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Technology Stocks : America On-Line: will it survive ...? -- Ignore unavailable to you. Want to Upgrade?

To: cruncher who wrote (8673)	3/8/1998 9:03:00 PM
From: Bald Man from Mars	Read Replies (1) \| Respond to of 13594

<<Bald Man: A question for the bears on this thread as well as the bulls. Why did AOL raise their monthly rates?>> You are asking me ??? I am sorry but I do not set the rates, you have to call my buddy Stevey (or shall we call him Mr. Case ).

To: cruncher who wrote (8673)	3/8/1998 9:46:00 PM
From: Craig Richards	Read Replies (1) \| Respond to of 13594

cruncher, AOL raised its rates a day or so after the Compuserve acquisition. One bullish explanation is that the Compuserve acquisition gave AOL monopoly power over the market, so it could raise its rates. I think they did it because they realized that they're not making money on access fees, and the ad revenues aren't ramping up as fast as expected, so they had to do something to keep from losing money.

To: cruncher who wrote (8673)	3/8/1998 11:58:00 PM
From: Investor-ex!	Read Replies (1) \| Respond to of 13594

Welcome cruncher, Why did AOL raise their monthly rates? Was it because the demand for their service and customers so loyal that they thought it would fly. Or was it the rate of new subscribers coming on line was starting to fall and they thought by increasing monthly rates would keep their estimates for this year in line. Both! Obviously, they would never had raised rates if THEY thought it wouldn't fly. I think the rate increase is a HUGE overreach on AOL's part. What happened to economies of scale? Shouldn't more clients allow AOL to lower rates? Yes, you say? -- aha -- this means AOL implicitly admits that their position becomes worse and worse as each new subscriber is added. Which proves that, for a company with AOL's costs (and this would include many other internet companies, as well), being an ISP is, ultimately, a money-losing activity. Which, not incidentally, explains why AOL was so easily able to grab market-share. Hence, AOL's need to raise rates. Most other companies understood that the cost structure in this line of business wouldn't really work at $20/month and decided to stay out until it became (becomes?) clearer exactly what synergies are available and what revenue model might turn a decent, sustainable profit. Well guess what, the synergies are inconsistent and slow to materialize, and the unlimited $20/month revenue model basically loses money, especially if you're not able to piggy-back internet activities onto your own existing telecommunications infrastructure. I think MCI has the right idea: use internet access as a loss leader to promote your core business. Other ISPs are in business to make money, careful to not bite off more than they can chew, keeping an iron in the fire, watching, waiting, and building a smallish, yet solid client base of satisfied customers. AOL is a bizarre, reckless experiment seeking a tragic conclusion. I have NEVER accepted the rationale of what AOL is doing or the way they are doing it: blindly grabbing as many subscribers as possible, serving up a substandard on-line experience, losing money on each client added, and all the while hoping and scheming that the internet can somehow be magically converted into some sort of obnoxious profit-generating system above and beyond the meager monthly access fees collected. It still sounds like a crap-shoot to me. Whenever and wherever REAL internet revenue can be sustainably had, there will be too much competition and too few barriers to entry. Meanwhile, AOL keeps going up -- at least through the split. :o)