AOL

AOL Inc.
Type Public company
Traded as NYSE: AOL
Industry Internet
Telecommunication
Media
Founded 1983 as Control Video Corporation
1991 as America Online, Vienna, Virginia, U.S.[1]
2006 as AOL
Headquarters New York City, U.S.
Area served Worldwide
Key people Tim Armstrong
(Chairman and CEO)
Revenue US$ 2.417 billion (2010)[2]
Operating income US$ -983 million (2010)[2]
Net income US$ -783 million (2010)[2]
Total assets US$ 2.962 billion (2010)[2]
Total equity US$ 2.287 billion (2010)[2]
Employees 5,860 (2010)[2]
Website AOL.com portal
AOL.com Corporate site

AOL Inc. (NYSE: AOL, stylized as "Aol.", previously known as America Online) is an American global Internet services and media company.[3][4] AOL is headquartered at 770 Broadway in New York.[5][6] Founded in 1983 as Control Video Corporation, it has franchised its services to companies in several nations around the world or set up international versions of its services.[7] AOL is headquartered in New York City, but has many offices throughout cities in North America, like Atlanta, Baltimore, Beverly Hills, Boston, Chicago, Detroit, Dulles, Mountain View, San Francisco, and Toronto. London and Tokyo are its foreign offices.

AOL is best known for its online software suite, also called AOL, that allowed customers to access the world's largest "walled garden" online community and eventually reach out to the Internet as a whole. At its prime, AOL's membership was over 30 million members worldwide,[8] most of whom accessed the AOL service through the AOL software suite.

In 2000 AOL and Time Warner merged under the name AOL Time Warner. The merger was not fruitful and on May 28, 2009, Time Warner announced that it would spin off AOL into a separate public company. The spinoff occurred on December 9, 2009,[9] ending the eight-year relationship between the two companies.[10]

Contents

Description

With regional branches around the world, the former American "goliath among Internet service providers"[8] once had more than 30 million subscribers[8] on several continents. It ranked fourth (behind the Web, email, and graphic user interfaces) in a 2007 USA TODAY retrospective on the 25 events that shaped the first 25 years of the Internet[11] and was named to the ".com 25" by a panel of Silicon Valley influencers on the occasion of the same anniversary.[12]

In January 2000, AOL and Time Warner announced plans to merge. The terms of the deal called for AOL shareholders to own 55% of the new, combined company. The deal closed on January 11, 2001 after receiving regulatory approval from the FTC, the FCC, and the EU's COMP.

AOL Time Warner, Inc., as the company was then called, was led by executives from AOL, SBI, and Time Warner. Gerald Levin, who had served as CEO of Time Warner, was CEO of the new company. Steve Case served as Chairman, J. Michael Kelly (from AOL) was the Chief Financial Officer, Robert W. Pittman (from AOL) and Dick Parsons (from Time Warner) served as Co-Chief Operating Officers. The total value of AOL stock subsequently went from $226 billion to about $20 billion.[13] Similarly, its customer base decreased to 10.1 million subscribers as of November 2007,[14] just narrowly ahead of Comcast and AT&T Yahoo!. As of June 2010, AOL's subscriber base dropped to 4.4 million.[15]

News reports in late 2005 identified companies such as Yahoo!, Microsoft, and Google as candidates for turning AOL into a joint venture;[16] those plans were apparently abandoned when it was revealed on December 20, 2005 that Google would purchase a 5% share of AOL for $1 billion.

AOL was rated both one of the best and worst Internet suppliers in the UK, according to a poll by BBC Watchdog.[17]

On March 31, 1997, the short-lived eWorld was purchased by AOL. The ISP side of AOL UK was bought by The Carphone Warehouse in October 2006 to take advantage of their 100,000 LLU customers which made The Carphone Warehouse the biggest LLU provider in the UK.[18]

The product was rated the "Worst Tech Product of All Time" by PC World in 2006.[19]

On May 28, 2009,[20] Time Warner announced that it would spin AOL off as an independent company once Google's shares ceased at the end of the fiscal year, and AOL's page and logo changed afterward.[21]

AOL ceased to be a part of Time Warner on December 9, 2009. The company declared an IPO on that day, under the stock symbol NYSE:AOL.[22]

History

AOL release timeline
1989 America Online for Macintosh received as a popular Apple Macintosh BBS
February 1991 AOL for DOS launched
January 1993 AOL 2.0 for the Apple Macintosh released,
AOL 1.0 for Microsoft Windows 3.x launched
June 1994 AOL 1.5 for Microsoft Windows 3.x released
September 1994 AOL 2.0 for Microsoft Windows 3.x released
June 1995 AOL 2.5 for Microsoft Windows 3.x released
June 1995 AOL 3.0 (Win16) for Windows 3.x/Windows 95/Windows NT released
June 1996 AOL 3.0 for Windows 95 released
July 1998 / June 1999 AOL 4.0 (Casablanca) and Refresh 2 released
September 1999 AOL 5.0 (Kilimanjaro) released
June 2000 AOL 5.0 for 9x/NT/2K (Niagara) released
October and December 2000 AOL 6.0 (K2 – Karakorum) and Refresh released
September 2001 AOL 6.0.2 for XP (Steppenwolf) launched
October and December 2001, May and July 2002 AOL 7.0 (Taz) and Refresh 1, Refresh 2, and Refresh 2 Plus released
October 2002 AOL 8.0 (Spacely) released
April 2003 AOL 8.0 Plus (Elroy) launched
August and September 2003 AOL 9.0 Optimized (Bunker Hill / Blue Hawaii) and Refresh released
May 2004 AOL 9.0 Optimized SE/LE (Thailand / Tahiti) released
November 2004, July 2005 AOL 9.0 Security Edition SE/LE (Strauss) and Refresh released
August 2005 to March 2006 AOL Suite Beta launched (cancelled)
September 2006, March 2007 AOL OpenRide (Streamliner) launched
November 2006, April 2007 AOL 9.0 VR and Refresh (Raga) released (AOL 9.0 for Microsoft Windows Vista but also works with Microsoft Windows 98, ME, 2000 and XP)
September 2007 AOL Desktop for Mac Beta released
October 31, 2007 AOL 9.1 (Tarana) released
December 2007 AOL Desktop (a.k.a. AOL 10.0) launched
May 2008 AOL Desktop for Mac 1.0 officially launched
September 2008 AOL Desktop 10.1 released
February and November 2009 AOL 9.5 and 9.5 Refresh released (Classic)
November 2010 AOL Desktop 9.6
July 31, 2011 AOL Desktop (Bn)

AOL began as a short-lived venture called Control Video Corporation (or CVC), founded by Bill von Meister. Its sole product was an online service called GameLine for the Atari 2600 video game console after von Meister's idea of buying music on demand was rejected by Warner Brothers.[23] Subscribers bought a modem from the company for $49.95 and paid a one-time $15 setup fee. GameLine permitted subscribers to temporarily download games and keep track of high scores, at a cost of $1 per game. The telephone disconnected and the downloaded game would remain in GameLine's Master Module and playable until the user turned off the console or downloaded another game.

The original technical team was composed of Marc Seriff, Tom Ralston, Ken Huntsman, Janet Hunter, Dave Brown, Steve Trus, Ray Heinrich, Craig Dykstra, and Doug Coward.

In January 1983, Steve Case was hired as a marketing consultant for Control Video on the recommendation of his brother, investment banker Dan Case. In May 1983, Jim Kimsey became a manufacturing consultant for Control Video, which was near bankruptcy. Kimsey was brought in by his West Point friend Frank Caufield, an investor in the company.[23] Von Meister quietly left the company in early 1985. Control Video was reorganized as Quantum Computer Services, Inc. on May 24, 1985, with Kimsey as Chief Executive Officer and Marc Seriff as Chief Technology Officer. Out of 100 employees from Control Video, only 10 remained in the new company.[23] Case himself rose quickly through the ranks; Kimsey promoted him to vice-president of marketing not long after becoming CEO, and later promoted him further to executive vice-president in 1987. Kimsey soon began to groom Case to ascend to the rank of CEO, which he did when Kimsey retired in 1991.

Kimsey changed the company's strategy, and in 1985 launched a dedicated online service for Commodore 64 and 128 computers, originally called Quantum Link ("Q-Link" for short). The Quantum Link software was based on software licensed from PlayNet, Inc, (founded in 1983 by Howard Goldberg and Dave Panzl). In May 1988, Quantum and Apple launched AppleLink Personal Edition for Apple II and Macintosh computers. In August 1988, Quantum launched PC Link, a service for IBM-compatible PCs developed in a joint venture with the Tandy Corporation. After the company parted ways with Apple in October 1989, Quantum changed the service's name to America Online.[24][25]

From the beginning, AOL included online games in its mix of products; many classic and casual games were included in the original PlayNet software system. In the early years of AOL the company introduced many innovative online interactive titles and games, including:

In February 1991 AOL for DOS was launched using a GeoWorks interface followed a year later by AOL for Windows. This coincided with growth in pay-based online services, like Prodigy, CompuServe, and GEnie. AOL discontinued Q-Link and PC Link in the fall of 1994.

March 2011: AOL announced it will cut around 20 percent jobs or 900 workers among 5,000 workers.[26]

In September 2011, AOL formed a strategic ad selling partnership with two of its largest competitors, Yahoo and Microsoft.[27]

Growth

Steve Case positioned AOL as the online service for people unfamiliar with computers, in particular contrast to CompuServe, which had long served the technical community. The PlayNet system that AOL licensed was the first online service to require use of proprietary software, rather than a standard terminal program; as a result it was able to offer a graphical user interface (GUI) instead of command lines, and was well ahead of the competition in emphasizing communication among members as a feature.

In particular was the Chat Room concept from PlayNet, as opposed to the previous paradigm of CB-style channels. Chat Rooms allowed a large group of people with similar interests to convene and hold conversations in real time, including:

Another area of early AOL leadership was education. Between 1990–94, AOL launched services with the National Education Association, the American Federation of Teachers, National Geographic, the Smithsonian Institution, the Library of Congress, Pearson, Scholastic, ASCD, NSBA, NCTE, Discovery Networks, Turner Education Services (CNN Newsroom), National Public Radio, The Princeton Review, Stanley Kaplan, Barron's, Highlights for Kids, the US Department of Education, and many other education providers. AOL's offered the first real-time homework help service (the Teacher Pager—1990; prior to this, AOL provided homework help bulletin boards), the first service by kids, for kids (Kids Only Online, 1991), the first online service for parents (the Parents Information Network, 1991), the first online courses (1988), the first omnibus service for teachers (the Teachers' Information Network, 1990), the first online exhibit (Library of Congress, 1991), the first parental controls, and many other online education firsts.

In September 1993, AOL added USENET access to its features.[28] This is commonly referred to as the "Eternal September".

AOL quickly surpassed GEnie, and by the mid-1990s, it passed Prodigy (which for several years allowed AOL advertising) and CompuServe.

Originally, AOL charged its users an hourly fee, but in October 1996 this changed to a flat monthly rate of $19.95. During this time, AOL connections would be flooded with users trying to get on, and many canceled their accounts due to constant busy signals (this was often joked "AOL" standing for "Always Off-Line").A commercial featuring Steve Case telling people AOL was working day and night to fix the problem was made. Within three years, AOL's userbase grew to 10 million people. In 1995 AOL was headquartered at 8619 Westwood Center Drive in the Tysons Corner CDP in unincorporated Fairfax County, Virginia,[29][30] near the Town of Vienna.[31]

AOL was quickly running out of room in October 1996 for its network at the Fairfax County campus. In 1996, AOL moved to 22000 AOL Way in Dulles, unincorporated Loudoun County, Virginia.[32] The move to Dulles took place in mid-1996 and provided room for future growth. In a five year landmark agreement with the most popular operating system, AOL was bundled with Windows software.

Change in focus, decline, and rebranding

Since its merger with Time Warner (the owners of the aforementioned Warner Bros.) in 2001, the value of AOL has dropped significantly from its $240 billion high. Its subscriber base has seen no quarterly growth since 2002. AOL has since attempted to reposition itself as a content provider similar to companies such as Yahoo! as opposed to an Internet service provider.

Controversies

Community leaders

Prior to mid 2005, AOL used online volunteers called Community Leaders, or CLs, to monitor chatrooms, message boards, and libraries. AOL's use of remote volunteers dated back to the establishment of its Quantum Link service in 1985. Some community leaders were recruited for content design and maintenance using a proprietary language and interface called RAINMAN, although most content maintenance was performed by partner and internal employees.

Two former community leaders, Brian Williams of Dallas and Kelly Hallissey of New York filed a class action lawsuit against AOL citing violations of U.S. labor laws in its use of community leaders. The lawsuit was filed in the United States Federal Courthouse, New York City on May 25, 1999 which subsequently was followed by the dismissal of all community leaders under the age of 18 years old as well as a reorganization of the community leader program as a whole. The Department of Labor was also investigating AOL's alleged labor law violations, but came to no conclusion closing their investigation in 2001.[48] AOL began drastically reducing the responsibilities and privileges of its volunteers in 2000. The program was eventually ended on June 8, 2005. Current Community Leaders at the time were offered 12 months of credit on their accounts in thanks for their service.

Within one decade of the class action lawsuit being filed, the class had grown to over 6,000 members citing the largest class action lawsuit ever filed against an internet based company. Currently it is the third largest class ever involved in any lawsuit on a federal level in the United States, affecting ultimately the employment eligibility of individuals in an online environment.

In February 2010, a settlement was approved by the Courts in the class action suit. The settlement included a $15 million USD payment. This payment was then divided by one third, the first of which was attorney and legal fees. Five Million was then divided among the included members of the class which consisted of more than 7,000 individual former Community Leaders. The final five million dollars was donated to charities hand picked by Hallissey and Williams then approved by the Courts for distribution. One such charity, The Remote Area Medical Foundation (www.ramusa.org), received payments in excess of $1.2 million USD for the provision of medical services, supplies and medication for those in need within the more rural areas of the United States and beyond.

Prior to the 1999 class action lawsuit, the community leaders were informed of a change in compensation for duties performed by AOL. Community leaders would be charged a reduced rate per month for their accounts and no longer would be given unlimited access without invoice. During this live announcement via an online meeting of all community leaders in a virtual arena, Brian Williams of Dallas led many community leaders in a virtual "strike" or "sit-in" to protest the new charges the community leaders were being asked to now pay. This protest or strike is noted as the first of its kind for an online environment and was nicknamed for the row of the arena it was held in; Row 800. Following the protest, AOL terminated the online working relationship between itself and several of the Community Leaders involved. Quickly following the release of these community leaders was the reinstatement of each one terminated with exception to Williams, which AOL was not willing to review due to the role he played within the cause of the protest. During this time, Williams role on AOL was that of Guide XNT (Guide Program), CB Naked (Crystal Ball forum), VnV Naked (iVillage's Vices and Virtues Forum) and JCommBrian (Jewish Community Online Forum).

Billing disputes

AOL has faced a number of lawsuits over claims that it has been slow to stop billing customers after their accounts have been canceled, either by the company or the user. In addition, AOL changed its method of calculating used minutes in response to a class action lawsuit. Previously, AOL would add 15 seconds to the time a user was connected to the service and round up to the next whole minute (thus, a person who used the service for 11 minutes and 46 seconds would be charged for 13 minutes). AOL claimed this was to account for sign on/sign off time, but because this practice was not made known to its customers, the plaintiffs won (some also pointed out that signing on and off did not always take 15 seconds, especially when connecting via another ISP). AOL disclosed its connection-time calculation methods to all of its customers and credited them with extra free hours. In addition, the AOL software would notify the user of exactly how long they were connected and how many minutes they were being charged.

AOL was sued by the Ohio Attorney General in October 2003 for improper billing practices. The case was settled on June 8, 2005. AOL agreed to resolve any consumer complaints filed with the Ohio AG's office. In December 2006, AOL agreed to provide restitution to Florida consumers to settle the case filed against them by the Florida Attorney General.[49]

Account cancellation

In response to approximately 300 consumer complaints, New York Attorney General's office began an inquiry of AOL's customer service policies. The investigation revealed that the company had an elaborate scheme for rewarding employees who purported to retain or "save" subscribers who had called to cancel their Internet service. In many instances, such retention was done against subscribers' wishes, or without their consent. Under the scheme, consumer service personnel received bonuses worth tens of thousands of dollars if they could successfully dissuade or "save" half of the people who called to cancel service. For several years, AOL had instituted minimum retention or "save" percentages, which consumer representatives were expected to meet. These bonuses, and the minimum "save" rates accompanying them, had the effect of employees not honoring cancellations, or otherwise making cancellation unduly difficult for consumers.

Many customers complained that AOL personnel ignored their demands to cancel service and stop billing. On August 24, 2005, America Online agreed to pay $1.25 million to the state of New York and reformed its customer service procedures. Under the agreement, AOL would no longer require its customer service representatives to meet a minimum quota for customer retention in order to receive a bonus.[50]

On June 13, 2006, a man named Vincent Ferrari documented his account cancellation phone call in a blog post,[51] stating he had switched to broadband years earlier. In the recorded phone call, the AOL representative refused to cancel the account unless the 30-year-old Ferrari explained why AOL hours were still being recorded on it. Ferrari insisted that AOL software was not even installed on the computer. When Ferrari demanded that the account be canceled regardless, the AOL representative asked to speak with Ferrari's father, for whom the account had been set up. The conversation was aired on CNBC. When CNBC reporters tried to have an account on AOL cancelled, they were hung up on immediately and it ultimately took more than 45 minutes to cancel the account.[52]

On July 19, 2006, AOL's entire retention manual was released on the Internet.[53]

On August 3, 2006, Time Warner announced that the company would be dissolving AOL's retention centers due to its profits hinging on $1 billion in cost cuts. The company estimated that it would lose more than six million subscribers over the following year.[54]

Direct marketing of disks

Prior to 2006, AOL was infamous for the unsolicited mass direct mail of CD-ROMs and 3½" floppy disks containing their software. They were the most frequent user of this marketing tactic, and received criticism for the environmental cost of the campaign.[55] The mass distribution of these disks was seen as wasteful by many people and led to protest groups. One such was No More AOL CDs, a web-based effort by two IT workers[56] to collect one million disks with the intent to return the disks to AOL.[57] The website was started in August 2001, and an estimated 410,176 CDs were collected by August 2007 when the project was shut down.[57] AOL CDs were recognized as No.1 on PCWorld's top ten list of most annoying tech products.[58]

Software

Usenet newsgroups

When AOL gave clients access to Usenet in 1993, they hid at least one newsgroup in standard list view: alt.aol-sucks. AOL did list the newsgroup in the alternative description view, but changed the description to "Flames and complaints about America Online". With AOL clients swarming Usenet newsgroups, the old, existing user base started to develop a strong distaste for both AOL and its clients, referring to the new state of affairs as Eternal September.

Later, AOL discontinued providing access to Usenet on June 25, 2005.[62] No official details were provided as to the cause of decommissioning Usenet access, except providing users the suggestion to access Usenet services from a third-party, Google Groups. AOL then provided community-based message boards in lieu of Usenet.

Terms of Service (TOS)

AOL has a detailed set of guidelines and expectations for users on their service, known as the Terms of Service (TOS, also known as Conditions of Service, or COS in the UK). It is separated into three different sections: Member Agreement, Community Guidelines and Privacy Policy.[63][64] All three agreements are presented to users at time of registration and digital acceptance is achieved when they access the AOL service.

There have been many complaints over rules that govern an AOL user's conduct. Some users disagree with the TOS, citing the guidelines are too strict to follow coupled with the fact the TOS may change without users being made aware. A considerable cause for this was likely due to alleged censorship of user-generated content during the earlier years of growth for AOL.[65][66][67][68]

Certified email

In early 2005, AOL stated its intention to implement a certified email system called Goodmail, which will allow companies to send email to users with whom they have pre-existing business relationships, with a visual indication that the email is from a trusted source and without the risk that the email messages might be blocked or stripped by spam filters.

This decision drew fire from MoveOn, which characterized the program as an "email tax", and the EFF, which characterized it as a shakedown of non-profits.[69] A website called Dearaol.com[70] was launched, with an online petition and a blog that garnered hundreds of signatures from people and organizations expressing their opposition to AOL's use of Goodmail.

Esther Dyson defended the move in a New York Times editorial saying "I hope Goodmail succeeds, and that it has lots of competition. I also think it and its competitors will eventually transform into services that more directly serve the interests of mail recipients. Instead of the fees going to Goodmail and EON, they will also be shared with the individual recipients."[71]

Other members of the antispam and blogging community were broadly critical of moveon.org and the EFF's attempts to characterize this as a "shakedown".

Tim Lee of the Technology Liberation Front[72] posted an article that questioned the EFF's adopting a confrontational posture when dealing with private companies. Lee's article cited a series of discussions[73] on Declan McCullagh's Politechbot mailing list on this subject between the EFF's Danny O'Brien and antispammer Suresh Ramasubramanian, who has also compared[74] the EFF's tactics in opposing Goodmail to tactics used by Republican political strategist Karl Rove. Spamassassin developer Justin Mason posted some criticism of the EFF's and Moveon's "going overboard" in their opposition to the scheme.

The dearaol.com campaign lost momentum and disappeared, with the last post to the now defunct dearaol.com blog—"AOL starts the shakedown" being made on May 9, 2006.

Comcast, who also used the service, announced on its website that Goodmail has ceased operations and of as February 4, 2011 they will no longer use the service.[75]

Search data

Main article: AOL search data scandal

On August 4, 2006, AOL released a compressed text file on one of its websites containing twenty million search keywords for over 650,000 users over a 3-month period between March 1, 2006 and May 31, intended for research purposes. AOL pulled the file from public access by August 7, but not before its wide distribution on the Internet by others. Derivative research, titled A Picture of Search[76] was published by authors Pass, Chowdhury and Torgeson for The First International Conference on Scalable Information Systems.[77]

The data were used by Web sites such as AOLstalker[78] for entertainment purposes, where users of AOLstalker are encouraged to judge AOL clients based on the humorousness of personal details revealed by search behavior.

User list exposure

Jason Smathers, an AOL employee, was convicted of stealing America Online's 92 million screen names and selling them to known spammers.[79][80]

Company purchases

Main article: List of acquisitions by AOL

Company sales

AOL (Time Warner) has sold a number of its sub-companies in Europe. AOL Europe had six million users, but its subscription base had been steadily declining. In 2005, 287,000 European AOL online users migrated to other service providers.[81] In September 2006, AOL Germany's ISP business (AOL Deutschland GmbH & Co. KG) was sold for $863m (€675m) to Telecom Italia.[82] AOL's German web portal AOL Deutschland,[83] however, is now operated by then newly founded AOL Deutschland Medien GmbH which still is a subsidiary of Time Warner. Today, AOL Deutschland offers virtually all free services of AOL.com (see below) in German versions as well as some of their own products, such as an AOL VISA card.[84]

In October 2006, AOL UK's ISP business was sold for $688m (£370m) to Carphone Warehouse.[85][86]

Notable people

International versions

AOL has several versions of its service for different countries.[109]

Online security services

AOL's software incarnations have provided different combinations of security features, usually involving McAfee's VirusScan and Firewall software.

Timeline

Free services

On August 2, 2006, AOL announced a plan to offer "many" of its services free, with or without an AOL Internet connection."[113]

Other developments

Movie studios partnership

On Friday, August 25, 2006, AOL announced that it had signed a deal with several major movie studios to open an online video store allowing users to "download to own" full length movies and television shows. The deal was signed with News Corporation's 20th Century Fox, Sony Corp.'s Sony Pictures Home Entertainment, NBC Universal's Universal Pictures, and former corporate sibling Warner Home Entertainment Group.[128]

See also

References

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