Internet zombie that will never die

America Online is still alive – but in a very different way

An AOL CD from 2003. Ryan Finney, CC BY-SA 2.0, via Flickr

aamerica Online, also known as AOL, was at one time the powerhouse of the internet and later, a giant media company. But in the fast-moving world of technology, yesterday’s winner is today’s loser. While AOL eventually lost its luster, it still exists, even if it’s a much different company. Here is the story of how this mighty player jumped to the stars and then descended to Earth.

Ten years before the Internet was available to the public, a company called Control Video Corporation created GameLine to connect the Atari 2600 over a regular phone line, making it possible to rent games for $1 each. The company quickly failed but reinvented itself as a mobile data technology provider Quantum Computer Services, which launched “Q-Link”, an online gaming service in 1985. Apple Link.

Steve Case, who has been with the company since the days of Control Video, is credited with renaming Quantum Computer Services in 1991 to America Online with the goal of capitalizing on the emerging Internet. By 1992, America Online was publicly available and was on its way to building an online membership service with countless CDs sent home by mail and included in magazines.

America Online logo. America Online, Inc. , Public Domain, via Wikimedia Commons

America Online is a consumer-friendly service that features dial-up internet. Perhaps the horrible sound of a phone call to the Internet is an unfortunate memory of those early days. However, the company attracted one million users by 1995 and swelled to five million users just one year later, when AOL switched from paying by the hour to a flat monthly fee. AOL wasn’t just an access point to the internet, it was providing email, games, news, sports and more, so it really was its own complete online portal. The service even promoted the phrase “You have mail.”

Feeling indomitable, Case was nothing if not aggressive: In 1998, AOL bought business-oriented CompuServe and in 1999, AOL acquired Netscape, the company that created the first commercial web browser, Netscape Navigator. By 2000, AOL was the largest Internet service in the United States, valued at about $125 billion.

Dot-com companies were flying high at the dawn of the new century and the explosive growth of AOL caught the attention of the media. It also caught the attention of media giant Time Warner. In 2001, AOL and Time Warner merged to form AOL Time Warner. The deal was valued at a staggering $350 billion, a merger of unparalleled size to this day.

On the surface, the merger made sense: AOL and Time Warner could provide each other with access to millions of families, while AOL’s online expertise would lose Time Warner’s media holdings, including TIME magazine as well as film and television operations.

The marriage turned out to be nothing short of a complete disaster. Wisely, Steve Case left in 2002. The merger was an epic culture clash between two organizations as different as Night and Day. At the same time, broadband was transforming the internet access business. The company’s technology couldn’t keep up and its stock price was battered as the dotcom bubble was bursting exponentially. Prior to the merger, AOL had thirty million subscribers; which had fallen to ten million by 2007. AOL and Time Warner soon agreed to split.

AOL Silicon Valley office. Coolcaesar at English Wikipedia, CC BY-SA 3.0, via Commons Wikimedia

AOL officially broke off from Time Warner in 2009, and was still a $5 billion company. After making a series of management changes, the company attempted to grow via acquisition. Over the next few years, AOL bought several companies, including Patch Media, TechCrunch, and The Huffington Post. Some acquisitions turned out to be better than others, but AOL kept going. Remarkably, he retained even a few million dial-up subscribers.

In May 2015, telecommunications company Verizon agreed to buy AOL for approximately $4.4 billion. Tim Armstrong, AOL Chairman and CEO at the time, said in a statement from Verizon:

Verizon is a leader in mobile and OTT [over-the-top] Connected platforms, combining Verizon and AOL to create a unique, scalable mobile and OTT media platform for content creators, consumers, and advertisers. Verizon and AOL insights are shared; The companies have successful partnerships today, and we’re excited to be working with the team at Verizon to create the next generation of media through mobile and video.”

In May 2021, just six years later, Verizon decided to sell its media group, which included AOL and Yahoo! (acquired by Verizon in 2017 for $4.5 billion), to Apollo Global Management, a private equity firm. The selling price was $5 billion, just over half of what Verizon paid for AOL and Yahoo! sum. Verizon received $4.25 billion in cash and retained a 10 percent stake in the company.

Now, AOL is a brand that flies under the Yahoo! is a cluttered, jumbled page. The company offers three monthly subscription “plans” — ID Protection by AOL, Data Secure by AOL, and Complete by AOL — and lists other AOL products, such as AOL Mail, AOL Desktop Gold, and the AOL app for Android. Remarkably, AOL still offers the original dial-up internet service – but you have to call 800 to order it.

In previous years, America Online experienced rapid rise and became the largest internet provider in America. Today, AOL appears to be a shadow of what it used to be. It’s just a section of Yahoo! Another internet zombie.

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