Aol Case

America Online Guo Jing ID:3357849

1. Prior to 1995, why was America Online (AOL) so successful in the commercial online industry relative to its competitors CompuServe and Prodigy?

The efficient price rate structure packages enable AOL become more to be understand and budgeting for customers, comparing with others, such as CompuServe and Prodigy, under the same standard fee (a monthly fee of $9.95 for access to all of its services for up to five hours each month with each additional hour charged at $2.95), customers of AOL do not have to pay additional downloading fee.

Continuous addition and improvement to the new interactive product and services provided to retain customer (large subscription base and friendly interface make it possible). Extensive marketing efforts like direct mail packages and bundling AOL software into related products sold in the market to attract new customers.

Moreover, new strategic partnerships with other large companies enable AOL sustain a leadership in this new interactive service industry.

2. As of 1995, what are the keys changes taking place in the commercial online industry? How are they likely to affect AOL’s future prospects?

The emergence of Internet: Throughout the World Wide Web and the entrance of Microsoft Network into the commercial online industry, those internet content providers people can easily access to the information such as news for almost nothing, therefore AOL’s paid services are obviously less attractive.

AOL only offers 20 percent of commission fees to the content providers.

Therefore, the arrival of Microsoft and the emergence of the Internet will potentially expect to cause AOL's market share and customer base to go down.

While Microsoft acted as a bookstore, which means one, in which every content provider was his/her own publisher. It kept only 30 percent of the commission fees and passed the rest of commission to the content providers as...