America Online (AOL) History

American Online (AOL) Through the Years

Today, digital media companies are awash online. But that was not the case many years ago. When researching on the history of American Online, I realized AOL was one of the few companies that offered online services at its time. The company has had as many ups as downs, but it is still standing. I tracked the company through the years to see what made it popular and what made it fail when it did.

An Introduction to American Online

The roots of AOL trace back to PlayNET, an online service under Quantum Link. In 1988, an IBM PC client came up and was later renamed to American Online. When AOL launched, it faced competition from established services such as CompuServe, The Source, and many more. Thanks to the solid business plan, AOL beat the competition to come out on top.

In its early days, AOL offered a host of services that made communication easy around the world. Some of these services included:

The browser came after the company acquired Netscape. Its popularity continued to soar high as more companies relied on it to provide online services. In 2001, AOL acquired Time Warner, a merger that was the talk of all business circles. However, the merger did not heighten its popularity as broadband replaced dial-up. At that point, the company needed to evolve or die. The decline by the company was so bad that Time Warner left to be a standalone company in 2009.  After Time Warner spun off, Tim Armstrong took over as the new CEO, and he injected new ideas into the company . Instead of offering the same services, Tim brought the idea of offering advertising technologies. The idea was so brilliant as the company started picking up.  However, in 2015, Verizon Communications acquired AOL. The company sold for $4.4 million – which shows the great growth of the company .

How Did AOL Start?

The history of the American Online started in 1983. William von Meister started a small venture named Control Video Corporation, CVC. CVC dealt in a digital game product known as GameLine, which worked with the Atari video game console. CVC was Meister’s idea of making money online after his request to buy on-demand music was turned down by Warner Bros.

CVC sold modems to subscribers of GameLine at $49.95 and activated their accounts at $15. After that, the subscriber needed to pay $1 for every game they accessed. The $1 allowed the subscriber to download the game temporarily and keep a record of their game progress. Subscribers would have unlimited access to the game they downloaded until they disconnected the console. If a subscriber downloaded another game, the old game was lost.

The company was not performing well. In the same year the company started, they hired Steve Case to work as a marketing consultant. This was in a bid to bring in more customers to revive dwindling number of subscribers. The company also brought in Jim Kimsey to work as a manufacturing consultant. At this time,  the company was near bankruptcy and the investors were already worried . Meister stayed with the company until 1985 when he finally exited, leaving it to others.

In the same year that Meister left, Jim Kimsey founded Quantum Computer Services from what was left of Control Video. Quantum Computer Services was meant to offer better online services. To set the business for success, Kimsey brought in a team of experienced technical staff to work with the staff from Control Video. He acted as the CEO of the company and had Marc Seriff stand in as the chief technology officer. He also promoted Case to be the executive vice president. Case was headed to the top and Kimsey groomed him for that. When Kimsey retired in 1991, Case took over as the CEO of the company to exercise all he had learned.

Kimsey knew that the company needed to evolve or be phased out by the competition. To do that, he changed the strategy of the company to offer a dedicated internet service for 128 computers and Commodore 64. He named this service Quantum Link (Q-Link). This service ran on a software licensed to PlayNet.

Q-Link offered unique services that attracted the attention of Apple, IBM, and other giant companies of the time. They relied on the power from Apple II and Commodore 64 to create digital services instead of using a slow terminal. With the computing power that these two provided, the company tailored their services for all people with home computers.

In 1988, Q-Link partnered with Apple to create AppleLink, which would work in Mackintosh and Apple II computers. Later that year, Q-Link developed PC Link, which was a personal edition for IBM PCs.  To develop PC Link, the company had to partner with Tandy Corporation . In 1989, the partnership between Q-Link and Apple was over and the company rebranded to America Online (AOL).

AOL was the company that offered online services for people who were not so familiar with computers. This is how Case marketed it, and this is why so many home users gained so much trust in them. With such a marketing plan, the company was able to beat CompuServe, which was a service for people with technical skills.

Another product was Quantum Link Serial, which was an interactive fiction developed by Tracey Reed. There was also Quantum Space, a service that allowed gaming enthusiasts to play by mail.

The Rise of AOL

In 1991, AOL saw a number of changes. This was the year that Case took over as CEO of American Online and the same year that so much else happened. In February that year, the company launched AOL for DOS. This service sported a GeoWorks interface. After the success of the service,  the company launched AOL for Windows in 1992 . Their services were in time to compete with premium internet services offered by CompuServe, GEnie, and Prodigy.

It was also in 1991 that Dungeons & Dragons introduced their original title Neverwinter Nights. It was the first role playing game for multiple players online. Instead of text, the game used advanced graphics by the standards of 1991.

AOL was doing great in the early 1990s as they started garnering more subscribers. They offered subscription services where the most expensive subscription option was the 25-month subscription that cost $350. The company also marketed to modem owners convincing them to have a taste of American Online services on a free trial basis.

In 1994, AOL could no longer sustain Q-Link and PC Link, and they had to stop the services. Before that, in 1993, the company allowed its subscribers to access to Usenet. Because this happened in September, and it was a revolution in itself, it was referred to as “Eternal September. Usenet was not previously a system for everyone. It was common with a group of college students and that was all. Access to Usenet came at a time when Jan Brandt launched a marketing campaign to sell AOL disks to as many people as possible. Instead of partnering with related businesses, Brandt chose unconventional partners, and this increased sales. The marketing campaign was so effective that the AOL logo appeared on about half of all CDs that sold around the world.

Still while in the early 1990s, American Online surpassed GEnie. By 1995, the company had overtaken CompuServe and Prodigy to be the number one provider of online services. After overtaking the main competitors, American Online went on to launch several services for big corporations and institutions. They developed products for:

They worked with a long list of education providers and worked with professionals, parents, and children. Before mid-1990s, the company had launched so many services that were the first in what they offered. Some of these services include:

At the same time, the company launched online courses and parental controls among so many other education services and products. It is during this phase that the company became so popular almost to a point of bringing down the competitors.

Before December 1996, all AOL subscribers had to pay an hourly fee, which was expensive for the subscribers. The company, however, changed their policies to charge a $19.95 monthly fee. Changing the payment policy attracted more subscribers than the system could handle. The increased traffic slowed the system down that the subscribers started cancelling their accounts. Steve Case tried to convince the subscribers to stay through a commercial he created. In the commercial, Case assured subscribers that the engineers were working tirelessly to rectify the issue. By 1999, the company had garnered more than 10 million subscribers.

All through the early 1990s, the company operated in its headquarters in 8619 Westwood Center Drive in Fairfax, West Virginia. But the space in the headquarters was not enough for the growing company.  In 1996, the company moved to 22000 AOL Way, Dulles, in Loudoun County, Virginia . The new offices provided space for the growth of the company. They also partnered with Microsoft and got a Windows software bundle. They now had a chance to create more products for the Windows platform.

In the same 1996, the company acquired eWorld. However, eWorld did not last long under American Online.  In 1997, eWorld was accessible to most homes with internet connectivity in the U.S. through AOL . Jason Seiken was in charge of the content for AOL and eWorld. The channels under the service included Sports, News, and Entertainment. AOL quickly turned to be the greatest provider of online services in the world and the channels saw their highest growth rate. At the time, American Online had more than 34 million subscribers.

In 1998, AOL was on to grow even bigger. They acquired Nescape, which had one of the most popular web browsers, for $4.2 billion. By March 1999, Netscape services already rolled over to AOL. In the same year, the company acquired MapQuest in a mega deal of $1.1 billion.

AOL and Time Warner Merger: Why Was This The Largest Merger of the Time?

The year 2000 saw the rise of new broadband technologies that would have seen the decline of AOL. It was at this time that Case decided it was time to go big and merge with Time Warner.  The two companies announced they would merge. According to the deal, shareholders of AOL were to own 55 percent of the AOL Time Warner company . After negotiations, the deal was done in January 2001. This new company was bigger and offered so many services. Running the company was a team of executives from both companies as follows:

Jonathan Miller was appointed the CEO of AOL in 2002. In 2003, AOL Time Warner was rebranded to Time Warner by dropping the name Time Warner. Theirs was the largest merger with the value of the newly formed company standing at $360 billion. The value was good, but it did not last. The value fell drastically all the way to $120 billion. This decline was due to the new valuation that saw AOL as a strictly online business that offered services linked to cable and traditional media business. The new broadband technologies were almost phasing out the company.

The decline was also not long lasting. The company started rising again, and in three months, its value had sharply risen. The year 2001 saw most of AOL competitors go down and even those that remained lost more than 75 percent of their value. These were the companies seen as internet-only. Even with the losses, the AOL was still an internet giant that brick-and-mortar businesses feared would take them down.

To match the new technologies, AOL had to create different and better products. In 2004, the company launched the intuitive AOL 9.0 Optimized. With it, they also developed personalized greetings. These greetings meant that the users would hear their name when they accessed basic services and mails. The greetings were common when users logged in or out of their accounts. This was one of the ways to entice the subscribers to stay.

In 2005, AOL developed yet another great product, Live Broadcast.  The company brought Live 8 Concert online live for all their subscribers and other viewers . After the broadcast, thousands of users were able to access clips of the concert. It was one of the services that made the company popular.

To even bring more features to the users, AOL created a Safety and Security Center. This center was responsible for the development of McAfee Antivirus, proprietary Firewall and phishing prevention software, and the CA anti-spyware.  Before the end of 2005, AOL was so popular with companies such as Google, Yahoo! and Microsoft . Investors forecasted that the three would make AOL a joint venture, but that never happened. In December 2005, it came to light that Google had intentions of purchasing 5 percent of AOL at $1 billion.

What Made AOL Start Declining

There is so much to like about the rise of AOL – the company kept evolving to match the competition. However, the company had its ups and downs and most of these had to do with the upping competition.

In 2006, the company officially shortened the name American Online to just AOL. Time warner was rebranded to AOL LLC. This was a good move as it made the company even more popular. In the same year, the company developed a program dubbed the Active Security Monitor. This system scanned PCs for any security threats and gave the user security suggestions. Usually, the program recommended security software from AOL or Download.com. This program scanned different aspects of the computer to check its overall health.

Later,  the company released the Active Virus Shield, a product of Kaspersky Lab. They offered this program free for all . Anyone with an email address could have the free program for use on their computer.

In October 2006, Carphone Warehouse made the ISP services offered by AOL U.K. more popular. Carphone Warehouse took advantage of their 100,000 LLU customers and that made it the biggest LLU service provider in the U.K.

The number of AOL subscribers had started to drop. In 2006, the case was not different as more subscribers left the company. In August 2006, the company announced that they were giving out email accounts and a few more gifts that only subscribers would access in the past. However, to qualify for the email account and other rewards, people had to access AOL and AOL.com through a third-party transit or non-AOL owned access. They did this to reduce the number of people who used AOL-owned access points and thereafter to reduce the costs of operation. By offering a free email account, AOL was ensuring that their customers did not defect to Yahoo! or Microsoft Hotmail, which were free email account providers. They had many other free services, which included:

After offering all the above free services, AOL sent news to its U.S. customers that they would increase the price of their dial-up access services to $25.90 per month.  The company had plans to move all the users to broadband so that they could access fast services . However, the price later dropped to $9.95 per month.

On November 2006, Randy Falco took over as CEO and on December the same year, the company finally closed its last call center in the U.S. The call centers are now only in the Philippines and India, and they offer support to all subscribers.

On September 2007, the company moved its corporate headquarters from Dulles, Virginia all the way to New York City. They did this in an effort to consolidate their advertising units into one unit they named Platform A. After the consolidation, they acquired a number of advertising agencies such as Advertising.com. This was the start of AOL’s advertising business model. Even as the company ventured in advertising, they still retained their modem banks and access services.

Later in 2007, the company moved its Loudoun County, Virginia offices to New York City. However, operations in the Virginia offices would still continue. At the same time, the company was restructuring, and the CEO, Randy Falco announced that they would be laying off about 2,000 employees from all over the world. The lay-off started immediately. At the end of the process, the company had least 40 percent of its employees.

All those who lost their jobs got a 120-day severance pay.  By November 2007, the number of AOL subscribers went down from more than 35 million to only 10 million . This number placed AOL in stiff competition with Yahoo! and Comcast, which were just behind AOL in numbers. At the time, about 80 percent of the subscribers had shifted to the free platform from the paid subscription.

The year 2008 continued the woes of AOL. The situation worsened and the company was forced to sell Reston Technology Center, one of three data centers in Northern Virginia, to CRG West. On February 2008, Jeff Bekwes, the CEO of Time Warner, announced the plans to split AOL’s advertising and internet access businesses into two with the aim of giving up the internet access division.

On March 2008, AOL acquired Bebo, a social media site, for $850 million in a bid to focus more on advertising. After that, they gave up xDrive, BlueString, and AOL Pictures. Letting go of all these businesses would save on costs and allow the company to venture more in advertising. Other services that were shed were AOL Journal blog-hosting service and AOL Hometown, a web-hosting service for AOL customers.

At this point, AOL had lost so many subscribers, but it was ready to go deeper into advertising.

The Switch to a Digital Media Company

By 2009, AOL was offering more advertising services than they were offering other services.  On March 2009, Tim Armstrong was appointed the new chairman and CEO of AOL . Tim was previously working with Google, and he brought his experience to the table in a bid to revive the company to its former glory.

In the same year on May, Time Warner announced they were leaving AOL to work as an independent company at the end of that fiscal year. On November the same year, AOL unveiled their new brand identity. It was the word “Aol” done on canvas. This new name appeared on all AOL services later on. AOL was now trading as an independent company in the NYSE for the first time since the merger with Time Warner.

In 2010, AOL sold Bebo to Criterion Capital Partners. The company did not disclose how much they sold Bebo, but some news outlets speculate the social networking site was sold for $10 million. Later that year, AIM removed AOL chatroom access, citing reduced patronage.

Armstrong was focused on making AOL regain its past glory. To do that, the company needed to have a new business model. He steered the business towards a digital media business. To make the business great, they started with a host of acquisitions. They acquired Patch Media, which dealt with news in different communities. Later, AOL agreed to acquire TechCrunch in a move meant to enhance its reach online as a digital media company. It also acquired about.me.

On January 2011, AOL acquired goviral, a video network, and in March, they acquired HuffPost.  Arianna Huffington took over as the president and editor-in-chief of AOL HuffPost . The acquisition of HuffPost cost the company $315 million, and this was a big blow, but a well-calculated move. Due to this, the company planned to lay off 900 workers.

September 2011 saw AOL seek help from its competitors, Yahoo! and Microsoft. The three giant companies formed a partnership that would allow them to sell each other’s inventory. If the three came together, they were sure to beat Google and other ad networks. This partnership helped the company reach more customers, but the decline in the number of subscribers was still huge.

In 2012, AOL entered a partnership with PBS to create a digital documentary, MAKERS. The documentary focused on women and their successes in male-dominated industries. It looked at women in fields such as war, politics, business, comedy, and space among others. When it started, it featured prominent women such as Ellen DeGeneres, Oprah Winfrey, Sheryl Sandberg, Martha Stewart, and Hillary Clinton among others.

Later in 2012, AOL acquired Hipster, an app that allows users to share photos. The company never disclosed the deal amount. A month later,  the company announced a plan to sell 800 of their patents to Microsoft with a license to continue using the patents. These patents cost $1.056 billion .

April 2012 saw the company desperate to come up with new ways to make money. They launched online video advertising and offered gross rating point, which means they could guarantee viewership the same as in TV. The launch of gross rating point came just before Digital Content NewFront Event. The event took place for two days and was attended by representatives from Google, Hulu, AOL, Vevo, Yahoo, and Microsoft. All these companies brought forward their video advertising offerings. After the event, AOL launched AOL On. This was a website for all the video output from the company.

In 2013, AOL executives had a reason to smile; the company had seen some growth. When the company gave their fourth quarter revenue report, they had earned $599.5 million, and this was the first news of growth in eight years. But things were not all rosy as the company would face more challenges.

In August 2013, the company announced plans to have Patch Media scale back. After a while, the business laid off more than 500 of its 1,100 employees. A few months later in 2014, AOL spun off Patch Media with Hale Global holding most of the ownership of the media company.

On January 2014, after AOL spun off Patch Media, the company acquired Gravity. The company offered software that tracked the behavior or people online and suggested ads based on what they are interested in. The $83 million deal included the employees and the technology they offered. They also acquired Vidible, a company that helped other companies run video content from different sources on their websites and also helped video publishers sell their content on websites. Vidible costed the company about $50 million.

In July 2014, the company was nominated for an Emmy Award for the series, The Future Starts Here. A few days before, the company had been nominated for Primetime Emmy Award for its show Park Bench with Steve Buscemi. They won this award.

The 2015 Acquisition by Verizon

AOL works as a division of Verizon and has been since 2015.  Verizon acquired the company at $50 per share, which amounted to about $4.4 billion . According to Tim Armstrong, who was still the CEO of AOL, the company had made a great step in preparation for the next five or more years. Armstrong noted that the next five years will see the rise of global scale networks and that they are happy to be under Verizon.

According to Analyst David Bank, the deal would help Verizon market its products more and enhance its ability to produce videos, but it might not add to its bottomline. Verizon would benefit from HuffPost, Engadget, and TechCrunch as it would expand its video production ability.

At the time of the acquisition, AOL only had two million dial-up customers. After the acquisition, the stock price of AOL rose by 17 percent while that of the Verizon dropped a little. After the acquisition, AOL launched One by AOL, a digital program geared towards client management. Later, they expanded the One by AOL to connect creative and media agencies and enhance the performance of the ad distribution networks.

In the first quarter of 2015, the company had made so much progress. They announced the revenue to be $625.1 million. About $483.5 million of the revenue came from advertising. With such growth, the company was about to venture more into ads.  The Platforms division of AOL had a high growth rate of 21 percent increase in revenue .

On June 2015, AOL entered a partnership with Microsoft where AOL was to take over the digital advertising division of Microsoft. Under the deal, AOL was to take the businesses together with the more than 1,200 employees. They were to oversee the same of videos, display, and ads on several Microsoft platforms. The deal also included all AOL Properties to replace Google Search with Bing, which would sell Microsoft’s ads. These two deals would involve sharing of revenue from affiliate marketing.

It was like AOL was on a path to its former glory. On July 2015, the company was nominated for two Emmy Awards. One for the documentary MAKERS and another for True Trans With Laura Jane Grace. The documentary True Trans With Laura Jane Grace was the story of Laura Jane Grace, a transgender and the lead singer of the rock band, Against Me! Laura decided to come out publicly as a transgender, and this documentary was about her experience.

AOL acquired Millennial Media in September 2015 – a deal they completed on October 23, 2015. The deal cost the company $238 million.

The growth of AOL continued when Go90, an ad-supported mobile video service, launched its content after spending months in beta testing. The launch was seen on HuffPost, Univision News, Comedy Central, MTV, Vice, and ESPN. Further, the company expanded its One by AOL by adding the Publishers division. This new platform within the One platform was aimed at consolidating various publishing technologies. With One by AOL: Publishers, the company was able to customize video players and offer a better ad experience. The creation of One by AOL: Publishers came at the time when AOL acquired Aleph, a publisher analytics company based in Paris.

In 2016, AOL continued with acquisitions and growth. The company acquired RYOT, a virtual reality studio, in a bid offer 360-degree videos and virtual reality content for HuffPost videos. Later, Verizon acquired the internet businesses of Yahoo and merged that with AOL to create a company known as Oath Inc. The company Oath Inc. was later renamed to Verizon Media in 2019. In 2020, Verizon Media sold The Huffington Post to BuzzFeed.

What Does AOL Offer Today?

Although the glory of AOL is yet to go back where it was, the company is adapting into the digital space as a digital media company. For a company that was once valued at more than $350 billion, there is a long journey ahead to reclaiming the spot.  Today, the company has a team of contributors who make up more than 20,000 bloggers . There are contributors in almost every topic imaginable.

The company not only offers mobile-optimized content, but also creates applications for mobile devices for its properties such as TechCrunch, AutoBlog, and Engadget. It also has apps for products such as Pip, Alto, and Vivv.

AOL Memberships

While AOL is now big on advertising, they still offer other digital services and products to its customers. These include communication tools, digital subscription packages, and mobile apps among others. Some of the services that the company offers include:

AOL Mail

Aol Mail is an email service that allows you to create a free email account. The service has been in use since 1993 when American Online and Delphi uploaded their email services online.  By 1997, Aol mail had the highest number of email subscribers at 9 million users . The same year, the company launched NetMail, which was the web-based version email service. At first NetMail only worked on Microsoft’s Internet Explorer, but later other versions came up.

Some of the features of the AOL Mail 295 include:

You can choose from so many domains including @aol.com, @ygm.com (you’ve got mail domain), @love.com, @wow.com, and @games.com. The company deactivates mails that stay inactive for more than 90 days and any emails that come to the account will send back a failed delivery note. If your account is still not active, the company deletes it.

AOL Mail Login

AOL Mail 295 is easy to log into. Open www.aol.com and you will see the login button on the right top corner of the homepage. Click the button and enter your login credentials. Click next and enter your password and then click login. The process will take you to your mailbox. You can, however, login with your Facebook account, Yahoo, or Google account.

AOL Instant Messenger

AOL Instant Messenger, AIM, was one of the instant messaging services that attracted a high number of users. It was the go-to service between 1990 and 2000, but the rise of Facebook and Twitter saw it decline in popularity. In the 2010s, the popularity of the service was already masked by the giant Facebook and Twitter social networks.  After Verizon acquired AOL, AIM did not have any space, and it was discontinued in 2017 .

During its active days, AIM was well developed and available for all subscribers. It has features such as an iPhone application, iPad application, AIM to mobile, real time messaging, AIM for Mac, AIM Pages, and AIM Express.

One of the things that led to the decline and fall of AIM was security. The service scored one out of seven security tests. It got a point for encryption during messaging, but it lost when it comes to encrypting communications. They lacked end-to-end encryption and users could not verify contacts. However, this was not the worst service in terms of service as other IM services such as Skype, Viber, and Yahoo! Messenger also scored one out of seven points on security.

AOL News and Entertainment

Today, AOL is more in to advertising. The company has so many media outlets where they entertain and offer news alongside their adverts. They have ads on mobile, desktop, and TV. They offer brand integration and sponsorships where its in-house content creators come up with content for the brands to market.

Partner Studio by AOL is the content arm of the company. Their ad technology stack, One by AOL, allows the creation of entertainment and ad content.

To make AOL News and Entertainment division successful, AOL has acquired a number of businesses, including AdapTV in 2013. They also acquired Precision Demand, Converto, and Vidible in 2014. Their technology package/platform, One by AOL, is in two divisions. The first of One by AOL: Advertisers and the second is One by AOL: Publishers. Each of these two platforms has a host of sub-platforms to make advertisement easy.

In 2018, the Oath Ad Platforms was created. This platform was a result of the consolidation of One by AOL, Yahoo BrightRoll, and Yahoo Gemini to create a single ad platform.

AOL Search

AOL Search is an advanced search engine, which is part of AOL advertising network. The search has a host of features that enable it to compete with Google and Bing. Although AOL only takes less than 1 percent of the global advertising market, they still have so many products, and they are scaling up.

As an advertising company, the search engine gives sponsored links on the top of the page. These ads are related to what users search. There are also featured results, which are results from AOL’s network or blogs and online content. For instance, if you search for information available on TechCrunch, it will appear first.

The search engine also gives search suggestions. When a user enters a few letters, a drop down menu appears to suggest some keywords. Further, there are related searches, which help a user explore further. This shows terms that are similar to what a user searched.

There is also a search history feature from where users can access information they had previously searched. This comes in handy when someone wants to compare different items and sites.

AOL Desktop

This is an online suite developed in 2007 by AOL. The suite has an instant messenger, media player, and a web browser client. The features of AOL Desktop 10.x are for people who need to browse the web and access their email. Users do not need AOL membership to access the web browser. Again, it becomes easier to access AOL Mail when one uses the AOL Desktop.

Although AOL still offers online services today, the company has morphed into an advertising company. To offer ads in a way that customers will love, the company offers news and entertainment on mobile, desktop, and TV among other avenues.  The old and popular American Online has faced stiff competition that almost took it out of business . However, the business has stood the test of time and is still competing for market share.

The company has faced lawsuits on its slow billing and failure to cancel accounts on time, but it has trumped everything to still be standing today. The old AOL is gone and the new one is now focused on marketing.