AOL Maps Out Recovery Plan

05 December 2002

More about America Online’s conference with over five hundred investors, analysts and reporters Tuesday in Manhattan.

In addition to presenting the financial outlook [WAMN: 04-Dec-02], AOL’s new chairman-ceo Jonathan Miller told an expectant but increasingly skeptical audience of the online giant’s plan to return to revenue growth.

AOLs current advertising model doesn't work, Miller confessed. However, he assured listeners that the company is “getting back to basics” with traditional advertisers and trying to repair relationships with marketers and agencies. He failed to spell out what this tried and tested vaguery actually means; while details as to how it would be achieved were in short supply. In addition, AOL will start to charge for search functions, while Yellow Pages, classifieds, local guides and other paid listing services will be introduced to boost ad revenue.

Miller is pinning his hopes for fiscal salvation on broadband. But rather than depend its own high-speed access capabilities, AOL will next year promote coast-to-coast a Bring Your Own Access concept, inviting AOL subscribers to harness other suppliers’ high-speed services (for example, Earthlink) to connect with AOL broadband programming. AOL will charge $14.95 a month for the BYOA service.

AOL’s eggs will not all be in the broadband basket, however. Narrowband dial-up access will continue to be a buttress of its services and revenues. “We don't pretend to have all the answers. But I am confident that narrowband is not going away,” Miller assured. The $23.90-monthly service will continue to account for the bulk of AOL profit margins

AOL is to cooperate with its AOL Time Warner siblings to develop original programming for the premium paid-content service. Miller compared this to a cable TV model: tiered packages of exclusive paid content in areas including gaming, youth, personal financial, music and shopping.

The audience was largely unimpressed with the detail – or lack of it. Opined Merrill Lynch analyst Jessica Reif Cohen: “It’s clear that the US online business is increasingly moving to broadband but long-term growth rate is the big unanswered question.” This, she noted, was something Miller failed to address.

Data sourced from:; additional content by WARC staff