60% of AOL's profits come from misinformed customers

By on January 25, 2011, 12:28 PM
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.





User Comments: 13

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CamaroMullet said:

WOW, just WOW....

TomSEA TomSEA, TechSpot Chancellor, said:

This is one of the reasons why I go out of my way to help elderly and non-tech friends, co-workers and family. Whether it's AOL or GeekSquad ripping off unknowing/uneducated consumers, I do what I can to prevent any of them from getting royally screwed over.

CamaroMullet said:

TomSEA said:

This is one of the reasons why I go out of my way to help elderly and non-tech friends, co-workers and family. Whether it's AOL or GeekSquad ripping off unknowing/uneducated consumers, I do what I can to prevent any of them from getting royally screwed over.

Yeah exactly. Good ole' pound ya in the arse corporate America.

gwailo247, TechSpot Chancellor, said:

"If all of these customers were to be suddenly... informed, AOL would collapse."

Maybe we could send them a CD containing the information about how they're getting ripped off. And if they don't unsubscribe, send them another CD...and another...and another...

CamaroMullet said:

Last November I helped a co-workers Mom with her Quest DSL modem. She was paying for a wireless 4 port router and service. Additional, she also purchased 2 4G usb modems plus service from Qwest for her 2 kids laptops. Both the mobile and 4G sticks were ordered at the same time, the sales person told her the laptops NEEDED the the 4G modems to access the internet from home. Hopefully he got fired, but probably not. They are pushed to sell the house for extra commissions.

Guest said:

Great example for this was my Aunt had upgraded to Verizon FIOS triple play package and still was paying a $15 a month fee for AOL. When i went over to do some routine computer work for her and found out about this I immediately showed her how you can simply go to AOL.com and check your mail for free she was on the phone right away to cancel the unncessary cost. AOL is a failed company now that the DIAL up age has been phased out about 8 years ago.

Get rid of AOL your wasting your money on something that has no benefit to you.

Relic Relic, TechSpot Chancellor, said:

Not surprised by this at all, had an older family member doing just this paying their DSL provider on top of AOL. Wasn't until I actually informed them that AOL isn't the "internet" that they woke up and got ride of them.

Guest said:

I've worked with older folks, also. The problem is that many of them don't understand computer use in general and, due to their age and the device usage models they grew up (there were no personal computers when they were young), many are just getting by... barely. With AOL, they are so addicted to the user interface they are afraid to attempt learning another one. It confuses them and they don't have the flexibility needed to switch to another interface. As that generation dies off, AOL will eventually dissapear. -M

MrAnderson said:

So I imaginge the fall of AOL will be sooner or later unless they come up with other revenue streams. A grassroots advertsement to enlighten subscribers could be the end of AOL?

Guest said:

The title should read "100% of AOL's profits come from misinformed customers". We never needed AOL because they are merely a service provider, and there were/are many service providers. AOhell has always been over-priced, and if people were informed about their options back in 2002, the company would have imploded then.

captaincranky captaincranky, TechSpot Addict, said:

Yeah well, "NetZero's" software wouldn't install. This despite their fervent promises to save us from the clutches of overpriced dial up.

I had a trial of AOL installed, called up to cancel about an hour after their, "deadline", they issued me a cancellation confirmation number, then proceeded to charge me for the next month anyway, despite I had placed no traffic on the net during that time.

Nice try AOL, I'm pretty sure my credit card company had had enough of them, long before I called to dispute the charges.

Then Verizon came riding in on a white charger, and bestoweth-ed upon me 756Kbs DSL for 15 bucks a month.

Verily I tell thee, twas a modern day miracle!

Guest said:

People still use AOL? haha!

captaincranky captaincranky, TechSpot Addict, said:

People still use AOL? haha!

Guests are still posting to a two year old thread :eek: ......LOL!

Although, strangely enough, AOL is listed on the NYSE @ around $35.00 a share..... So, one has to suppose that somebody is using it..!

Given AOL's tactics with respect to refusing to allow people to cancel their service, their existing customers are probably poor wretches that haven't found a way out yet.

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