Aol Case

1

A main reason was AOL’s large subscription base of over 4 million members compared to CompuServe and Prodigy. Prior to 1995 there were only three companies that offered interactive services. AOL was a leader among those three due to an ease with which subscribes could communicate through real-time conferences, email and bulletin boards, etc. In addition, AOL provided its members with a wide range of features such as online community, computing, education and references, news and personal finance, travel and shopping, entertainment and children’s programing. All of these features allowed subscribers to use one server to meet all of their needs, which helped AOL to be more successful than its competitors. Another reason that made AOL successful was its rate structure. A customer only had to pay $9.95 a month for five hours of usage for all of the AOL’s services. Each additional hour would cost $2.5 and there were no downloading fees. In contrast AOL’s competitors offered the same pricing but would charge additional fees for premium services and downloading. This rate structure made it difficult and confusing for customers to anticipate their monthly spending. Therefore, allowing AOL to offer wider range of services with more convenience to its subscribers.

2

One of the major changes was fast growth of Internet Wide Web, which allowed content providers to have alternative distribution channels. AOL was a “middle mam” between content providers and users. Content providers had little or no control of their products using AOL, thus reducing their ability to collect potentially higher revenues. Internet was a major threat to AOL because providers now had an option of doing their business without a middle man. Nevertheless at that time it was still unclear how content providers would collect money since Internet was a publication environment for reading only. But ability to have greater control and higher revenues through using internet made it clear that it would...