Wow, this is huge news: AOL has decided to offer its proprietary software and aol.com email addresses for free. This means that canceling members can now keep everything they like about AOL except for Internet connectivity. Free.
It is impossible to overstate how huge an organizational and cultural change this is for AOL. For years beyond the point it made sense, AOL pursued a "walled garden" strategy where *every* AOL feature (email, news, music, etc) was accessible only for paying members. As the Internet evolved, these features became available for free elsewhere on the Internet, and often they were better (e.g. Gmail, Yahoo Mail). Hanging on to the walled garden strategy kept many members longer, but it virtually ensured that when those members did cancel they would abandon AOL forever. Over the long run it was a losing strategy that guaranteed AOL's demise before the decade is out.
Organizationally, everything at AOL was geared towards keeping members in the garden. Whenever I would suggest that we offer these features for free, I would see eyes flash and tempers flare: "Heretic! Burn him!! Burn!!!!" I'm joking, but this isn't far from the truth. AOL's decision is like the Catholic Church acknowledging that the Earth revolves around the Sun and not the other way around. It's been obvious to the rest of us for a long time, but for them it's a huge, huge, huge deal.
For those of you who don't know, I spent the last two years working on AOL's web strategy, AOL.com. Before that I spent four years at Yahoo working on Mail and Messenger. For my AOL friends reading this blog: "Kudos! This new strategy means you can take the gloves off and really compete." For my Yahoo friends: "Dismiss AOL at your peril."
This move means that top Time Warner management has woken up and smells the coffee. For all its faults, AOL has a better understanding of how everyday consumers interact with technology than pretty much anyone else out there.
I'll be rooting for both companies from the sidelines, but I gotta admit that I historically favor the underdog ;-).