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Technology Stocks : America On-Line: will it survive ...?
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To: steve lipson who wrote (6626)12/31/1997 12:15:00 PM
From: Follies  Read Replies (2) of 13594
 

Too bad it's the same old half-baked analysis.

AOL is the brand leader in the category, not the upstart



Okay lets bake this analysis a little. Just exactly what is the category? BTI (Before The Internet) is was easy to understand what their category/business model was. Now I'm not so sure.

Here's my analogy, Many years ago it was very difficult and expensive to set up a radio station but there were a few, KAOL, WCSRV, Prodigy-FM, etc. and people bought radios tuned to one frequency only and they just listend to that frequency and paid monthly fees. Someone then realized they could build a radio that could get multiple frequencies and the started selling them. You could get some of KAOL but most of it was too noisey to listen to. But then someone figured out how to set up cheap stations and new stations started springing up everywhere and in fact some of the programs that where on KAOL were now available on other stations. But KAOL kept giving away radios that were tuned to them. Oh you could get other stations on their radio but it wasn't as good as the general purpose radio, and yes you could tune out the comercials on KAOL by opening up the radio and clipping a wire in the back but most listeners of KAOL were afraid to do that, they were newbies. All the newbies wanted these free radios because, well they were free right? But eventually they became oldbies (but Goodbies) and they became savvy about all the other stations out there. In short they out grew their old radio. Sure they still go back and listen to whatever KAOL they can get on their new radio but KAOL commercial revenue dropped and they could no longer give out free radios and well the rest is history.

Happy New Year.
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