The Decline and Fall of AOL
Wall Street started noticing that AOL was not signing up members with the same momentum and began to cool.
With 22 million subscribers, AOL had creamed the market; all the obvious people had bought. New members were costing more and more to acquire and the growth was incremental.
To me at the time, it was obvious what needed to be done. AOL had a huge, loyal, captive audience of 22 million people. Any direct marketer with half a brain could figure out how to delight the membership by making wonderful exclusive offers and raking in money.
Happy members would tell non-members about these great offers and the buzz would generate more members that wanted in on the action.
Steve Case Took His Eye Off the Ball
The late guru Dick Benson always cautioned his clients not to ignore their core business. “Who’s looking after Mama?” was the question he would ask if a marketer started getting too involved in some cockamamie new scheme.
Steve Case and Gerry Levin of Time Warner fell in love with the idea of the largest merger in corporate history. In January 2000 they made a joint announcement. Levin crowed to Ray Suarez on the “News Hour with Jim Lehrer”:
You have all the obvious statistics here. When you look at the 22 million subscribers to AOL and CompuServe, the 135 million additional registered users for AOL, the 120 million readers of the more than 30 magazines of Time Inc., the 35 million subscriptions to HBO, its pay television services, the 20 million homes patched with digital cable. For TNT and TBS, our entertainment networks, they’re received by 75 million homes. And probably, very significantly, and you’ll hear from them shortly, CNN is really accessible to a billion people around the world. And, in fact, I view us and our combined company as the trustees for a remarkable heritage.