I don't think it's that amazing, actually, because inertia is a very powerful force. Maybe more powerful than compounding interest. And the kind of people who still use AOL for anything at all are probably not aware that they can use virtually all of it for free. These same people either see the $10-25 monthly fee and assume they still need to pay it; or they don't even notice it on their credit card bill anymore. Because they don't even review their credit card bill, except to see if the total feels about right.
Frommer cites AOL's citation of a "price rationalization program" that has helped AOL maintain a surprisingly high number of subscribers. I will translate this programn into plain English:
For the past few years, people have begun to realize that the only thing they use AOL for is checking a very, very old e-mail address that probably involves some embarrassing and antiquated handle to the left of the "@" symbol (and, let's face it, a fairly embarrassing domain name to the right of the "@" symbol), and that they can continue to access this old address for free.
We needed a way to rationalize increasing the prices we charge to the dwindling number of people who do not yet realize this.
We considered rolling AOL dial-up service into the monthly phone rental fee these people are probably still paying to Ol' Ma Bell, but we ran into legal and licensing roadblocks on that. So instead, we just licensed a bunch of crappy services at bargain-basement prices (it's amazing how cheap Lifelock is when you're buying 3,000,000 licenses!) and we'll keep nudging our prices up.
Problem solved: prices rationalized!The metric I'd really like to see is the number of actual dial-in connections that AOL serves in any given month, and the number of unique users who actually use the service. I would be shocked if more than 1% of their paid users have dialed in to AOL within the past year, and I'd be even more surprised if AOL serves up more than 3.5 million connections per month. Does AOL have the stones to reveal these numbers?