April 29, 2009, 3:41 PM — Once upon a time -- two decades ago this year, actually -- a startup called Quantum Computer Services changed the name of its moderately popular online service to America Online and added a cheery e-mail notification recorded by an employee's husband: "You've got mail!"
As the 1990s progressed, the company lived up to the promise of its new moniker, doing more than any other to introduce the country to the online world. As the Internet took off, it served as the most important on-ramp to what was often called the Information Highway. And although today's AOL is no longer the country's dominant ISP, its services and sites add up to the fourth most popular property on the Web, from instant-messaging kingpin AIM to muckraker TMZ.com to video engine Truveo.
Over the years, it's also found a remarkable number of ways to drive both loyal customers and random bystanders bonkers, shooting itself in its corporate foot again and again through everything from monumental technical glitches to willful strategic decisions. Herewith, a 20th-anniversary retrospective.
It's hard to fathom today, but in 1993, most people had never heard of AOL--it only had 250,000 subscribers. And even if they had heard of it, they didn't know how to get it. Then direct-marketing maven Jan Brandt convinced a skeptical CEO Steve Case to spend a quarter-million dollars sending out floppy disks with AOL software and a free trial offer. It worked. So they mailed out more. And more. The company ended up distributing millions of floppies and CD-ROMs; just how many has never been disclosed. They showed up in your mailbox. They were bound into your favorite computer magazines. They were stacked up at retail-store checkouts, doled out in high-school cafeterias, and inserted into cereal boxes. In short, they were like pop-up ads--except that they intruded on your real life, and there was no way to block them.
The early floppies were kind of cool, since they could be reformatted and put to good use. Not so for the CD-ROMs. And before long, many of them cluttered up the lives of two groups of people who didn't need them: Existing AOL members and anyone who had no interest in becoming an AOL member.
Over the years, the omnipresent marketing freebies inspired both protesters and collectors, and showed up as a cultural touchstone in the darndest places (an episode of the animated TV show Futurama involved an earth-threatening meteor consisting in part of discarded discs).
Was AOL proud of what it had wrought? You betcha: When your author visited the company's headquarters in 2001, he walked down a very long hallway with walls plastered with framed discs, displayed as proudly as if they'd been Grammy awards.
Bonus annoyance: One late disc touted 1045 free hours over 45 days, which was an insult to the intelligence of anyone with the ability to do long division--if you'd taken advantage of every minute of free time, you would have had slightly over an hour each day to sleep or otherwise do anything but use AOL.
It remains the online outage by which online outages are measured to this day. On Wednesday, August 7th, 1996, a switch upgrade at an AOL data center went awry and knocked the service offline for 19 hours, sending millions of users into withdrawal. Like a New York City blackout, it led the news on all three major networks and was both a unifying experience and a source of anger and despair.
In subsequent months, AOL suffered several similar-but-briefer hiccups, and got sued by customers who said it was failing to deliver on its promise of unlimited, flat-rate access. The company reacted by spending millions of dollars to improve reliability, which mostly worked--although it didn't eliminate glitches entirely. But none of the later blips had the impact of the 1996 meltdown.
In December, 1996, AOL moved from hourly rates to flat-rate pricing. Customers who were used to carefully monitoring their consumption began simply dialing in and staying on, maxing out the service's inadequate capacity and leaving other subscribers with busy signals rather than the squeal of a successful dial-up connection. It was a little like a restaurant instituting an all-you-can-eat policy and then running out of food on a regular basis.
It got so bad that Steve Case, in a letter to members, urged subscribers to treat AOL as they would a pay phone, so that it wasn't tied up when others might need it. Meanwhile, the company installed 30,000 new modems a month, eventually catching up with its customers. But not before then-archrival CompuServe ran a snarky commercial during the 1997 Super Bowl advertising its new toll-free number: 1-888-NOT BUSY.
Among the many online innovations that AOL pioneered was the annoying advertising pop-up. It used them to market a bevy of third-party products and services to subscribers, such as long-distance phone service from a company called Tel-Save. Just to add insult to irritation, opting out of the pop-ups carried an expiration date--unless you reaffirmed your decision, AOL would begin bombarding you with pop-ups again.
It took until 2002 before the company came to a realization that its subscribers had reached long before: "The most important thing we offer advertisers is the chance to be part of a service consumers love, and we've determined that pop-ups aren't the best way to do that," said AOL chairman Jon Miller as he announced that it was ending the practice. Funny--just about any AOL subscriber could have told the company that years earlier.
Pop-ups weren't the only way AOL hawked third-party products to its subscribers. In 1997, it was forced to rethink plans to let marketing partners call subscribers at home, though it still reserved the right to do so itself.
Chat Dirty to Me
For a company that rose to fame in part on the strength of a family-friendly image, AOL had a thriving seamy side--especially in its chat rooms. In 1996, one researcher said that almost half of user-created AOL chat rooms were sexual in nature. And even if you simply went to a chat room to talk about your stamp collection, you ran the risk of your screen name being scraped by a spammer looking to pelt your inbox with porn. Chat areas gained a reputation for being popular with pedophiles looking for underage victims; Dateline NBC's "To Catch a Predator" series eventually cranked out hours of tawdry TV by using decoys in chat rooms on AOL and elsewhere to ensnare men looking for underage sex partners.
To be fair, sleazy chat rooms and porn spam were hardly unique to AOL. But they were particularly at odds with AOL's wholesome reputation. Even today, the most popular rooms at what is now called AIM Chat tend to be a little creepy.
The Neutering of Netscape
Even if you're the world's biggest ISP, $4.2 billion isn't chump change. That's what AOL paid in 1998 to acquire Netscape Communications, whose eponymous browser remains the single most important piece of software in the history of the Web. But what did AOL do with its new toy? Almost nothing--it didn't even dump Microsoft's Internet Explorer as the default AOL browser. Netscape slipped into not-so-benign neglect and ever-declining usage, culminating in AOL's formal abandonment of it in 2007.
The one thing that went right for Netscape during its AOL years stemmed from a decision that Netscape Communications made in January 1998, when it was still independent: It released the browser's code as open source. It took years, but the move eventually led to Blake Ross and Dave Hyatt's creation of Firefox. The two youthful programmers managed to accomplish what the billion-dollar AOL couldn't or wouldn't do: Reignite browser competition and put Microsoft on the defensive.
Between its own AOL Instant Messenger service (launched in 1997) and instant-messaging pioneer ICQ (which it acquired in 1998), AOL took an early lead in IM. And then it spent years preventing its users from chatting with the outside world, by blocking attempts by Microsoft, Tribal Voice, Trillian, Odigo, and others to establish interconnectivity between AIM and other IM services. At one poiint, it claimed to be considering permitting interoperability with other networks---and then it went back to its old proprietary ways. All along, it said that it was being stubborn over security concerns, but critics suspected that it had more to do with making sure that it IM users remained a captive audience.
The hubbub eventually died down, in that AOL eventually struck a deal with Apple to let iChat users sign into AIM accounts and no longer actively blocks Trillian, Meebo, and other IM applications from accessing its network. But even in 2009, IM interoperability remains the exception, not the rule.
"This is the classic one plus one equals three," said AOL president Bob Pittman in January 2000. He was speaking of the company's audacious $146 billion takeover of Time Warner, the biggest corporate merger ever. Pittman's math turned out to be woefully overoptimistic: When the merger was approved a year later, it turned out to be bad news for everybody involved.
Eight years later, it's still hard to identify ways in which AOL Time Warner fulfilled Steve Case's vision of building "a company that helps to take the Internet to the next level--connecting, informing, and entertaining people around the world as never before, and benefiting consumers in valuable new ways."
Within two years of the merger, both Case and Time Warner chief Jerry Levin had stepped down, and it was clear the company was failing to keep its Internet access business relevant in the broadband era. In 2003, AOL suffered the ultimate corporate insult: Its name was removed from the combined company's moniker, leaving it as plain old Time Warner; today, just about everybody believes that the company is getting ready to undo the merger by spinning off AOL.
In 2004, AOL launched a big new TV campaign. It was supposed to help revitalize the company's image, but instead the spots were roundly mocked. One commercial featured a teeming mob of irate customers showing up at company headquarters to demand new features--the idea being that AOL was listening to its subscribers, but the subscribers looked just plain angry (you almost wondered why they weren't brandishing pitchforks and torches)--and it resonated with real AOL users. Another commercial, featuring the AOL "running man" icon having apparently just concluded a tryst with Sharon Stone and the claim that AOL for broadband was "just a little sexier than you might have imagined," was unsettling on so many levels that I don't know where to start.
In 2003, AOL reached a settlement with the FCC over charges that it intentionally made it difficult for unhappy customers to say goodbye. But three years later, it seemed still to be up to its old tricks: Vincent Ferrari called the company to cancel his account and was subjected to an extended dose of customer service as psychological torture--and unfortunately for AOL, he was recording the call. It turned out that AOL's "retention queue" handled 60,000 calls a day, and that employees were given an 81-page training manual on how to convince disgruntled subscribers that they didn't really want to leave.
All of which was not only appalling, but pointless. Within weeks of Ferrari's support call becoming public, the company was saying that its future lay in free Web services and that it would stop trying to sign up new subscribers and retain the ones it had.
Search Privacy? What's That?
It was supposed to be a dignified scholarly exercise: On August 4th, 2006, AOL made 20 million keyword searches available online for researchers to study. They contained no personally-identifiable information, so they were anonymous and harmless. Except that they weren't--you didn't have to be Sherlock Holmes to figure out who had done some of the searching, since folks' queries included information such as their own names, addresses, and Social Security numbers. Privacy experts were appalled. AOL yanked down the data and apologized, but the damage had been done. And as usual when the company ticked off its customers, it was the subject of revenge in the form of a class-action lawsuit.
Back in the 1990s when it looked like this World Wide Web thing just might amount to something, AOL gave its members tools for publishing their own sites, which it dubbed AOL Hometown. In 2008, it decided to discontinue the service--not in itself an outrage. But it gave members only a month's notice before deleting their sites and redirecting their URLs to a single blog post with a terse apology. Given that many of the sites hosted by Hometown dated to AOL's heyday, the act amounted to an abrupt razing of one of the Internet's few remaining historic districts.