By Gary Kirchherr
You have to give America Online credit. It takes real chutzpah for a company that has such lousy service to raise its prices 10 percent.
PC World rated AOL the worst national Internet service provider as recently as its January issue. And yet the company wants its customers to pay more. Why? Didn't the company boost its bottom line enough by laying off 500 CompuServe employees at the same time?
The answer to these and other burning questions are in a ZDNet special report, "AOL Makes its Move." Included in the cornucopia of information about the price increase is one article, "AOL sends ripples through cyberspace," that has AOL's rather dubious justification for the move.
"AOL officials said the price hike will help it keep pace with the increasing number of hours its members are spending online," the article says. AOL chief Steve Case whines that members now spend 23 hours a month online, compared with seven hours before AOL started unlimited usage in December 1996. E-mail use has tripled to 22 million messages a day, Case said, without elaborating how much of that increase is attributable to spam. Any additional revenue will go to AOL's infrastructure, the article said.
Two key questions come to mind, and AOL users should ponder them. One, Why is AOL and only AOL among ISPs unable to make money charging $20 a month, even with all those millions of members? And two, Weren't the omnipresent ads all over AOL supposed to cover the cost of all those users staying online so long? You'd think with multiple pop-up ads on start-up, ads in chat rooms, and even on member profiles, AOL could scrape together enough cash to run its business. Especially since no other ISP has to do this.
Well, I have my own theory about the price hike. AOL is raising its prices because, well, it believes it can. AOL caters to what I learned in college economics classes is called a "vertical market" - many users will pay virtually whatever it takes to have it. Why? Because they have been conned into thinking AOL is "easy" and the Internet proper is too "difficult." Whether it's simple ignorance, corporate brainwashing or outright stupidity, or some combination of the above, long-time AOL'ers will stick with the service.
Don't believe me? Listen to this comment by one Mike Duncan, an oh-so-typical AOL user quoted by Jennifer Files in The Dallas Morning News: "I don't like it, but they sort of have you, don't they? For $2 a month, who's going to switch?" The answer: not many gullible nitwits like you, which is why the company's stock soared on news of the price hike.
But will the extra money AOL earns from sheep like Duncan offset the lower membership from those who finally wise up and cancel their subscriptions?
That AOL'ers willingly will pony up, and other ISPs will follow AOL's pricing lead, is the breathless conclusion of "reporters" like Files and various Wall Street suits who don't know a modem from a hole in the ground. But a ZDNN quick poll that asks AOL users if they'll cancel their subscriptions because of the rising prices shows more than a 4-to-1 margin saying "yes" as of the date of this column. Meanwhile, EarthLink is offering a "Get Out of AOL Free" program; as a ZDNet article points out, disgruntled AOL'ers can switch by logging onto a special Web site or calling 1-888-QUIT-AOL. David Cassel's Feb. 24 "AOL Watch" says a Minnesota ISP has done much the same thing: created a "leave-aol.com" Web site, set up a catchy toll-free number (1-888-Leave-AOL), and guaranteed users their rates won't increase for two years. The article also quotes the CEO of rival Prodigy as saying: "With the service levels they've been delivering, the guys at AOL must be out of their minds."
Whether "the guys at AOL" are out of their minds remains to be seen. But there's no arguing that the AOL subscribers who acquiesce to this price hike are.
|
Talk online to the author by appointment |