American online Case

Hand-in case: America Online. INC. (AOL)

AOL was a leader in the development of a new mass medium that encompassed online services, the Internet, multimedia, and other interactive technologies. AOL principal revenue is coming from consumers through membership fees, as well as from content providers and merchandise sales and other transactions. In contrast, the biggest expenditure for AOL was the cost of attracting new subscribers. There were big three companies as oligopoly structure technology market, which are AOL and its main competitors, CompuServe and Prodigy.

Question 1

AOL was so successful in commercial online industry relative to its competitors prior 1995 was because their strategy.

The major focus for AOL is customer acquisition and retention. The cooperating companies bundled AOL software with their computer products, facilitating easy trial use by their customers, and customer can easily gain access to AOL’s online service. In addition, during 1995 AOL’s alliances grew to include American express, ABC, Reuters and so on, also two special-interest sites were offered on America online to keep customers online and running up metered time and revenues. The other reason why AOL was more successful is because its rate structure was the easiest for consumers to understand and anticipate compared to its competitors who required additional fees for premium services.

Question 2

As of 1995, with the advent of the Internet World Wide Web and the entrance of Microsoft Network, content providers now had alternative distribution channels that offered greater control over their products and potentially higher revenues.

In contrast to big three, Microsoft played a very limited and passive role in determine content and fees charged for that content. With the migration of proprietary services and content to websites, the unique offerings of AOL were declining. However the online services were still better for interactive communications with full-fledged message boards and live chat. Therefore, the future prospect for AOL could be Internet access