Ten Tech Blunders: Whoops, We Stepped in It!: Page 3

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3) AOL Group Madness

The Blunder:

In an act of societal mass delusion, more than 30 million people sign up for America Online. Historians will always wonder why.

What happened:

America Online took an ingenious approach: in an age before the general public understood the Internet, the ISP moved hyper-aggressively to build a customer base. Morphing from a popular BBS to a major Net onramp in 1989, AOL was there when couch potatoes realized they could stare at the Internet instead of the television.

The strange thing was, for years AOL was an ISP that didn’t allow access to the Internet. Until 1995, AOL users paid substantial dial-up fees (higher than those charged by many other ISPs) to stay corralled in AOL’s closed universe. Instead of surfing the Net, users had to be content browsing through AOL’s homogenized, sanitized offerings.

Yet the public flocked to AOL (full disclosure: I was one of the lemmings). Nothing could keep them away. Not all those busy signals when the system was overloaded, not the dubious customer service, not AOL’s clunky, slow software.

Fully explaining this mass hypnosis is hard to do. The most likely reason: that warmly robotic voice chiming “You’ve Got Mail!,” which made you feel as if someone, somewhere, wanted to communicate with you.

The lemmings, uh, I mean users, kept signing up. At one point, AOL claimed a remarkable 34 million subscribers. It strode the Net like a colossus, attracting the attention of Time Warner in a merger that was itself one of the great business blunders.

Over time, the hallucination wore off. Users realized that they didn’t need AOL to hold their hand as they explored the Web. The subscriber based started falling, but AOL tried desperately to hang on. In 2005, the company paid a $1.25 million fine to the state of New York after getting copious complaints about the difficulty of canceling.

Then came the humiliating incident with a user named Vincent Ferrari, who recorded his painful attempt to cancel AOL, which became an Internet hit.

Now, with a report showing its user base shriveled to 13.2 million, AOL is a free service, attempting to make a buck from ad revenue. Oh, how the mighty do fall.

Moral of the Story:

All that glitters isn’t gold. And an ISP that has to be pressured into allowing its customers onto the Internet probably won't thrive long term.

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