"Economists are pessimists: they've predicted 8 of the last 3 depressions."
--Barry Asmus

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Friday, January 28, 2011

Do You Know Someone With An AOL E-Mail Account? Help Them.

Reluctant as I am to credit anything the Huffington Post says as having accuracy, this particular news item actually comes from quoting an article in the New Yorker. Accessing the original article requires a paid subscription, so I'll just quote the relevant section from the HuffPo article: "The company still gets eighty percent of its profits from subscribers, many of whom are older people who have cable or DSL service but don't realize that they need not pay an additional twenty-five dollars a month to get online and check their e-mail. 'The dirty little secret,' a former AOL executive says, 'is that seventy-five percent of the people who subscribe to AOL's dial-up service don't need it.'"
(80% x 75%) = 60% That means that, assuming that the New Yorker article is accurate, 60% of AOL's revenue come from people who actually have no need for their service. As BusinessInsider.com points out in "An Apology To AOL" (in which, probably in response to somebody's lawyers, they retract their original description of this as a "scam"): "Now, no one is suggesting that AOL is actively misleading any of these people about the need to keep paying, and in the past AOL has been quire forthright with subscribers about how they can switch to cheaper (or free) subscription plans. But if Auletta is right - if most of AOL's remaining subscribers don't realize that they don't need to pay to get their email - it does raise some ethical questions about what lengths AOL should go to to alert them to this."
I would add that it also raises questions about how long AOL will remain a company with a viable business model.

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