There Really Isn't a Pony in There. Really.
News that AOL was No. 3 in the access business in the U.S. was a little bittersweet for any longtime watcher of the online service. At 12 million customers, it sits behind AT&T (12.9 million) and Comcast (12.1 million) and is bleeding subscribers from its once-mighty dial-up business, who are not shifting over in the same numbers to its high-speed offerings.
When I saw the numbers, part of its parent Time Warner’s first-quarter earnings announced Wednesday, it was hard not to remember the days when former AOL execs like Steve Case and Bob Pittman crowed constantly about the subscriber growth at AOL and repeated ad nauseam the most annoying but effective mantra: “So Easy to Use, No Wonder It’s No. 1!”
Somehow, “It’s No. 3!” just does not sound the same.
And who can forget the ubiquitous AOL disks that blanketed the world (even showing up in orders of flash-frozen Omaha Steaks), which was the single boldest and, well, nuttiest marketing scheme in Web history.
Now, I know AOL has been strategically shifting its business away from the access market to the ad-supported model for its various offerings, like email, services and content, that it started giving away for free and has added millions of free subscribers (many of whom used to pay).
And the quarterly results showed its strategy has been a good move (and all credit for that should go to former AOL head Jonathan Miller, who was shabbily forced out of AOL last year after working hard to improve the service under difficult and stressful pressures from Time Warner’s top brass). Ad revenue rose an impressive 40 percent from the previous year, even though overall revenue fell from the loss of the access fees that once paid for all those private executive planes in the old AOL.
AOL head Randy Falco was already touting AOL’s new resurgence a few weeks ago when the former NBC exec hosted major advertisers at the gleaming Time Warner Center in NYC to show off new interactive programming and features in an event he called a “coming-out party.” It was heavy on content and flashy tie-ins with television shows and movies, such as a renewed deal with reality-show kingpin Mark Burnett. From all signs, such fare will be heavier still in the year ahead, with an overdose of razzle-dazzle marketing noise.
I can’t say I don’t kind of like the ideas. Burnett’s combo trivia/treasure-hunt game, “Gold Rush,” was fun, and “Ye Olde Shrek the Third Royal Tournament” (games based on the new movies) will probably keep the kids happy. And, on a pure hokey scale, another show based on checking the serial numbers on your cash to win a million dollars (“Million Dollar Bill”) and one that lets users pick and control a real-life group of “Gilligan’s Island” contestants (“iLand”) scores off the charts.
This butts-in-the-seats approach is no surprise from Falco, whose career is steeped with television experience that focuses on churning out the hits and big audiences for content. And yet, while its ad-sales team, under longtime AOLer Michael Kelly (how he hung on from the past regime makes him my first choice for “iLand”), deserves kudos, one wonders how AOL can keep those hits coming. First, there is a lot out there on the Net to see, and it is ever easier to find it.
And, more important, it is hard to create a true and lasting Internet hit, rather than just a series of what are probably expensive traffic spikes. It is no coincidence that there has never really been one.
Falco might ask Vice Chairman Ted Leonsis, another lifer within AOL and really its old heart and soul. Over the course of his long and colorful career, he has tried mightily to make a Net entertainment hit–he even made a very early deal with the late, legendary NBC programmer Brandon Tartikoff–and encountered a lot of near-misses and flat-out failures more than successes. Not that the ebullient Leonsis was ever defeated by this, and I think is still at it.
AOL has managed to garner one great hit, TMZ.com, the now-popular gossip site–thanks to the troubled hijinks of Britney Spears, Alec Baldwin, Lindsay Lohan and Mel Gibson–that it launched with Telepictures Productions in late 2005 (and credit for that goes to another ex-AOLer, Jim Bankoff, who was also badly treated).
I chronicled a lot of these dashed and pricey efforts to create big entertainment offerings in two books I wrote about AOL in the 1990s, called “aol.com” (about the rise of AOL) and “There Must Be a Pony in Here Somewhere” (about the fall of the company after its ill-fated merger with Time Warner; cover shamelessly pictured here).
The latter title was from a story about a boy digging in a giant pile of manure, and that was his response when asked why, which was also an internal AOL mantra during the company’s many ups and downs. And today, it could also be what current execs might use to explain their quest to create a Web hit.
The fact of the matter is that the true hits of AOL have always been its easy-to-use services, such as AIM, email and Buddy Lists. I am hearing a lot from folks in these areas that Falco’s concentration on hit-making is troubling and takes focus away from AOL’s core strengths of making the Internet navigable and simple for the vast majority of users.
I would agree. And more on this disgruntlement inside AOL very soon.