60% of AOL's Profits Come From Misinformed Customers 301
satuon writes "Ken Auletta's big New Yorker piece on AOL (subscription only) this week revealed an interesting detail about the company's inner workings. According to Auletta, 80% of AOL's profits come from subscribers, and 75% of those subscribers are paying for something they don't actually need. According to Auletta: "The company still gets eighty percent of its profits from subscribers, many of whom are older people who have cable or DSL service but don't realize that they need not pay an additional twenty-five dollars a month to get online and check their e-mail. 'The dirty little secret,' a former AOL executive says, 'is that seventy-five percent of the people who subscribe to AOL's dial-up service don't need it.'"
Inertia (Score:5, Insightful)
So, essentially the bottom line of AOL is bolstered by "inertia"? Is there a compelling reason why someone hasn't told the investors and / or the people getting bilked?
Re:My grandmother is one of them... (Score:5, Insightful)
And particularly the person who actually NEEDS AOL?
I was also bit mystified by the 25% actually needing it.
It seems to be insurance.
Can you absolutely 100% guarantee that your hotel or conference center will have a phone line to dial up and check your email etc when business traveling? Yeah, pretty much. Thats right up there with "having sheets" or "has HVAC" or "has electricity".
Can you absolutely 100% guarantee that your hotel or conference center will have WORKING wifi? Well, err, ... um... Yeah maybe 90% but can you financially afford to take that chance for only $50/month to AOL?
Re:Inertia (Score:5, Insightful)
So, essentially the bottom line of AOL is bolstered by "inertia"?
Works for the RIAA. Actually, truth be told, this is how a lot of out-dated behemoths stay in business.
Re:Where are the lawyers? (Score:5, Insightful)
Re:Inertia (Score:5, Insightful)
I've told them until I am blue in the face!
The AOLers cannot grasp the concept that they can retain their email addresses without paying for the unnecessary services. We've even downloaded their emails and contacts, opened IE and FF without AOL but they still don't believe. MSNers are no different. They are all the 60yo+ crowd who got online with the dial-up services and believe they still need these portals to get online with their Comcast/Cox/Qwest hi-speed. It doesn't help that the AOL operators outright lie to them about the necessity of the service.
Inevitable When You Shrink By 90% (Score:5, Insightful)
AOL has claimed in the past that its subscriber base hit 30 million, this was probably somewhat exaggerated (rounding up a couple of million) but taking them at their word their subscriber base is now something like 3.3 million. Not quite 90% yet, but they have been losing at least half a million per quarter so we are only a couple of months out from that mark.
Any mass auto-billing subscription service that is going to have some fraction of subscribers who are inappropriately signed up through ignorance or error. On your way down to zero again it is inevitable that you will reach the point where these are essentially your only remaining customers. Approaching the 90% decline point, AOL clearly reached that stage some time back.
I await to see how AOL will arrange to screw their last few customers when the service is finally shut down.
Re:My grandmother is one of them... (Score:4, Insightful)
Yes but... there are less expensive options for dial-up than AOL. I think the point is that the people in question don't realize that all the "extras" they're paying for are available for free with any internet connection.
Re:My grandmother is one of them... (Score:5, Insightful)
The privacy issues with Facebook are similar to Usenet.
You put it out there, and it's out there forever.
If you treat Facebook like a webified Usenet or public listserv, you have no problems.
0. My profile is nearly blank. The day of my birthday is there, but not the year. No address. No school. No work. Nothing identifying me.
1. I don't use my real name. Facebook thinks I'm a Siberian Eagle Owl.
2. I don't use any third party applications - if you take the time to read the privacy flags on the application, you quickly decide you don't want Farmville or whatever it is.
3. I block all third party application notices sent from friend accounts on sight.
4. I have the privacy settings to "friends only"
5. I only "friend" meatspace friends. I'm not one of those people who build up armies of so-called friends because I need them for "Mafia Wars".
That's it. And I enjoy it as a result. While Facebook mines my data for itself (I deep six the ads to 0.0.0.0 too), nothing else mines my data, unlike Usenet which is still trawled every day by spammer address harvesters and you can still find stuff by me from the mid '90s through DejaNews/GoogleGroups. If you don't know me on Facebook, you see nothing on it.
And thus, the time sink nature of Facebook also goes away. I check it about the same amount as I check my mail. My time sink is IRC.
So anyway, that's my Facebook Safety lecture. My policy seems to work well.
I think that if everyone did as I do on Facebook, it would go dark.
--
BMO
Re:Where are the lawyers? (Score:4, Insightful)
This is more like if I come into your hardware store and say "I need to drive this nail into this board and I have a hammer, do I need anything else?" and you tell me that I need to buy a screwdriver and 10 lbs. of bark chips as well.
Apparently some people have been calling AOL and asking if they still need a subscription after getting a new internet connection, and the operators are lying to them and saying they do. That sounds pretty sleazy to me.
Re:Todo: Get your granny's AOL login (Score:4, Insightful)
He who pays the piper calls the tune.
The employee is paid by AOL, not by AOL's customers; by preventing them from being able to cancel, he is in fact preserving the revenue that is necessary for his job to continue. Vicious cycle, and all that. Of course, this makes him a robot rather than a human, but I don't see you offering to provide him with an alternate source of income.
[substitute the appropriate pronouns as you see fit should Capt. Skinny not be male]
Re:Todo: Get your granny's AOL login (Score:3, Insightful)
> On average, they aren't well educated, and they don't have a lot of money.
You don't need an education or money to be polite. The OP clearly he said he was only a dick to people who were rude to him. I think the OP and I have a lot in common - I'll be pleasant and courteous, and do what I have to -- unless you start cursing me out without provocation. In that case, I'll be the biggest dick I can.
For example, if you think it's a good idea to tailgate me because I'm only going 10 over the speed limit, I will slow down. Slower and slower. And man, I mean, I have almost no lower bound. I'll do 10 in an 80 if you're on my ass. Until you decide to pass me. Then I'll speed up so you're still stuck behind me. You would have been much better off waiting until it was safe to pass, and put on your turn signal. I'll move right in my lane and slow down 'till you're past.