AOL AND THE MONEY

A couple days ago, Joy found out her sister has been paying $40 a month for AOL’s dial-up service. What a rip-off. She already has a high-speed Internet connection, and has had it for 15 years. Yet the charges went on and on. And this is just the tip of the payout iceberg. According to the latest AOL quarterly report, payments for dial-up services accounted for 70 percent of AOL’s profit.

This is truly amazing, because only a handful of those connected to the Internet still use dial-up. The happy news for AOL is that people keep paying for this service even when they stop using it. Joy’s sister, for example, thought she’d be disconnected if she didn’t keep paying. ¬†She also assumed she would no longer get email. But AOL mail has been free since 2006.

Now she’s so mad, she’s switching to Yahoo.

This is reminiscent of other companies that became prisoners of their profit centers: Hewlett Packard reached the point a few years ago when all of their profit came from selling printer ink. Instead of a high tech company, they became an ink company. Kodak invented the digital camera but wouldn’t turn that way because film was where they made their money. They lost focus.

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