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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Comments on “AOL Inflated Subscriber Numbers”

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1 Comment
Oliver Wendell Jones (profile) says:

What about 'free' subscribers?

I’ve got a friend, who even though he’s knowledgable and well educated, uses AOL because he gets it for free. AOL ran a deal several years back where you could get a credit card with an AOL logo on it, and as long as you use it once per month for a purchase of any type you get free AOL for that month.

He hasn’t paid for internet access in something like 5 years, and he’s a cheapskate, so he’s not buying much on that card, so they’re not making up the money in interest or late fees, either.

Can’t imagine that they’re bragging about the accounts like that to their stock holders…

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