1983–1991: Early years
AOL began in 1983, as a short-lived venture called Control Video Corporation (or CVC), founded by William von Meister. Its sole product was an online service called GameLine for the Atari 2600 video game console, after von Meister's idea of buying music on demand was rejected by Warner Bros. Subscribers bought a modem from the company for US$49.95 and paid a one-time US$15 setup fee. GameLine permitted subscribers to temporarily download games and keep track of high scores, at a cost of US$1 per game. The telephone disconnected and the downloaded game would remain in GameLine's Master Module and playable until the user turned off the console or downloaded another game.
In January 1983, Steve Case was hired as a marketing consultant for Control Video on the recommendation of his brother, investment banker Dan Case. In May 1983, Jim Kimsey became a manufacturing consultant for Control Video, which was near bankruptcy. Kimsey was brought in by his West Point friend Frank Caufield, an investor in the company. In early 1985, von Meister left the company.
On May 24, 1985, Quantum Computer Services, an online services company, was founded by Jim Kimsey from the remnants of Control Video, with Kimsey as Chief Executive Officer, and Marc Seriff as Chief Technology Officer. The technical team consisted of Marc Seriff, Tom Ralston, Ray Heinrich, Steve Trus, Ken Huntsman, Janet Hunter, Dave Brown, Craig Dykstra, Doug Coward, and Mike Ficco. In 1987, Case was promoted again to executive vice-president. Kimsey soon began to groom Case to take over the role of CEO, which he did when Kimsey retired in 1991.
Kimsey changed the company's strategy, and in 1985, launched a dedicated online service for Commodore 64 and 128 computers, originally called Quantum Link ("Q-Link" for short). The Quantum Link software was based on software licensed from PlayNet, Inc, (founded in 1983 by Howard Goldberg and Dave Panzl). The service was different from other online services as it used the computing power of the Commodore 64 and the Apple II rather than just a "dumb" terminal. It passed tokens back and forth and provided a fixed price service tailored for home users. In May 1988, Quantum and Apple launched AppleLink Personal Edition for Apple II and Macintosh computers. In August 1988, Quantum launched PC Link, a service for IBM-compatible PCs developed in a joint venture with the Tandy Corporation. After the company parted ways with Apple in October 1989, Quantum changed the service's name to America Online. Case promoted and sold AOL as the online service for people unfamiliar with computers, in contrast to CompuServe, which was well established in the technical community.
From the beginning, AOL included online games in its mix of products; many classic and casual games were included in the original PlayNet software system. In the early years of AOL the company introduced many innovative online interactive titles and games, including:
1991–2006: Internet age, Time Warner merger
First AOL logo as "America Online", used from 1991 to 2005.
In February 1991, AOL for DOS was launched using a GeoWorks interface followed a year later by AOL for Windows. This coincided with growth in pay-based online services, like Prodigy, CompuServe, and GEnie. 1991 also saw the introduction of an original Dungeons & Dragons title called Neverwinter Nights from Stormfront Studios; which was one of the first Multiplayer Online Role Playing Games to depict the adventure with graphics instead of text.
During the early 1990s, the average subscription lasted for about 25 months and accounted for $350 in total revenue. Advertisements invited modem owners to "Try America Online FREE", promising free software and trial membership. AOL discontinued Q-Link and PC Link in late 1994. In September 1993, AOL added Usenet access to its features. This is commonly referred to as the "Eternal September", as Usenet's cycle of new users was previously dominated by smaller numbers of college and university freshmen gaining access in September and taking a few weeks to acclimate. This also coincided with a new "carpet bombing" marketing campaign by CMO Jan Brandt to distribute as many free trial AOL trial disks as possible through nonconventional distribution partners. At one point, 50% of the CDs produced worldwide had an AOL logo. AOL quickly surpassed GEnie, and by the mid-1990s, it passed Prodigy (which for several years allowed AOL advertising) and CompuServe.
Over the next several years, AOL launched services with the National Education Association, the American Federation of Teachers, National Geographic, the Smithsonian Institution, the Library of Congress, Pearson, Scholastic, ASCD, NSBA, NCTE, Discovery Networks, Turner Education Services (CNN Newsroom), NPR, The Princeton Review, Stanley Kaplan, Barron's, Highlights for Kids, the U.S. Department of Education, and many other education providers. AOL offered the first real-time homework help service (the Teacher Pager—1990; prior to this, AOL provided homework help bulletin boards), the first service by children, for children (Kids Only Online, 1991), the first online service for parents (the Parents Information Network, 1991), the first online courses (1988), the first omnibus service for teachers (the Teachers' Information Network, 1990), the first online exhibit (Library of Congress, 1991), the first parental controls, and many other online education firsts.
AOL purchased search engine WebCrawler in 1995, but the next year sold it to Excite in a deal that makes Excite the exclusive search and directory service on AOL. After the deal closed in March 1997, AOL launched its own branded search engine, based on Excite, called NetFind. This was renamed to AOL Search in 1999.
America Online 2.0 software for Microsoft Windows (1994)
AOL charged its users an hourly fee until December 1996, when the company changed to a flat monthly rate of $19.95. During this time, AOL connections would be flooded with users trying to get on, and many canceled their accounts due to constant busy signals. A commercial featuring Steve Case telling people AOL was working day and night to fix the problem was made. Within three years, AOL's user base grew to 10 million people. In 1995 AOL was headquartered at 8619 Westwood Center Drive in the Tysons Corner CDP in unincorporated Fairfax County, Virginia, near the Town of Vienna.
AOL was quickly running out of room in October 1996 for its network at the Fairfax County campus. In mid-1996, AOL moved to 22000 AOL Way in Dulles, unincorporated Loudoun County, Virginia to provide room for future growth. In a five-year landmark agreement with the most popular operating system, AOL was bundled with Windows software.
On March 31, 1997, the short-lived eWorld was purchased by AOL. In 1997, about half of all U.S. homes with Internet access had it through AOL. During this time, AOL's content channels, under Jason Seiken, including News, Sports, and Entertainment, experienced their greatest growth as AOL become the dominant online service internationally with more than 34 million subscribers. In November 1998, AOL announced it would acquire Netscape, best known for their web browser, in a major $4.2 billion deal. The deal closed on March 17, 1999. Another large acquisition in December 1999 was that of MapQuest, for $1.1 billion.
In January 2000, AOL and Time Warner announced plans to merge, forming AOL Time Warner, Inc. The terms of the deal called for AOL shareholders to own 55% of the new, combined company. The deal closed on January 11, 2001. The new company was led by executives from AOL, SBI, and Time Warner. Gerald Levin, who had served as CEO of Time Warner, was CEO of the new company. Steve Case served as Chairman, J. Michael Kelly (from AOL) was the Chief Financial Officer, Robert W. Pittman (from AOL) and Dick Parsons (from Time Warner) served as Co-Chief Operating Officers. In 2002, Jonathan Miller became CEO of AOL. The following year, AOL Time Warner dropped the "AOL" from its name.
In 2004, along with the launch of AOL 9.0 Optimized, AOL also made available the option of personalized greetings which would enable the user to hear his or her name while accessing basic functions and mail alerts, or while logging in or out. In 2005, AOL broadcast the Live 8 concert live over the Internet, and thousands of users downloaded clips of the concert over the following months. In late 2005, AOL released AOL Safety & Security Center, a bundle of McAfee Antivirus, CA anti-spyware, and proprietary firewall and phishing protection software. News reports in late 2005 identified companies such as Yahoo!, Microsoft, and Google as candidates for turning AOL into a joint venture. Those plans were abandoned when it was revealed on December 20, 2005 that Google would purchase a 5% share of AOL for $1 billion.
2006–2009: Rebranding and decline
Former AOL logo, used from 2005 to 2009
On April 3, 2006, AOL announced it was retiring the full name America Online; the official name of the service became AOL, and the full name of the Time Warner subdivision became AOL LLC.
On June 8, 2006, AOL offered a new program called AOL Active Security Monitor, a diagnostic tool which checked the local PC's security status, and recommended additional security software from AOL or Download.com. The program rated the computer on a variety of different areas of security and general computer health. Two months later, AOL released AOL Active Virus Shield. This software was developed by Kaspersky Lab. Active Virus Shield software was free and did not require an AOL account, only an internet email address. The ISP side of AOL UK was bought by The Carphone Warehouse in October 2006 to take advantage of their 100,000 LLU customers, making The Carphone Warehouse the biggest LLU provider in the UK.
Decline in AOL U.S. subscribers 2Q 2001 – 2Q 2009, with a significant drop from 2Q 2006 onward.
In August 2006, AOL announced they would give away email accounts and software previously available only to its paying customers provided the customer accessed AOL or AOL.com through a non-AOL-owned access method (otherwise known as "third party transit", "bring your own access", or "BYOA"). The move was designed to reduce costs associated with the "Walled Garden" business model by reducing usage of AOL-owned access points and shifting members with high-speed internet access from client-based usage to the more lucrative advertising provider, AOL.com. The change from paid to free was also designed to slow the rate of members canceling their accounts and defecting to Microsoft Hotmail, Yahoo!, or other free email providers. The other free services included:
- AIM (AOL Instant Messenger)
- AOL Video featured professional content and allowed users to upload videos as well.
- AOL Local, comprising its CityGuide, Yellow Pages and Local Search services to help users find local information like restaurants, local events, and directory listings.
- AOL News
- AOL My eAddress, a custom domain name for email addresses. These email accounts could be accessed in a manner similar to other AOL and AIM email accounts.
- Xdrive, which was a service offered by AOL, allowed users to back up their files over the Internet. It was acquired by AOL on August 4, 2005 and closed on December 31, 2008. It offered a free 5 GB account (free online file storage) to anyone with an AOL screenname. Xdrive also provided remote backup services and 50 GB of storage for a $9.95 per month fee.
Also that month, AOL informed its American customers it would be increasing the price of its dial-up access to US$25.90. The increase was part of an effort to migrate the service's remaining dial-up users to broadband, as the increased price was the same price they had been charging for monthly DSL access. However, AOL has since started offering their services for $9.95 a month for unlimited dial-up access.
On November 16, 2006, Randy Falco succeeded Jonathan Miller as CEO. In December 2006, AOL closed their last remaining call center in the United States, "taking the America out of America Online" according to industry pundits. Service centers based in India and the Philippines continue to this day to provide customer support and technical assistance to subscribers.
An AOL Mobile sign at GSMA Barcelona 2008
On September 17, 2007, AOL announced it was moving one of its corporate headquarters from Dulles, Virginia, to New York City and combining its various advertising units into a new subsidiary called Platform A. This action followed several advertising acquisitions, most notably Advertising.com, and highlighted the company's new focus on advertising-driven business models. AOL management stressed "significant operations" will remain in Dulles, which included the company's access services and modem banks.
In October 2007, AOL announced it would move one of its other headquarters from Loudoun County, Virginia, to New York City; it would continue to operate its Virginia offices. As part of the impending move to New York and the restructuring of responsibilities at the Dulles headquarters complex after the Reston move, AOL CEO Randy Falco announced on October 15, 2007 plans to lay off 2,000 employees worldwide by the end of 2007, beginning "immediately". The end result was a near 40% layoff across the board at AOL. Most compensation packages associated with the October 2007 layoffs included a minimum of 120 days of severance pay, 60 of which were given in lieu of the 60-day advance notice requirement by provisions of the 1988 Federal WARN Act.
By November 2007, AOL's customer base had been reduced to 10.1 million subscribers, just narrowly ahead of Comcast and AT&T Yahoo!. According to Falco, as of December 2007, the conversion rate of accounts from paid access to free access was over 80%.
On January 3, 2008, AOL announced the closing of one of its three Northern Virginia data centers, Reston Technology Center, and sold it to CRG West. On February 6, Time Warner CEO Jeff Bewkes announced Time Warner would split AOL's internet access and advertising businesses in two, with the possibility of later selling the internet access division.
On March 13, 2008, AOL purchased the social networking site Bebo for $850m (£417m). On July 25, AOL announced it was shedding Xdrive, AOL Pictures, and BlueString to save on costs and focus on its core advertising business. AOL Pictures was terminated on December 31. On October 31, AOL Hometown (a web hosting service for the websites of AOL customers) and the AOL Journal blog hosting service were eliminated.
2009–2015: As a digital media company
The AOL 'eraser' logo, in use since 2009
On March 12, 2009, Tim Armstrong, formerly with Google, was named Chairman and CEO of AOL. Shortly thereafter, on May 28, Time Warner announced it would spin off AOL as an independent company once Google's shares ceased at the end of the fiscal year. On November 23, AOL unveiled a sneak preview of a new brand identity which has the wordmark "Aol." superimposed onto canvases created by commissioned artists. The new identity, designed by Wolff Olins, was enacted onto all of AOL's services on December 10, the date AOL traded independently for the first time since the Time Warner merger on the New York Stock Exchange under the symbol AOL.
On April 6, 2010, AOL announced plans to shut down or sell Bebo; on June 16, the property was sold to Criterion Capital Partners for an undisclosed amount, believed to be around $10 million. In December, AIM eliminated access to AOL chat rooms noting a marked decline of patronage in recent months.
Under Armstrong's leadership, AOL began taking steps in a new business direction, marked by a series of acquisitions. On June 11, 2009, AOL had already announced the acquisition of Patch Media, a network of community-specific news and information sites which focuses on individual towns and communities. On September 28, 2010, at the San Francisco TechCrunch Disrupt Conference, AOL signed an agreement to acquire TechCrunch to further its overall strategy of providing premier online content. On December 12, 2010, AOL acquired about.me, a personal profile and identity platform, four days after that latter's public launch.
On January 31, 2011, AOL announced the acquisition of European video distribution network, goviral. On February 7, AOL bought The Huffington Post for $315 million. Shortly after the acquisition was announced, Huffington Post co-founder Arianna Huffington replaced AOL Content Chief David Eun, assuming the role of President and Editor-in-Chief of the AOL Huffington Post Media Group. On March 10, AOL announced it would cut around 900 workers in the wake of the Huffington Post deal.
On September 14, 2011, AOL formed a strategic ad selling partnership with two of its largest competitors, Yahoo and Microsoft. According to the new partnership, the three companies would begin selling inventory on each other's sites. The strategy was designed to help them compete with Google and ad networks.
On February 28, 2012, AOL partnered with PBS to launch MAKERS, a digital documentary series focusing on high-achieving women in male-dominated industries such as war, comedy, space, business, Hollywood and politics. Subjects for MAKERS episodes have included Oprah Winfrey, Hillary Clinton, Sheryl Sandberg, Martha Stewart, Indra Nooyi, Lena Dunham, and Ellen DeGeneres.
On March 15, 2012, AOL announced the acquisition of Hipster, a mobile photo-sharing app for an undisclosed amount. On April 9, 2012, AOL announced a deal to sell 800 patents to Microsoft for $1.056 billion. The deal includes a "perpetual" license for AOL to use these patents.
In April, AOL took several steps to expand its ability to generate revenue through online video advertising. The company announced it would offer gross rating point (GRP) guarantee for online video, mirroring the TV ratings system and guaranteeing audience delivery for online video advertising campaigns bought across its properties. This announcement came just days before the Digital Content NewFront (DCNF) a two-week event held by AOL, Google, Hulu, Microsoft, Vevo and Yahoo to showcase the participating sites' digital video offerings. The Digital Content NewFront were conducted in advance of the traditional television upfronts in hopes of diverting more advertising money into the digital space. On April 24, the company launched the AOL On network, a single website for its video output.
In February 2013, AOL reported its fourth quarter revenue of $599.5 million, its first growth in quarterly revenue in 8 years.
In August 2013, Armstrong announced Patch Media would scale back or sell hundreds of its local news sites. Not long afterwards, layoffs began, with up to 500 out of 1,100 positions initially impacted. On January 15, 2014, Patch Media was spun off, with majority ownership being held by Hale Global. By the end of 2014, AOL controlled 0.74% of the global advertising market, well behind industry leader Google's 31.4%.
On January 23, 2014, AOL acquired Gravity, a software startup that tracked users’ online behavior and tailored ads and content based on their interests, for $83 million. The deal, which included roughly 40 Gravity employees and their personalization technology, was CEO Tim Armstrong's fourth largest deal since taking over the company in 2009. Later that year, AOL also acquired Vidible, which developed technology to help websites run video content from other publishers, and help video publishers sell their content to these websites. The deal, which was announced December 1, 2014, was reportedly worth roughly $50 million.
On July 16, 2014, AOL earned an Emmy nomination for the AOL original series, The Future Starts Here, in the News and Documentary category. This came days after AOL earned its first Primetime Emmy Award nomination for Park Bench with Steve Buscemi in the Outstanding Short Form Variety Series category, which later won the award. Created and hosted by Tiffany Shlain, the series focused on human's relationship with technology and featured episodes such as The Future of Our Species, Why We Love Robots, and A Case for Optimism.
2015–present: Division of Verizon
AOL's Silicon Valley branch office.
On May 12, 2015, Verizon announced plans to buy AOL for $50 per share in a deal valued at $4.4 billion. The transaction was completed on June 23. Armstrong, who continued to lead the firm following regulatory approval, called the deal the logical next step for AOL. "If you look forward five years, you're going to be in a space where there are going to be massive, global-scale networks, and there's no better partner for us to go forward with than Verizon." he said. "It's really not about selling the company today. It's about setting up for the next five to 10 years."
Analyst David Bank said he thought the deal made sense for Verizon. The deal will broaden Verizon's advertising sales platforms and increase its video production ability through websites such as The Huffington Post, TechCrunch, and Engadget. However, Craig Moffett said it was unlikely the deal would make a big difference to Verizon's bottom line. AOL had about two million dial-up subscribers at the time of the buyout. The announcement caused AOL's stock price to rise 17%, while Verizon's stock price dropped slightly.
Shortly before the Verizon purchase, on April 14, 2015, AOL launched ONE by AOL, a digital marketing programmatic platform that unifies buying channels and audience management platforms to track and optimize campaigns over multiple screens. Later that year, on September 15, AOL expanded the product with ONE by AOL: Creative, which is geared towards creative and media agencies to similarly connect marketing and ad distribution efforts.
On May 8, 2015, AOL reported its first quarter revenue of $625.1 million, $483.5 million of which came from advertising and related operations, marking a 7% increase from Q1 2014. Over that year, the AOL Platforms division saw a 21% increase in revenue, but a drop in adjusted OIBDA due to increased investments in the company's video and programmatic platforms.
On June 29, 2015, AOL announced a deal with Microsoft to take over the majority of its digital advertising business. Under the pact, as many as 1,200 Microsoft employees involved with the business will be transferred to AOL, and the company will take over the sale of display, video, and mobile ads on various Microsoft platforms in nine countries, including Brazil, Canada, the United States, and the United Kingdom. Additionally, Google Search will be replaced on AOL properties with Bing—which will display advertising sold by Microsoft. Both advertising deals are subject to affiliate marketing revenue sharing.
On July 22, 2015, AOL received two News and Documentary Emmy nominations, one for MAKERS in the Outstanding Historical Programming category, and the other for True Trans With Laura Jane Grace, which documented the story of Laura Jane Grace, a transgender musician best known as the founder, lead singer, songwriter and guitarist of the punk rock band Against Me!, and her decision to come out publicly and overall transition experience.
On September 3, 2015, AOL agreed to buy Millennial Media for US$238 million. On October 23, 2015, AOL completed the acquisition.
On October 1, 2015, Go90, a free ad-supported mobile video service aimed at young adult and teen viewers that Verizon owns and AOL oversees and operates launched its content publicly after months of beta testing. The initial launch line-up included content from Comedy Central, Huffington Post, Nerdist News, Univision News, Vice, ESPN and MTV.
On January 25, 2016, AOL expanded its ONE platform by introducing ONE by AOL: Publishers, which combines six previously separate technologies to offer various publisher capabilities such as customizing video players, offering premium ad experience to boost visibility, and generating large video libraries. The announcement was made in tandem with AOL's acquisition of AlephD, a Paris-based startup focused on publisher analytics of ad price tracking based on historical data. AOL announced AlephD would be a part of the ONE by AOL: Publishers platform.
On April 20, 2016, AOL acquired virtual reality studio RYOT to bring immersive 360 degree video and VR content to The Huffington Post's global audience across desktop, mobile, and apps.
In July 2016, Verizon Communications announced its intent to purchase the core internet business of Yahoo!. Verizon tentatively plans to merge AOL with Yahoo into a new company called "Oath".
In April 2018, Oath Inc. sold Moviefone to MoviePass Parent Helios and Matheson Analytics.