Originally published January 27, 2003

Once-mighty AOL losing out to competition

Two years after one of the biggest mergers in history, AOL-Time Warner is in deep financial trouble, largely due to the AOL component of this new conglomerate. Analysts cite losses in the area of advertising and commerce, but I perceive something even more basic at the core of these financial woes: Consumers are no longer choosing America Online as their Internet gateway.

AOL is forecasting subscription growth, but frankly I don't see this playing out in practice. Increasingly, existing customers are weaning themselves from this high-priced service in favor of more affordable alternatives with all the conveniences of AOL. I certainly don't intend to over simplify the complex problems of this media giant, but let's face it -- folks just don't need America Online like they used to.

In 1990, the Stone Age in Internet timetables, locating content on this vast network was next to impossible for anyone but scientists. Back then I first used Prodigy and then CompuServe to explore this new frontier, but switched in 1993 to America Online following the release of Windows 3.1. Above all, it was easy to negotiate and provided that much-needed menu interface or "front door" to the Internet. For $10 a month, AOL was the best game in town for non-business users. Ten years later, however, they are just one among thousands of Internet providers and their price for unlimited access is the highest of all. It's no longer necessary to get to the Internet through America Online. You can get there directly for less money, less advertising and less e-mail spam.

AOL prices its unlimited monthly service at $23.90, significantly higher than a connection-only account from an Internet Services Provider, or ISP.

Unlimited Internet access can cost as little as $10 a month. Pricing varies based on your billing choices, but AOL is consistently at the high-end of alternatives. Granted, they tout their proprietary content as value-added, but quite frankly you can find most of what you're looking for by going directly to the Internet at large.

Any of the popular Internet portals provide free e-mail accounts, search functions, the latest news, weather and personalized finance tools as well as chat tools, originally popularized by AOL. The only user cost is the basic Internet connection, obtained through an ISP. Yahoo and Microsoft Network (MSN), the preeminent portal favorites, are free once you're connected to the Internet. Both offer extensive personalized services that make a service such as AOL unnecessary and over-priced.

You can maintain your ISP-provided e-mail account as your primary, unlisted mail account and use your Web-based Yahoo or MSN email account for all other business. This will seriously reduce the amount of unwanted e-mail, or spam you receive daily in your primary mailbox.

For the popular chat functions that are a draw in AOL, both Yahoo Messenger and MSN Messenger offer free real-time chat with plenty of bells and whistles. With Yahoo, you can enable both video and audio functions to actually see and hear those with whom you're conversing. MSN also offers sound and video through its secondary application, NetMeeting. If you're hooked on AOL Instant Messenger, you can still use this program without a paid AOL subscription. It's available as a free download for anyone from www.aol.com.

To check out direct Internet access in your area, refer to The List, a comprehensive list of Internet Services Providers: www.thelist.com.

Cathi Schuler is an Assistant Professor for the School of Engineering and Computer Science at the University of the Pacific. She also owns a business software training company, CeePrompt!  cschuler@uop.edu or cschuler@ceeprompt.com or by mail c/o The Record, P.O. Box 900, Stockton, CA 95201. She is on the Internet at: http://www.ceeprompt.com. Click here for past archived columns.  


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