Hey AOL, quit ripping off your older dial-up customers

75% of long-time subscribers paying for service they don't need, former AOL exec says

You know how every so often your local newspaper reports about elderly people being swindled out of money by shady contractors who trick them into paying for unnecessary home repairs, like a repaved driveway or new gutters? To me, that's sort of what AOL is doing. Ken Auletta reports in a New Yorker profile on AOL that 75 percent of AOL's dial-up subscribers are paying for a service they don't need. This comes from a former AOL executive who calls it AOL's "dirty little secret." (Also see: How AOL is like Plankton's Chum Bucket) In his New Yorker piece (subscription needed, unlike AOL's), Auletta identifies these unsuspecting marks as "older people who have cable or DSL service but don't realize that they need not pay an additional $25 a month to get online and check their email." As Business Insider's Nicholas Carlson points out, AOL's subscriber business has been in freefall for years as more savvy users moved to high-speed access. Even so, AOL's current 4 million subscribers (down from 35 million in 2002) generated $244 million in revenue for AOL in last year's third quarter. That's about 43 percent of AOL's total revenue, according to the Consumerist, and Auletta says it comprises 80 percent of AOL's profits. Obviously AOL isn't going around knocking on doors like an unscrupulous contractor to initiate a scam against the innocent and naive. These primarily are long-term subscribers who haven't caught on to the fact that the online world has changed dramatically in a decade. But AOL clearly is happy to keep cashing the checks of their unsuspecting loyal customers. Way to repay their loyalty, AOL. Before any of you hard-core free-market fetishists start in on "let the buyer beware," don't bother. You can take "caveat emptor" and shove it. This is just wrong. Seriously, if this is what AOL needs to do to stay in business, I hope it goes under tomorrow. And I say that as someone who hates to see people lose jobs. What I hate more, though, is seeing people who clearly don't know better being taken advantage of by a major corporation. Especially when money for elderly people is tighter than ever. Obviously the right thing to do would be for AOL to notify these customers that they don't need to keep paying a subscription fee to get online or even check their AOL email. Fat chance that's going to happen. More likely AOL will try to get them to buy gutters for their computers.

Chris Nerney writes about the business side of technology market strategies and trends, legal issues, leadership changes, mergers, venture capital, IPOs and technology stocks. Follow him on Twitter @ChrisNerney.

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