AOL’s dirty little business plan: Dial-up for dollars

Happy days are here again at AOL, which just reported its first quarter of revenue growth in eight years. To put that into perspective, the last time AOL made money, George W. Bush had just been reelected, Facebook had just launched, Google was still considered a search company, YouTube didn’t exist, and Lindsay Lohan had yet to enter rehab.

As Business Insider’s Henry Blodget points out, though, a huge chunk of AOL’s revenue came from — you guessed it — dial-up subscribers. Last year, those monthly fees accounted for more than $700 million of AOL’s $2.2 billion of revenue.

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AOL subscriptions actually declined 10 percent from last year, due most likely to natural causes. Still, as Boy Genius Report’s Brad Reed so eloquently puts it, some 3 million souls are still trapped in AOL dial-up hell, paying out up to $27.99 a month for the privilege of hearing voice actor Elwood Edwards cry out, “You’ve got mail!”

A January 2011 New Yorker profile of AOL jefe Tim Armstrong reveals the company’s “dirty little secret”: According to a former AOL executive, some 75 percent of those aging AOL subscribers already get Internet access from DSL or cable and don’t realize they no longer need to pony up every month to keep their @aol.com email address alive.

Hear that loud screeching noise in the background? That’s the sound of 3 million 56k modems crying out for justice.

The biggest part of AOL’s income stream is of course advertising; AOL owns the fourth-largest ad network on the Net, according to ComScore, followed by its “brand group” properties, such as Huffington Post, TechCrunch, Engadget, and supermodel Heidi Klum, among others. (Did you know Heidi Klum was owned by AOL? That’s so depressing. No wonder Seal dumped her.)

But nothing is as profitable as AOL dial-up. All told, Huffpo, TechCrunch, et al. brought in a measly $9 million in profit in Q4 2012, down from $13 million the year before. Dial-up profit over the same period: $159 million.

See? Turns out that ripping off octogenarians is a viable business model after all. AOL should capitalize on this while it still can. I mean, these people aren’t going to live forever. Their pensions will run out eventually. Then what will AOL use to prop up its quarterly numbers?

I say squeeze them dry now while there’s some juice left. Think of the promotional campaigns AOL could cook up. Like an exchange program: For every six “Free AOL” CDs a subscriber turns in, they get a new set of teeth.

AOL can hire Wilford Brimley as spokesperson. Or Betty White — she’s still smokin’ hot for a 91-year-old. They can do joint marketing with AARP and Geritol. Buy a year’s subscription at once, and get a free “I’ve fallen and I can’t get up” medical alert bracelet. Buy five years, and get a six-month supply of Viagra and the number of a cardiologist on call 24/7.

Of course, I am stereotyping a bit. It’s not just clueless old people who still subscribe to AOL dial-up. There are also hillbillies and the mentally ill. Some parts of the country only recently got phone service, you know. (I know these things because I watch “Justified“). As anyone who’s ever read the comments section of any popular site can tell you, the Web does not lack for crazy people. They must be getting online somehow. That many of them turn out to be AOL subscribers would be not at all surprising.

Don’t get me wrong. I’m happy for AOL. It’s actually hired more journalists over the last few years than any other media company I can think of. Large chunks of that $28-a-month fee are going to my brothers and sisters in arms, so to speak. If AOL diehards have to eat cat food a few days a month to make their Social Security checks last, that’s a small price to pay.

I’m also happy I still have AOL to kick around for a few more years. For a snarky blogger they are the gift that keeps on giving, even at 56 kilobits per second.

Do you know anyone who uses still uses AOL dial-up? Share your tales below or email me: cringe@infoworld.com.

This article, “AOL’s dirty little business plan: Dial-up for dollars,” was originally published at InfoWorld.com. Follow the crazy twists and turns of the tech industry with Robert X. Cringely’s Notes from the Field blog, and subscribe to Cringely’s Notes from the Underground newsletter.