AOL Inflated Subscriber Numbers

from the sneaky-sneaky-sneaky dept

Recognizing the business culture at AOL, this probably doesn't come as much of a surprise, but reports are coming out suggesting that they really inflated their subscriber numbers. During the boom years, they liked to release reports at ever-decreasing intervals about the next million subscribers. However, to meet those numbers, they apparently sold subscriptions off to partner companies at extraordinarily deep discounts. In other words, about a million subscribers (the article says 830,000) really never paid AOL very much money at all. This revelation is causing AOL's stock to take a beating, since people think it shows their subscriber base isn't as strong as they thought. However, with the recent news that AOL has lost 846,000 subscribers in the last quarter, I wonder if you couldn't come to the opposite conclusion. If the people who are leaving now are simply the people who never really contributed to AOL's bottom line - then those remaining are a much stronger (higher margin) set of subscribers. Of course, that makes the huge (probably not true) assumption that the folks leaving are only those who got the super discount deal.

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