Remember CompuServe? That pay-by-the-hour online service that was born in the 80’s, matured in the 90’s, and was effectively dead well before the turn of the millennium.
One of the primary reasons CompuServe died was AOL — who used flat rate monthly pricing to kill the economics of CompuServe. Mortally wounded, AOL eventually acquired what was left of CompuServe, turning it into AOL’s “value brand”.
Now, Yahoo! (and others) are doing to AOL what it did to CompuServe. As ad-supported and by-the-transaction revenue streams kick in, as broadband penetration now exceeds dial-up, AOL’s monthly subscription model is under serious attack. AOL lost something like 2 million subscribers in the last quarterly report.
From today’s Wall St. Journal:
America Online, in its latest effort to adapt its operations for the high-speed Internet world, unveiled a plan to reorganize its corporate structure. The shake-up reflects AOL’s plan to shift from a business heavily dependent on revenue from paying subscribers to a more advertising-dependent model in which a growing number of consumers will use AOL services free.
The separation of access from content is essentially complete.