- The Washington Times - Monday, December 4, 2000

America Online is big. A huge success. And, as most agree, the reason's simple: It has made the Internet make sense.
The on-line service company has determinedly targeted the average new computer user and steadfastly served even the technologically challenged.
Consequently the Sterling, Va., company headed by Steve Case has enrolled more than 25 million subscribers 85 percent of them in the United States. It has emerged as the world's biggest on-line service.
And although the so-called "techies" and "geeks" deride the company for offering the "Internet on training wheels," and chide it for dismissing, delaying and otherwise stinting on technological innovation, the company has grown so powerful it worries the Federal Communication Commission.
That's because AOL is in the process of acquiring rich Time Warner Inc., the media conglomerate that publishes Time magazine and owns the second-largest U.S. cable-TV operation.

Single source for all

If and when that $133 billion purchase and merger is completed, AOL Time Warner might allow customers to obtain through just one company an array of information and entertainment programming so vast and varied that it can be matched now only by subscribing to the services of a number of companies. If at all.
Among other things, the FCC fears the merged company might monopolize the relatively new process of linking computer users to the Internet via cable-TV wiring. Through that and other means, it might ultimately dominate Internet content and the way the content is delivered.
However, while it's true AOL has thrived through stressing simplicity, it hasn't had easy time.
The company started in 1989, and, in the early years, analysts and others foretold its impending death.
The predictions seemed on target when in 1996 the company switched to a comparatively low "flat pricing" system to encourage subscription sales. The response was so great, the company could not accommodate all would-be subscribers. Its system slowed and at times crashed.
So many people phoned complaints that company lines were always busy, leading scoffers to call the company "America Offline" or "America on Hold." AOL was forced to give partial subscription refunds to settle a resulting class-action lawsuit.
But even on the rebound, the company stuck to its policy of keeping the system simple while deferring technological advances.

Soft on innovation

Until late October, for instance, AOL's software couldn't read messages heavy in graphics. It couldn't sort e-mail by sender either. Such features are common with different software.
Even the company's corporate offices and its five "creative centers," where a fifth of its 15,000 employees work, have a non-tech feel. The huge cluster of computers that run AOL aren't visible. They're hidden in other buildings that are fortified to withstand natural disasters and "acts of God" like being bombed by an engine dropped from a passing jetliner.
By favoring simplicity over functionality, AOL persuaded computer-shy Americans to try e-mail, instant messaging and other tools. It got them hooked. It enabled moms to coordinate soccer schedules, dads to check stock quotes and teen-agers to chat with friends all from one service provider.
While AOL competitors like CompuServe and Prodigy stalked the business user, AOL targeted first-time computer users. Today AOL owns CompuServe, which has 2.8 million subscribers. Prodigy has just 2.7 million.
"AOL has done a great job of encouraging people," said Stacy Elliott, digital lifestyle adviser at Microsoft Corp., whose competing MSN service has 3.5 million subscribers. "They have some good marketing."
Indeed within five years of its founding, AOL had a million subscribers. That was in 1994, the year that hordes of people began discovering the Internet. Millions subsequently subscribed after receiving promotional disks stuffed into their mailboxes or falling out of newspaper inserts.

A mantra about mail

AOL's "You've Got Mail" message to users became a mantra and popular enough to spawn a movie starring Tom Hanks and Meg Ryan.
For many Americans, AOL is the Internet. Not for computer sophisticates though.
The technologically tutored say they consider AOL's service a joke. They frown on its users as clueless "newbies," who wander through cyberspace and offend them with their lack of training in on-line etiquette and techniques.
"Introducing new people in itself is a good thing," said James R. Curry, 23, a Web designer and programmer in Louisville, Ky., "but AOL has traditionally thrown people into the water without a life preserver."
One Internet service provider, FlexNet, won't even take former AOL users. It complains that they lack technical sophistication.
That's fine, from AOL's standpoint.
As senior vice president Jonathan Sacks puts it, AOL users have no need to switch to other services as their skills improve. They're like motorists with automatic transmissions who don't later have to change to manual gear shifting.
AOL apparently can retain its audience while increasing it. But the company has also grown through consolidation.

Acquiring growth

It has purchased Netscape, the maker of the Netscape Navigator browser, Mapquest's on-line maps and Moviefone's movie schedules and ticket sales. Soon, Mr. Sacks said, Citibank cardholders on AOL will be able to send digital cash to friends on line.
Clearly, AOL wants to become a necessity. Its mission statement: "To build a global medium as central to people's lives as the telephone or television … and even more valuable."
To keep intermediate users from bolting, the company now offers or will soon provide access to the service through such handheld devices as pagers, cell phones and Palm organizers. For an extra fee, it now lets users check e-mail over a regular telephone and to chat on a television set.
By letting members always with the same password access personal address books, calendars, e-mail and other services from all manner of machines, AOL strategists reason that few people will abandon the company for competing services.
The same strategy is expected to apply also to the high-speed broadband services that AOL will be able to provide to Time Warner's 12.6 million cable subscribers. Broadband refers to various methods of moving electronic data up to a 100 times faster than it can travel over "narrow band" telephone lines.

Bellwether to kingmaker

"AOL really is the bellwether," said Patrick Keane, a senior analyst at Jupiter Research. "Now, AOL can really be a kingmaker with broadband."
Mr. Keane believes consumer inertia will strongly favor AOL as different media converge and consumer options increase.
Ruth Sawyer, 72, a retired bookkeeper in Daphne, Ala., got her Internet start on AOL five years ago. She subscribed to AOL because most of her friends had done so. Now she resists calls from family members to switch.
"I'm familiar with it and the idea of how it operates and how to find things," she said.
Tony Torti, 43, a network consultant in Narragansett, R.I., said his teen-age daughters "would be gravely disappointed" if he were to cancel AOL. For one thing, changing e-mail addresses would be a pain that wouldn't be assuaged by saving on the monthly fee. AOL charges $21.95 a month, several dollars more than many of its rivals.
To lure new users, AOL recently began introducing devices that enable users to access the Internet merely by plugging the device into a wall socket and phone outlet. It is distributing books through Time Warner that help computer phobic persons to use the Internet. It is shipping promotional disks with Time Warner magazines and is considering creation of an AOL television show.

Cross promoting

While AOL executives say they won't discriminate against other companies, they acknowledge the value of the cross promotions that their connection with Time Warner affords. Already, ads for Time Warner's Sports Illustrated magazine pop up when users log on to AOL.
That sort of advertising could backfire, warned Andrew Bartels, an electronic-business analyst at Giga Information Group.
He said content providers may look elsewhere for partnerships if they perceive discrimination.
In fact, the Internet portal Yahoo reports increased inquiries from providers of news since the AOL merger was announced in January.
Complaints aren't likely to diminish as the subscriber base grows. Over the years, AOL has been accused of unevenly enforcing its usage policies.
Raymond J. Oglethorpe, president of AOL's technology group, says complaints often come from advanced users, not AOL's targeted home audience.
"When I hear this thing that AOL is training wheels for the Internet or it's clunky, I know we are doing our job," he said. "The mom and pop consumers, they just want to go in there and turn that computer on and go."

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