AOL — what a long, strange trip

America Online — what a long, strange trip it’s been. One of the first to make the jump from the old bulletin board days to the new visual Web, back when Netscape was just a toy that Mark Andreesen came up with at university, America Online was like the Google of its time. Sure, it was annoying, and it blanketed the globe in free signup disks, but for many people just getting used to the Internet it was friendly and safe; the “You’ve got mail!” tagline became so famous it became a movie. Then AOL hit the peak — it effectively acquired one of the largest media companies in the world for hundreds of billions of dollars.

Since then, it’s been pretty much downhill all the way. The bubble burst within minutes of the Time Warner deal being signed, the market value of the two companies disappeared like a ghost in the night, and TW has spent the past few years trying desperately to figure out what the hell to do with AOL — as millions of people have deserted the once mighty service. According to the latest figures, more than 15 million people have signed off and never signed on again since 2001 (although AOL still has 18 million left). The company has taken down much of the “walled garden” approach that it became famous for, but it hasn’t helped all that much.

Now there are reports that Time Warner is considering radical surgery: namely, making all (or virtually all) of the service’s content free, with the hope that increased traffic and advertising-related strategies will compensate for the loss of revenue. But will it? That’s a multibillion-dollar question. According to one estimate, TW could be giving up in the range of $2-billion in revenue by going free. Can it make enough deals that bring in new dollars to fill that hole? Maybe the real question is whether the company has any real choice.

The only other option is to spin the thing off and hope someone else wants it (at one point, there was talk that founder Steve Case might), or watch it continue to shrink until someone puts a bullet in its head. More coverage in the Washington Post and Fortune magazine, which notes that there is already a company pursuing the strategy AOL has in mind — it’s called Yahoo.

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