60% of AOL's profits come from misinformed customers

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80 percent of AOL's profits come from subscribers, which is not too surprising given the company's history. What is perhaps a little surprising is that 75 percent of those subscribers are paying for something they don't actually need. Three quarters of four fifths is three fifths, or more simply put, 60 percent.

The statistic comes from a recent article in The New Yorker, titled "You've got news - Can Tim Armstrong save AOL?" Here is the relevant part of the 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."

Although the number of AOL's subscribers has sharply decreased from 35 million in 2002 to just over 4 million in Q3 2010, the percentage is still high enough for a high number of misinformed customers keeping the company afloat. Many simply don't know they no longer need to subscribe to AOL to get online.

If all of these customers were to be suddenly... informed, AOL would collapse. The company has been doing well for itself recently, but it's a little crazy to learn that its entire survival strategy depends on slyly earned money, and will likely continue to for many more years to come.


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