was laid out and presented to you. Instead of having to use an search engine to find what you were looking for, AOL made it super simple to find. Entertainment, news, family stuff, all there, within one click. Yes, none of it was available beyond AOL, but for your average user, it didn’t need to be. AOL developed a lot of content, but as time moved forward, one thing AOL did really well was invite companies to establish online presences on AOL. So, the sorts of things that probably most people wanted to see were all right there. You weren’t going to find as much entertainment news or shopping outside of AOL in 1992 or 1993. And definitely not kids stuff. The web had a lot of seedy stuff back in those days, way before parental controls.
There’s a reason why “You’ve got mail” became such an iconic phrase. Email was not nearly as ubiquitous then as it was now. Web communications in general were not. When the Chris of today, with a smartphone, email accounts, social media accounts, SMS, and on and on, thinks back to the Chris of the early 90s with just an AOL account to send and receive email and chat some, it’s so quaint. But getting just email back in the day was certainly not as easy as it is now, not since the invention of Yahoo mail in 1997. Back then, if you worked somewhere with email, and at that, an email system open to the web, you could have email. Or if you were a school or college student, you could get email. Or if you owned your own domain, there you go. If I remember correctly, some, but not all ISPs offered email addresses as an enticement to sign up, but webmail was not a thing then and obviously, neither were smart phones. I didn’t mind using a text based system for email nor setting up an email client. But I can’t think of too many others in my life who were interested.
But when you logged into AOL, you had email. It literally would tell you the moment you logged in, if you had email. And you could chat directly with other users, just by knowing their name. You could participate in message boards too. Even though you were confined to the AOL service, all of the sorts of communication you could engage in on the larger web, were available to you.
But, as the online world grew and more and more people and companies and services decided to move to the larger Internet, AOL faced a huge problem. While, to many people, AOL *was* the Internet^, more and more people, while still desiring to be part of AOL’s walled garden, wanted a back door to the actual Internet *through* AOL. AOL did not consider themselves to be an ISP, but purely an online service. They wanted you in their system where you would do all of your stuff, not the larger internet, because once you were on the larger, and growing internet, you might one day decide that you didn’t necessarily need AOL to find what you were looking for.
By the late 90’s, AOL had opened up to the larger Internet. You could go into AOL and fire up a web browser and get to WWW sites through a browser inside of the window. By this time, you could access both AOL’s content as well as whatever was on the web. This had to be a major blow because, from the user perspective, this was indeed the first step to no longer needing AOL. They also allowed email from outside of AOL to reach their users.
Even so, one of the bigger changes was the company made was AOL Instant Messenger, or, AIM. At first, the service allowed AOL users to chat with other users from an app outside of the main AOL software. Eventually, due to pressure from competing products like Yahoo Messenger, and eventually, MSN Messenger, AOL opened up AIM to anybody who wanted an account and you could chat with both AOL users and non-AOL users. AIM would outlive AOL’s dominance, but AIM was never something outside users paid for.
My perspective has always been that by the time of the AOL/Time Warner merger announcement in 2000, the writing was on the wall for AOL. The larger Internet was growing. The dot com bubble would later on erase quite a few names from the Internet landscape, but that was a financial concern, not a technological one, nor a social one, and the appetite for more on the Internet was not slaked when the bubble would eventually burst. The bubble hit AOL yes, but by the time that this happened, their earlier business model, under which they’d had their largest successes was already becoming outdated. AOL might not have wanted to, but they were rapidly becoming just an ISP and no more. It was becoming impossible to wall off data and content. There was so much more coming to the web. Even the other conveniences AOL sold were no longer unique. For instance, email. As webmail started to come into its own, average users could get email very easily from Yahoo. Hotmail was bought by Microsoft in 1997.
The stock market only revealed, in its way, what was true: that AOL was not, and would not, be the behemoth many thought it was. AOL may have understood the attention economy long before anybody else, but the way they crafted their company around it didn’t change with the times. And as AOL became no longer “the Internet” for more and more people, the game was surely going to be up.
I’m reminded of the scene in Matrix Revolutions when the machines’ drill finally pierces through the Zion dome and the humans inside their mechs are shooting at the initial waves of sentinels. Sentinels fall and fall but eventually, a huge mass of sentinels breaches Zion, overwhelming the fire coming from the mechs. And once the sentinels are in, they overwhelm human forces.
That’s how I think about the growth of content and communication on the Internet, the first couple of waves with AOL valiantly fighting them off. But the explosion surely came once broadband Internet started to pop up. At that point, aside from habit or the inability to have access to broadband, there was no reason to use AOL as a service. You didn’t have to dial up to get anywhere online anymore. You didn’t need AOL to curate your online experience anymore. And you could stay in contact with friends, family, and others with other apps.
As is widely considered, the AOL/Time Warner merger is still one of the worst ever in corporate history. And yes, as Company Man says in the video, the stock took an historic hit alongside other online companies. But I think AOL, as a company, was pretty well doomed already. Just like other .com companies whose value wasn’t tied to anything but investors’ unchecked optimism about the coming Internet era, AOL was a company whose business was sure to be gutted in the upcoming years. I really wonder what kinds of forecasts they were writing for their financials by 2000.
What’s really sad is that it didn’t see the winds blowing and pivot towards social media once Twitter and Facebook started to emerge on the scene. I’ll be always forced to wonder if, by its name alone, it could have become an early force in social networking, especially since, in some ways, it laid the groundwork for social media today. What happened to AOL might not have had to happen.
^ I can not tell you the number of times I got frustrated and tired of explaining to people that AOL wasn’t synonymous with the Internet, but that it was strictly a self-contained service with its own existence apart from the Internet, whether you could access the Internet through it or not.