becker
Feb 01, 2012

Why and how does AOL still exist...and earn money!?

I saw the financial results for AOL in the business section today, and the first thing that came to mind was, AOL?!? Who the heck is using AOL? I asked around the office and almost everyone had a similar action. One "rebel" admitted that he still had an aol email, but this is a guy didn't have a cell phone until last month...a cell phone, not a smart phone.  And yet AOL just posted $577 million in revenue for the fourth quarter of 2011. Honestly, I though this company was put-a-fork-in-it dead and done. How are they still around and who is still using AOL?

S
Sergio Zambrano
11/22/2013

Two of the answers here reminded me thw two reasons why AOL is still alive:

 

Old people, and yellow pages piled up in condos basement.

 

With all the offers out there to get intenet for free, or from some cute provider like terra, AOL was the no-hassle "if it's expensive it must be good" service, and they caught lots of old people (40 and up, for internauts age)

 

So the profits were based on ads "displayed", and boy, there were A LOT of them in any page, and as current companies lie about it, with bots visiting pages nobody sees, they are keeping the same customers who can't cope with changes, or are not worried about charges from services they don't even remember are paying, again, old people.

 

The first image that comes to my mind is the millions of yellow pages accumulated at the basement of buildings. WHOLE pallets of those brand new books, while there are schools that can't have real books printed on paper, or countries without toilet paper hehe. They are just sitting there, and some smart liar stating "your ad is being seen by millions".

 

I wish to see the faces of those old people, and rich stock holders (they must have not seeing the reports as well either! ) when they see the pallets of yellow pages sitting there, and relate in their brain how the heck a single person that wants his YP book from the pallete, is he wanna get out of his leather sits cadillac and rip off the shrink wrap to take out one book?

 

Investors are not that stupid. There must be some money laudry somewhere in there, I always think… but if there arae Yellow Pages subscribers… everything is possible.

R
ReadyJohn_YahKHAWBM
09/05/2013

Well, at the ripe old age of 30, I can still clearly remember a time when AOL may have been the only way you got online.  Remember those discs they distributed so heavily?  That was a really amazing marketing campaign for them.  At the time I think they were able to sign up something like 90% of all citizens over the age of 65, and for those who don't like change, AOL is one of the last bastions of the obtuse in the online world.

 

All jokes aside, while I definitely wouldn't sign up for AOL now, at one time it was a pretty attractive service.  Everyone bashing it right now (including myself) should remember that the internet may not be quite a developed if AOL hadn't existed in the 90's.  So, while I can't think of one reason why AOL actually exists today, I have to tip my hat in their direction for hanging on (but not for buying Huffington Post, that site can die right along with AOL).

m
mengia
03/25/2013

I am one of the hanger ons and for me it is because the social networks today suck.  I don't understand why young people today want to use facebook when all you can do on  is connect with grandma and people you already know.  It pails in comparison to what we had before with AOL and there chatrooms.  I mean anything you were looking for there was a chat for.  In my opinion if you are trying to meet new people AOL was like going to an internet bar while facebook is like trying to pick up someone at a family reunion.   And why the heck does everyone think I want to link everything I do online with everyone.  You log into yahoo and it wants to add facebook contents, facebook wants to add contacts to my smart phone etc. etc.  How stupid is that??  The beauty of the internet is that you can have some anonymity. 

sallysf
12/01/2014
I am also one of the people who uses aol and i love it. I do have a gmail account and i never use it. I like my privacy and aol offers that. If you have any of these other email accounts it always want you to link with other accounts and i do not care for other people knowing every detail of my life. I think nothing is private anymore and its really sad so if i could have more privacy i will take it.
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OldHippie
02/02/2012

Grandmas and Huffington Post is all I can think of.  I also know one person who has an AOL email (kind of funny that in three post on the topic, each poster knows one person).  Wonder if they all still use fax machines too?  Actually, it's been so long since I've actually seen an AOL account, that it has some nostalgic value.  Well, it did, until I just remember that horrible Meg Ryan/Tom Hanks movie about a independent bookstore owner who rails against the evil empire of chain bookstores.  Usually while drinking coffee at Starbucks.

 

Seriously though, AOL being profitable, albeit just with $13.1 million in net income blows my mind.  Last year they lost $782.5 million (source Forbes).  The source of their revenue is overwhelmingly advertising, which is in contrast to their earlier subscription based model.  This topic got me curious about the company, so I did some digging.  Only about 10% of AOL revenue is from dial-up internet subscriptions, while about 50% of revenue is from ads on AOL and 3rd party sites.  It seems like AOL is trying to become Yahoo...which seems like tagging along with the Titanic to me, but I've been wrong before. 

jimlynch
02/01/2012
Well, they did just buy the Huffington Post. So maybe that's helping to bring in the money. Beyond that, I really don't know.

A friend of mine still has an AOL email address. I don't know why he bothers, but he refuses to move to gmail or some other web based email. I mock him sometimes for having one, he ought to have moved on a long time ago but he refuses.

So he and others out there are contributing to AOL's bottom line. That said, I certainly wouldn't want to own any AOL stock. No way!

The WSJ has an article that isn't exactly upbeat about AOL.

AOL's Profit Slumps 66%
http://online.wsj.com/article/SB1000142405297020474090457719663425296615...

"AOL Inc. reported a 66% decline in fourth-quarter profit as lower subscription revenue, higher costs and tax provisions more than offset improved advertising sales.

Ad revenue increased 10% to $364 million, led by 15% growth in domestic display ads, marking the third consecutive quarter of year-over-year ad growth. However, revenue from AOL's steadily shrinking subscription-based Internet access service fell 18% to $195 million, contributing to a 3% decline in total revenue.

Executives said the rate of revenue decline was AOL's lowest in five years and that while it will be a "stretch," the company has a chance to post revenue growth in 2012."
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