AOL released their latest financial report this week, and the biggest surprise for most people was that the company still makes a ton of money from subscriptions to dial-up internet.
Over two million people are paying America Online $20.86 per month for the same crackly-modem-sound dial-up internet you might remember from the 90's. How is this possible?
There are theories. At Recode, Peter Kafka suggested that AOL is essentially running a business built on forgetfulness. He compared AOL users' behavior to his own lingering subscription to Netflix's DVD plan -- he hasn't used it for years, just because he's forgotten to turn it off. That seems plausible, especially since AOL was truly ubiquitous in the 1990's. On Quora, a former AOL product manager recently explained that when AOL 4.0 launched in 1998, the company monopolized the entire world's CD production capacity.
When we launched AOL 4.0 in 1998, AOL used ALL of the world-wide CD production for several weeks. Think of that. Not a single music CD or Microsoft CD was produced during those weeks...They knew which words and colors were the most effective. And they were constantly trying to best their previous efforts. The Tide-colored CD marketing piece was the champion for a long time. People kept popping them in computers and signing up.
I found further, anecdotal support for this theory when I tried to track down someone - anyone - who's still using AOL dial-up on purpose. The only leads I got were from people who knew senior citizens (grandparents, older parents) who had neglected to cancel their subscriptions.
But here's another, supplementary theory. According to a Pew survey from last August, 3% of Americans still use dial-up internet at home. That means that AOL actually only has a small chunk of the dial-up internet -- three percent of Americans translates to around 9 million people. It's easy to caricature dial-up users (they're old! they're forgetful!) but most polls suggest that for those 9 million, dial-up internet is mostly about access and poverty. Some dial-up users live in places that haven't been wired for broadband internet. Others can't afford broadband (dial-up can be cheap, as cheap as 10 bucks a month.)
Anyway, this will probably always be a bit of a mystery. It's unlikely that AOL will ever come out and declare that their customers choose them because they have no other option, or that their customers choose them because they're very forgetful people. I would love to know though, what secret reasons animate the hearts of the dial-up diehards.
How fast is your connection?
