Larry,
I used to think the same thing. Why pay any money when you can get it for free somewhere else? In fact I thought the AOL "expeiment" would die in a year at the hands of YHOO or someone. Not so. Then I thought Microsoft would kill AOL dead in a month with MSN buttons being plastered all over every copy of their operating system.
Not so. The fans were loyal and membership even grew. AOL proved it has a working business model.
After reading a lot of reviews about this, it appears that people like AOL because it is the local pub. You have a nice place to go to with nice graphics and all your friends are there. You know exactly which chat room to go to and whose screen name to call. No hassle. You can do some shopping, look up stock stuff, etc without having to go out in the dizzying world of web engines and endless pointers to pages that waste your time. It's cozy. It's not that expensive.
AltaVista, YHOO, etc - not so cozy.
Try looking at the YHOO interface for chat rooms, etc and compare it to AOL. No contest.
You might argue that YHOO will improve and kill the desire/need for people to go to AOL. Maybe. On the other hand, all YHOO has is a computer and a contract with Inktomi. AOL can buy a web search engine contract anytime it wants to.
AOL starts with millions of satisfied customers that log on every day and has to lose them. YHOO starts with zero and has to gain them. YHOO does have fans (me included). It has made great progress with its financial site (AOL should copy it) and they have started a (horrible) chat site.
It will be an interesting race and 1999 will be a major year in this industry. AOL will have to make broadband deals with someone. AOL tried to force T to fork over some bandwidth by complaining at the merger (T/TCI). It didn't work. Merger is a done deal by March.
My guess is AOL will buy broadband from T (actually ATHM) and roadrunner. Then they will battle to become your sole ISP. In other words, for $X/month you get AOL, cable broadband access, email, web pages, web hosting, etc - no ISP needed. Or, if you are rural, DSL. In this format AOL will be king because they already have the loyal customers.
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