The Survival of AOL

Time-Warner announced today that they are spinning off troublesome AOL into its own company once again.  Time-Warner’s purchase of AOL in 2000 left a lot of people shaking their heads.  Ten years ago, AOL was already a declining product as people were moving toward broadband and not using AOL dial-up service, which was the core of their business.  It seemed like a very unprofitable thing for Time-Warner to acquire AOL.

AOLYet, they did, and managed to maintain the brand for the last ten years.  The fact is, AOL is continuing its decline, and I believe Time-Warner’s planned spinoff of AOL into its own company by the end of this year is an effort to off-load a poorly performing division.  What Time-Warner failed to do was capitalize on the global reach of AOL by melding together old media with what AOL could have offered in new media.  If AOL had been left to its own devices, it is possible that it would have found its own way to renewed profitability.  Instead, Time-Warner’s business model likely held back any innovation that AOL once had.

In its time, AOL was a monster online machine.  It provided a way for those without tech savvy a way to access the incredible resources of the Internet, at a time when so few were tech savvy.  While most geeks avoided AOL like the plague, others (like geeks’ mothers, grandmothers, and non-geeky friends) flocked to a service that got them online with a minimum of fuss, giving them ready access to email, news, games, and a place to store photographs.  It was the ideal product for a quickly-developing but fledgeling industry that was growing more quickly than most people could keep up with.  I, myself, signed my mother up to an AOL account on her Mac, and she was one happy camper.  A click and she was connected, and everything she wanted, from email to news, was just a click or two away.  Using a simple “keyword” she could type in, she would get access to web pages for her favorite shows (Oprah) or information on products.  She loved it, and as much as I avoided it, I knew the value it had for her.

Can AOL survive at all at this point?  When was the last time you heard a commercial say “keyword _____ on AOL”?  Time-Warner states in their press release that spinning of f AOL will create “a standalone public company positions AOL to strengthen its core businesses, deliver new and innovative products and services, and enhance our strategic options.”  Sounds more like Time-Warner is cutting its losses.  But I’m willing to bet that new AOL head Tim Armstrong, recently acquired from Google, will have a few new ideas to take AOL forward.  They have some catching up to do, but with the right incentive, AOL can still have a future in the online community.