The Internet Zombie That Won’t Die | by Barry Silverstein | Aug, 2022

America Online is still alive — but in a very different form

AOL CD from 2003. Ryan Finnie, CC BY-SA 2.0, via Flickr

AAmerica Online, also known as AOL, was at one time an internet powerhouse and later, a media gargantuan. But in the fast-moving tech world, yesterday’s winner is today’s loser. While AOL eventually lost its luster, it still exists, even if it is a much different company. Here’s the story of how this once mighty player skyrocketed to the stars and then plummeted to Earth.

Ten years before the internet was publicly available, a company named Control Video Corporation created GameLine to connect an Atari 2600 via an ordinary telephone line, making it possible to rent games for $1 each. The company quickly failed but reinvented itself as phone-data technology provider Quantum Computer Services, which launched “Q-Link,” an online gaming service in 1985. Three years later, Quantum conceived of two pre-internet online services, PC-Link and Apple-Link.

Steve Case, who had been with the company since the Control Video days, is credited with renaming Quantum Computer Services in 1991 to America Online with the intention of taking advantage of the emerging internet. By 1992, America Online went public and was on its way to building an online membership service via the countless number of CDs AOL sent to households through the mail and inserted in magazines.

America Online logo. America Online, Inc., Public domain, via Wikimedia Commons

The consumer-friendly America Online featured internet service via telephone dial-up. The horrendous sound of connecting by phone to the internet is probably a not-so-fond memory of those early days. Still, the company attracted one million users by 1995 and ballooned to five million users just one year later, when AOL switched from pay-per-hour to a flat monthly fee. AOL wasn’t just an internet access point, either — it offered email, games, news, sports and more, so it was really a complete online portal of its own. The service even popularized the phrase, “You’ve got mail.”

Feeling invincible, Case’s company was nothing if not aggressive: In 1998, AOL purchased the decidedly business-oriented CompuServe and in 1999, AOL acquired Netscape, the firm that created the first commercial web browser, Netscape Navigator. By 2000, AOL was the biggest internet service in the United States, worth some $125 billion.

Dot-com companies were flying high as the new century dawned and the explosive growth of AOL caught the media’s attention. It also caught the attention of media giant Time Warner. In 2001, AOL and Time Warner merged to form AOL Time Warner. The deal was valued at a breathtaking $350 billion, a merger of unequalled size to this day.

On the surface, the merger seemed to make sense: AOL and Time Warner could offer each other access to millions of households while AOL’s internet expertise would rub off on Time Warner’s media holdings, including TIME magazine plus film and television operations.

The marriage turned out to be nothing short of a total disaster. Wisely, Steve Case departed in 2002. The merger was an epic culture clash between two organizations as different as night and day. At the same time broadband was changing the internet access business. The company’s technology couldn’t keep up and its stock price was battered as the dot-com bubble was bursting big time. Before the merger, AOL had thirty million subscribers; that dropped to ten million by 2007. AOL and Time Warner soon agreed to split up.

AOL Silicon Valley office. Coolcaesar at English Wikipedia, CC BY-SA 3.0, via Wikimedia Commons

Officially cut loose from Time Warner in 2009, AOL was still a $5 billion company. After going through a series of management changes, the company attempted to grow by acquisition. Over the next few years, AOL bought several companies, including Patch Media, TechCrunch and The Huffington Post. Some acquisitions turned out to be better than others, but AOL continued to plod along. Remarkably, it even retained a few million dial-up subscribers.

In May 2015, telecommunications firm Verizon agreed to purchase AOL for about $4.4 billion. Tim Armstrong, the chairman and CEO of AOL at the time, said in a statement released by Verizon:

“Verizon is a leader in mobile and OTT [over-the-top] connected platforms, and the combination of Verizon and AOL creates a unique and scaled mobile and OTT media platform for creators, consumers and advertisers. The visions of Verizon and AOL are shared; the companies have existing successful partnerships, and we are excited to work with the team at Verizon to create the next generation of media through mobile and video.”

In May 2021, just six years later, Verizon decided to sell its media group, which included AOL and Yahoo! (purchased by Verizon in 2017 for $4.5 billion), to Apollo Global Management, a private equity firm. The sale price was $5 billion, a little more than half of what Verizon paid for AOL and Yahoo! combined. Verizon got $4.25 billion in cash and retained a 10 percent interest in the company.

Now, AOL is a brand that flies under the flag of Yahoo! The AOL.com website is a busy, jumbled page. The company provides three monthly subscription “plans” — ID Protection by AOL, Data Secure by AOL and Complete by AOL — and lists other AOL products, such as AOL Mail, AOL Desktop Gold and the AOL app for Android. Remarkably, AOL still offers the original dial-up internet service — but you have to call an 800 number to order it.

In previous years, America Online had a meteoric rise and became America’s largest internet provider. Today, AOL seems to be a shadow of its former self. It is merely a division of Yahoo! — another internet zombie.

Trademarks and registered trademarks referenced in this article are the property of their respective holders.

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