Philonoist.net

No, this isn’t about the problems a now ex-AOL subscriber had in cancelling his account, or the ensuing mini-chaos in the media. But that incident may be helping AOL execs what most of us have long known: AOL dial-up service is a pretty ugly thing. The New York Times is reporting today (registration required, those bitches.) that AOL Chief Exec Jonathan Miller will introduce a plan to the Time Warner board to halt marketing for the AOL dial-up service and devote more – essentially all – resources to the free AOL.com web content. It’s a risky idea, of course, since subscribers pay in a very hefty portion to AOL (and parent company Time Warner) coffers.

But it may be a smart move in the long run. Fewer consumers are choosing or sticking with their dial-up accounts and moving to broadband access. There’s little for AOL in that market, since they can’t provide the bandwidth people need (having no access themselves to cable or DSL entry points, like phone or cable companies. Former AOL bigwig Steve Case kinda messed them up there.) Alternatively, AOL finds itself competing with Google and Yahoo! for ad revenues. Unfortunately for AOL, there’s no hybrid version. And AOL’s biggest problem in moving to a free-web/advertising revenue base is so many people have been turned off (no pun intended) to AOL in the past. There’s a tremendous amount of branding in the current web business model. People inherently support one company over another when they select a default search engine. Nobody really goes to Yahoo when they can’t find what they want with a Google search query: People simply edit their search terms and try again on Google.

Of course, AOL would suffer another problem: losing the built-in page views. This is how MSN and Yahoo! get so many hits: People don’t change their default home page when they purchase a new computer. Simply put, very few non-AOL subscribers have AOL.com as their homepage. If AOL loses subscribers, it also loses people who view their pages.

Bad move, short term. But the CEO realizes this. The only problem is: how good of of a move will it be in the long term?

Technorati Tags: Business, AOL, dial-up