What I would do with

What I would do with AOL
: Well, they are looking for a new president.

The old Pittman strategy was to keep charging customers more and more for cable, the Internet, high-speed, content, services, music, movies, anything that AOL Time Warner owned and that AOL could send over a wire. I heard him add all this up during one of those industry-time-waster convention keynotes and it didn’t take long before he was heading north of $100 and well into the low-three-figures a month. PowerPoint fiction. Fat chance.

The truth is that AOL is under tremendous competitive pressure from cable Internet access providers who give you access to the Internet and speed, which is all that most people want. At the same time, AOL has not given its customers anything new and innovative in its product in how long? And the company is renowned for horrendous customer service. Meanwhile, advertising is flaccid for everybody but especially for AOL, since it did not perform well too many times. And as AOL grows and as it loses customers (“churn” is the euphemism), it only finds that new and replacement customers are harder — and more expensive — to attract.

What to do?

Well here’s what not to do: AOL does not want to find itself primarily in the access business. Access is a commodity. And AOL does not want to find itself primarily in the advertising-supported content business; that’s tough rowing.

But AOL stands in a unique position online to have a billing relationship with more consumers than anyone else. That means that AOL is in the best position to sell people content — whether that’s content from its alleged (read: fictional) synergy in Time Warner or just content from producers who want to sell it.

AOL also stands in a strong position to be able to target advertising to consumers because it knows more about those consumers thanks to that billing relationship (with all due caution about privacy).

So here’s what to do:

1. Add irresistable improvements to its core killer aps. Microsoft now has a better instant messenger product than AOL and, yes, AOL can lose that market (just as it lost the browser war). AOL should invent the best email around (many of us started on its email and abandoned it). Care about your customers; give them new value; innovate still.

2. Make it a strategic goal to develop a billing relationship with as many people as possible. This means you don’t just sell the all-in-one AOL subscription. You sell deluxe email. You sell music, whether or not you subscribe to AOL. You sell others’ premium content. You sell subscriptions not only to Time Inc. magazines but to any magazines. You sell anything you can sell.

3. Develop friendly relations with content producers, especially outside the synergy fence, and sell their content and products.

4. Develop targeted advertising that actually performs for advertisers but don’t count on that soley.

5. Account honestly.

I was against the AOL/Time-Warner merger from the first. With AOL, Time Warner was doing nothing but buying — well, being bought by — the online strategy it was incapable of building itself. That’s the way Time Inc. has acted for years. When I was there, they got scared that Chris Whittle’s waiting-room-magazine company was going to kill their waiting-room audience and so they invested many millions in Whittle — and soon kissed that money good-bye. Then they needed an aggressive entertainment strategy and they offered themselves up to be were bought by Warner; I was there then (launching Entertainment Weekly) and I can attest that they never learned how to spell synergy. Then they failed frequently at finding an online future (remember Pathfinder?) and so they let themselves be eaten by AOL. Anybody could see that AOL was a bubble waiting to be pricked, anybody but Time Warner.

But they’re stuck with AOL now and they need to make the best of this.

So do what Ken Layne suggests, below, and then bring in a new guard with a new strategy.

I want to see this because (1) I still own damned, f’ing, cursed AOL stock (yes, I’m an idiot), (2) because AOL does have a huge number of customers it brings online and I want them to stay online, (3) because AOL can help sell content and I’m a content guy, and (4) because somebody should compete with Microsoft.

What he said
: Ken Layne says: :