AOL

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AOL, Inc.
Type Public
Traded as NYSEAOL
Industry Media
Web search engine
computer software
Technology
Founded 1983 as Control Video Corporation
1991 as America Online
2009-present as Aol.
Headquarters New York City, U.S.
Area served Worldwide
Key people Tim Armstrong
(Chairman and CEO)
Services Online services
Revenue Increase $2.3 billion (2013)[1][2]
Operating income Increase $190.3 million (FY 2013)[1]
Net income Increase $92.4 million (FY 2013)[1]
Total assets Decrease $2.797 billion (FY 2013)[1]
Total equity Decrease $2.137 billion (FY 2013)[1]
Employees 5,600
Parent Independent
(1983–2001, 2009–present)
AOL Time Warner
(2001–2003)
Time Warner (2003–2009)
Website corp.aol.com
www.aol.com
blog.aol.com[1]

AOL, Inc. (previously known as America Online, written as AOL and styled as "Aol.") is an American multinational mass media corporation based in New York City which develops, grows, and invests in brands and web sites.[3] The company's business spans digital distribution of content, products, and services, which it offers to consumers, publishers, and advertisers.

History[edit]

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 Bros..[4] Subscribers bought a modem from the company for 49.95 USD and paid a one-time 15 USD setup fee. GameLine permitted subscribers to temporarily download games and keep track of high scores, at a cost of 1 USD 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, Mike Ficco, 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.[4] In early 1985, Von Meister quietly left the company.

On May 24, 1985, Quantum Computer Services, an online services company, was founded by Jim Kimsey from the remnants of Control Video with Kimsey as Chief Executive Officer and Marc Seriff as Chief Technology Officer. Out of 100 employees from Control Video, only 10 were retained for the new company,[4] one of whom was Steve Case, who got promoted to vice-president of marketing. In 1987, Case was promoted again to executive vice-president. Kimsey soon began to groom Case to take over the role 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.[5][6]

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.

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:

1990s: a new Internet age[edit]

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. 1991 also saw the introduction of an original Dungeons & Dragons title called Neverwinter Nights from Stormfront Studios; it was the first Multiplayer Online Role Playing Game to depict the adventure with graphics instead of text.

During the early 1990s, the average subscription lasted for about 25 months and accounted for $350 in total revenue.[7] AOL discontinued Q-Link and PC Link in late 1994. In September 1993, AOL added USENET access to its features.[8] 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.

Particularly notable 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:

  • Private rooms – created by any user. Hold up to 23 people.
  • Conference rooms – created with permission of AOL. Hold up to 48 people and often moderated.
  • Auditoriums – created with permission of AOL. Consisted of a stage and an unlimited number of rows. What happened on the stage was viewable by everybody in the auditorium but what happened within individual rows, of up to 27 people, was viewable only by the people within those rows.[citation needed]

Between 1990–94,[citation needed] 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 children, for children (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.

The first chat room-based text role-playing game, Black Bayou, was introduced by AOL in 1996.

AOL charged its users an hourly fee until October 1996, when the company 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. 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,[9][10] near the Town of Vienna.[11]

AOL was quickly running out of room in October 1996 for its network at the Fairfax County campus. In 1996,[citation needed] AOL moved to 22000 AOL Way in Dulles, unincorporated Loudoun County, Virginia.[12] 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.[citation needed]

On March 31, 1997, the short-lived eWorld was purchased by AOL.

In 1997, about half of all US homes with internet access had it through AOL.[13]

AOL announced on November 24, 1998 it would acquire Netscape. The deal closed on March 17, 1999.

2000s: Transition re-branding and decline[edit]

Decline in U.S. subscribers 2Q 2001 – 2Q 2009.[citation needed]

In January 2000, AOL and Time Warner announced plans to merge, forming AOL Time Warner, Inc. The terms of the deal called for AOL shareholders to own 55% of the new, combined company. The deal closed on January 11, 2001. The new company 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.[citation needed]

In 2004, along with the launch of AOL 9.0 Optimized, AOL also made available the option of personalized greetings which would enable the user to hear his or her name while accessing basic functions and mail alerts, or while logging in or out.

In 2005, AOL broadcast the Live 8 concert live over the Internet, and thousands of users downloaded clips of the concert over the following months.[citation needed] In late 2005, AOL released AOL Safety & Security Center,[citation needed] a bundle of McAfee anti-virus, CA anti-spyware, and proprietary firewall and phishing protection software. News reports in late 2005 identified companies such as Yahoo!, Microsoft, and Google as candidates for turning AOL into a joint venture.[14] 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.

On April 3, 2006, AOL announced it was retiring the full name "America Online"; the official name of the service became "AOL", and the full name of the Time Warner subdivision became "AOL, LLC".[15]

On June 8, 2006,[16] AOL offered a new program called AOL Active Security Monitor, a diagnostic tool which checked the local PC's security status, and recommended additional security software from AOL or Download.com. The program rated the computer on a variety of different areas of security and general computer health. Two months later,[17] AOL released AOL Active Virus Shield. This software was developed by Kaspersky Lab. Active Virus Shield software was free and did not require an AOL account, only an internet email address. The ISP side of AOL UK was bought by The Carphone Warehouse in October 2006 to take advantage of their 100,000 LLU customers, making The Carphone Warehouse the biggest LLU provider in the UK.[18]

On August 2006, AOL announced they would give away email accounts and software previously available only to its paying customers provided the customer accessed AOL or AOL.com through a non-AOL-owned access method (otherwise known as "third party transit", "bring your own access", or "BYOA"). The move was designed to reduce costs associated with the "Walled Garden" business model by reducing usage of AOL-owned access points and shifting members with high-speed internet access from client-based usage to the more lucrative advertising provider, AOL.com.[19] The change from paid to free was also designed to slow the rate of members canceling their accounts and defecting to Microsoft Hotmail, Yahoo!, or other free email providers. The other free services included:[20]

  • AIM (AOL Instant Messenger)
  • AOL Video[21] featured professional content and allowed users to upload videos as well.
  • AOL Local, comprising its CityGuide,[22] Yellow Pages[23] and Local Search[24] services to help users find local information like restaurants, local events, and directory listings.
  • AOL News
  • AOL My eAddress, a custom domain name for email addresses. These email accounts could be accessed in a manner similar to other AOL and AIM email accounts.
  • Xdrive, which was a service offered by AOL, allowed users to back up their files over the Internet.[25] It was acquired by AOL on August 3, 2005 and closed on January 12, 2009.[26] It offered a free 5 GB account (free online file storage) to anyone with an AOL screenname.[25] Xdrive also provided remote backup services and 50GB of storage for a $9.95 per month fee.[25]

According to AOL CEO Randy Falco, as of December 2007, the conversion rate of accounts from paid access to free access was over 80%.[27] Later in August 2006, AOL informed its American customers it would be increasing the price of its dial-up access to US$25.90. The increase was part of an effort to migrate the service's remaining dial-up users to broadband, as the increased price was the same price they had been charging for monthly DSL access.[28] However, AOL has since started offering their services for $9.95 a month for unlimited dial-up access.[29]

On September 17, 2007, AOL announced it was moving one of its corporate headquarters from Dulles, Virginia, to New York City[30] and combining its various advertising units into a new subsidiary called Platform A. This action followed several advertising acquisitions, most notably Advertising.com, and highlighted the company's new focus on advertising-driven business models. AOL management stressed "significant operations" will remain in Dulles, which included the company's access services and modem banks.

In October 2007, AOL announced it would move one of its other headquarters from Loudoun County, Virginia, to New York City; it would continue to operate its Virginia offices.[31] As part of the impending move to New York and the restructuring of responsibilities at the Dulles headquarters complex after the Reston move, AOL CEO Randy Falco announced on October 15, 2007 plans to lay off 2000 employees worldwide by the end of 2007, beginning "immediately".[32] The end result was a near 40% layoff across the board at AOL. Most compensation packages associated with the October 2007 layoffs included a minimum of 120 days of severance pay, 60 of which were given in lieu of the 60-day advance notice requirement by provisions of the 1988 Federal WARN Act.[32]

By November 2007, AOL's customer base had been reduced to 10.1 million subscribers,[33] just narrowly ahead of Comcast and AT&T Yahoo!.

On January 3, 2008, AOL announced the closing one of its three Northern Virginia data centers, Reston Technology Center, and sold it to CRG West.[34]

On February 6, 2008, Time Warner CEO Jeff Bewkes announced Time Warner would split AOL's internet access and advertising businesses in two, with the possibility of later selling the internet access division.[35]

On March 13, 2008, AOL purchased the social networking site Bebo for $850m (£417m).[36] On July 25, 2008, AOL announced it was shedding Xdrive, AOL Pictures, and BlueString to save on costs and focus on its core advertising business.[37] AOL Pictures was terminated on December 31, 2008. On October 31, 2008, AOL Hometown (a web hosting service for the websites of AOL customers) and the AOL Journal blog hosting service were eliminated,[38] after first announcing the impending shutdown on September 30, 2008.[39]

2009–present: AOL as a digital media company[edit]

On March 12, 2009, Tim Armstrong, formerly with Google, was named Chairman and CEO of AOL.[40] Shortly thereafter, on May 28, Time Warner announced it would spin off AOL as an independent company once Google's shares ceased at the end of the fiscal year.[41]

On November 23, 2009, AOL unveiled a sneak preview of a new brand identity which has the wordmark Aol superimposed onto canvases created by commissioned artists. The new identity, designed by Wolff Olins,[42] was enacted onto all of AOL's services on December 10, 2009, the date AOL traded independently for the first time since the Time Warner merger on the New York Stock Exchange under the symbol AOL.[43]

On April 6, 2010, AOL announced plans to shut down or sell Bebo;[44] on June 16, 2010, the property was sold to Criterion Capital Partners for an undisclosed amount, believed to be around $10 million.[45] In December 2010, AIM eliminated access to AOL chat rooms noting a marked decline of patronage in recent months.[46]

Under Armstrong’s leadership, AOL began taking steps in a new business direction, marked by a series of acquisitions. On June 11, 2009, AOL had already announced the acquisition of Patch Media, a network of community-specific news and information sites which focuses on individual towns and communities.[47] On September 28, 2010, at the San Francisco TechCrunch Disrupt Conference, AOL signed an agreement to acquire TechCrunch to further its overall strategy of providing premier online content.[48][49] On December 12, 2010, AOL acquired about.me, a personal profile and identity platform, four days after that latter's public launch.[50]

On January 31, 2011, AOL announced the acquisition of European video distribution network, goviral.[51] On February 7, 2011, AOL bought The Huffington Post for $315 million.[52] Shortly after the acquisition was announced, Huffingtonpost.com co-founder Arianna Huffington replaced AOL Content Chief David Eun, assuming the role of President and Editor-in-Chief of the AOL Huffington Post Media Group.[53]

On March 10, 2011, AOL announced it would cut around 900 workers in the wake of the Huffington Post deal.[54]

On September 14, 2011, AOL formed a strategic ad selling partnership with two of its largest competitors, Yahoo and Microsoft. According to the new partnership, the three companies would begin selling inventory on each other’s sites. The strategy was designed to help them compete with Google and ad networks.[55]

On March 15, 2012, AOL announced the acquisition of Hipster, a mobile photo sharing app for an undisclosed amount.[56] On April 9, 2012, AOL announced a deal to sell 800 patents to Microsoft for $1.056 billion. The deal includes a "perpetual" license for AOL to use these patents.[57]

In April 2012, AOL took several steps to expand its ability to generate revenue through online video advertising.

The company announced it would offer gross rating point (GRP) guarantee for online video, mirroring the TV ratings system and guaranteeing audience delivery for online video advertising campaigns bought across its properties.[58] This announcement came just days before the Digital Content NewFront (DCNF), a two-week event held by AOL, Google, Hulu, Microsoft, Vevo and Yahoo to showcase the participating sites’ digital video offerings. The Digital Content NewFront were conducted in advance of the traditional television upfronts in hopes of diverting more advertising money into the digital space.[59] On April 24, 2012, the company launched the AOL On network, a single web site for its video output.[60]

In February 2013, AOL reported its fourth quarter revenue of $599.5 million, its first growth in quarterly revenue in 8 years.[61]

In August 2013, Armstrong announced Patch Media would scale back or sell hundreds of its local news sites.[62] Not long afterwards, layoffs began, with up to 500 out of 1,100 positions initially impacted.[63] On January 15, 2014, Patch Media was spun off, with majority ownership being held by Hale Global.[64]

Products and services[edit]

AOL’s products and services are in the following areas: Content, Advertising, Local, Membership and AOL Ventures.

Content[edit]

AOL’s Huffington Post Media Group, led by Arianna Huffington is a source of news, opinion, entertainment, community and digital information. The separate AOL Brand Group, led by Susan Lyne, is a diverse network of sites including Moviefone, Engadget, TechCrunch, Cambio and Stylelist, which combine reposting, technology, engagement, and video to reach a global audience on every platform. The Group has over 20,000 bloggers, including politicians, celebrities, academics and policy experts, who contribute on a wide range of topics making news.[65] The Group’s video is collected on its AOL On site, which offers channels in News, Entertainment, Style, Tech, Business, Food, Home, Travel, Health, Autos, Parenting, Relationships, Video Games and Pets.[66]

Advertising[edit]

  • AOL Advertising – AOL Advertising offers advertisers, agencies and publishers access to AOL’s online advertising tools, and the ability to advertise on the original brands available through the AOL Huffington Post Media Group.
  • Advertising.com – AOL’s ad network, Advertising.com, helps advertisers reach highly targeted audiences at scale, and helps publishers increase revenue. Advertising.com utilizes AdLearn, an advanced optimization and bid management system. AdLearn processes up to 10 billion transactions per day.
  • AOL Advertising.com Group – The AOL Advertising.com Group comprises eight businesses: Advertising.com, ADTECH, AOL On Network, Be On, Pictela, Studio Now, 5min Media and Sponsored Listings.
  • ADTECH – ADTECH's integrated ad serving solutions enable web publishers, ad networks, agencies and advertisers to manage, serve and report on their online advertising campaigns – including display, video and mobile formats.
  • AOL On Network – The AOL On Network comprises 14 curated video channels. It features original series by AOL Studios and other production houses, and a library of content from AOL partners. The site is refreshed with content surrounding breaking stories and trending topics. AOL On also features the custom playlists of celebrity curators.
  • 5min Media – 5min Media offers publishers access to a curated video library, white-label player and proprietary technology which allows them to integrate 5min Media’s videos across their sites to reach and be seen by targeted audiences.
  • Be On – Be On distributes branded video content on a pay-for-performance basis.
  • Pictela – Pictela is an award-winning,[67] high-definition global content marketing platform for serving and distributing brand content across online advertising and social media. The Pictela platform powers the backend of AOL Premium Formats.
  • StudioNow – StudioNow works with businesses to create, produce and distribute affordable custom video that's hyperlocal, high-quality and scaled to their needs.
  • Sponsored Listings – The Advertising.com Sponsored Listings network includes AOL Media properties and many of the web's top sites. The network is pay-per-click and enables advertisers to target ads by content and by audience.[68]

Local[edit]

AOL provides local content, platforms and services covering geographic levels ranging from neighborhoods to major metropolitan areas. This local content includes professional editorial content, user-generated content and business listings. AOL’s local brands include MapQuest, the second-largest online mapping company, operating at 44-percent market share; and a minority holding in Patch, a platform of hyperlocal news and information sites managed by professional local journalists and photographers.

AOL membership[edit]

AOL offers a range of integrated products and properties including communication tools, mobile services and subscription packages which drive traffic across the AOL network.

  • Mobile – AOL Mobile includes applications and mobile web experiences for existing AOL properties like Moviefone, TechCrunch, AIM, MapQuest, and products such as Engadget Distro, Editions by AOL, Play by AOL Music and Huffington Magazine.
  • AOL Mail – AOL Mail is AOL’s proprietary email client. It is fully integrated with AIM and links to news headlines on AOL content sites.
  • AIM – AIM is AOL’s proprietary instant-messaging tool. It also comprises a video-chat service, AV by AIM.
  • About.me – About.me enables users to bring in multiple online profiles from various services into one online identity.
  • Lifestore.com – Lifestore.com provides products and services including PC utilities, tech support, online learning, and diet and fitness programs.[69]

Ventures[edit]

AOL Ventures is the venture capital arm of AOL, investing in early-stage technology-centric consumer Internet companies.[70]

Corporate social responsibility[edit]

Since spinning off from Time Warner in 2010, AOL has made corporate social responsibility an important part of its mission. In its company values, AOL states, "We are in the business of helping people, period."[71] For the company’s corporate social responsibility efforts, AOL's CEO Tim Armstrong was included in a July 9, 2012 Adweek article, "The Givers," highlighting individuals who have committed their and their companies' time, money and resources to a diverse range of causes.[72]

Each year on the company’s birthday, AOL employees around the world are invited to participate in Monster Help Day, a global community service day dedicated to strengthening the communities in which AOL employees live and work.[73] Other corporate social responsibility initiatives include producing cause-related content for AOL properties; donating PSA campaigns throughout the AOL network; empowering consumers through cause-related contests and initiatives; implementing a permanent cause module on AOL’s homepage, dedicated to promoting a different nonprofit daily; and advocating for internet safety through its blog SafetyClicks.com.[74]

Criticism[edit]

Main article: Criticism of AOL

In its earlier incarnation as a “walled garden” community and service provider, AOL received criticism for its community policies, terms of service, and customer service. Prior to 2006, AOL was known for its direct mailing of CD-ROMs and 3½" floppy disks containing its software. The disks were distributed in large numbers; at one point, half of the CDs manufactured worldwide had AOL logos on them.[75] The marketing tactic was criticized for its environmental cost, and AOL CDs were recognized as PCWorld’s most annoying tech product.[76][77]

Company purchases[edit]

See also[edit]

References[edit]

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