AOL Screws Its Loyal User Base... And Itself

In Strategy Shift, AOL Makes More Services Free In Chase For Ads

In a move that essentially abandons millions of loyal AOL users that have held their accounts for years, AOL is pulling a bait and switch game. Recently, AOL practically forced AOL users into upgrading to their SBC/AT&T-AOL DSL package by making the price of maintaining a dial-up account more expensive than switching to the DSL package, then shipping out thousands of defective DSL modems in a rush, which then caused the broadband AOL client to function in an excessively slow manner--or not at all. Then there is the matter of AOL support--or should I say the lack of support? In the last two months I have run across at least a dozen DSL modems shipped by AOL partners in the DSL upgrade plan that are causing system foul-ups and sign-on problems... so many that I have advised people not to use the AOL client and sign onto the AOL site via Internet Explorer.

(See my blog post about AOL customer service/technical support.)
(See pages of bad customer service reports)
(See the broadcast of the Vincent Ferrari cancellation call)

Now that AOL has suckered so many of its loyal users into "upgrading" to the DSL package, which would have been cheaper through YAHOO DSL (and AOL would have allowed users to keep their AOL mail accounts if they cancelled the service), it announces that it is going to offer FREE AOL e-mail accounts. The fact is that AOL/Time-Warner (and don't get me started about their reputation in the cable industry) is screwing long-term, loyal customers and selling the farm in order to be something it is not... a content provider like Google, Yahoo, MSN, etc.

You'll have to excuse me, but I am going to be busy signing up for my FREE AOL e-mail account so that I have another junk e-mail that I can use to register at sites that want me to register so they can fill my inbox with SPAM. But if I were one of those loyal AOL customers Suckered into the upgrade that doesn't work, I would be on the phone cancelling my AOL part of the deal on the grounds that I was fraudulently pushed into the deal, I do not get adequate customer support, I received a defective modem, and technical support is almost useless.

NEW YORK (AP) ­ Stepping up the chase for online advertising dollars, AOL will give away e-mail accounts and software now available only to its paying customers in a strategy shift likely to accelerate the decline in its core Internet access business.

The decision, announced Wednesday by AOL parent Time Warner Inc., removes the few remaining reasons for AOL subscribers to keep paying when they already have high-speed Internet access through a cable or phone company.

AOL will still offer its dial-up accounts at $26 a month for unlimited use, but the company no longer will aggressively market it. That's likely to mean the end of mailboxes stuffed with CDs of trial AOL software, as well as job cuts in marketing and customer service. There was no immediate word on how many layoffs will result.

The changes are to fully take effect in early September.

Millions of subscribers are likely to drop their paid accounts, making the strategy risky for Time Warner and AOL. Subscriptions still account for about 80% of AOL's revenues, contributing to 19% of Time Warner's revenues last year.

But AOL has little choice. After peaking at 26.7 million U.S. subscribers in September 2002, AOL's subscription base dropped 30% to 18.6 million in March.

Because AOL's rivals, including Google Inc., Yahoo Inc. and Microsoft Corp., offer free e-mail, customers would have kept dropping paid subscriptions even if AOL.com e-mail remained a premium offering. By making such accounts free, AOL could at least try to persuade customers to watch an ad-supported video or two as they check their mail.