The Washington Post reported this week that over 1 million subscribers had left AOL, according to CFO Wayne Pace, who spoke at an industry news conference. According to the article, AOL is rapidly losing customers to NetZero and other lower-priced bare-bones Internet services, as well as to higher-priced high-speed cable and telephone providers. Pace also said the falloff in subscribers is much steeper than AOL had projected, so that the only way for the Internet unit to meet cash-flow targets for the year is to cut costs relentlessly.
I remember being at a meeting in Dulles last summer when AOL convened the Top 200 Managers, as they called us, to gather in Dulles and met Jon Miller, who had just been appointed to run the service. At that gathering, Ted Leonsis ambled to the front of the room and told stories about the AOL crisises he’d weathered: the move to flat-rate pricing and the subsequent access problems, the need to get more network capacity, fast, the threats to the business from MSN and others eager to get their subscriber base. The stories were funny and inspiring, and at the end, Leonsis slammed his hand on the podium and roared, “The worst is over, we’ve hit bottom this time and we’re only going up!”
By last fall, it was clear bottom was further down and we’d sink a bit more before we got to move up. I left the company in January 2003, and it seems clear that AOL perhaps has not yet found the bottom.

The Washington Post reported this week that over 1 million subscribers had left AOL, according to CFO Wayne Pace, who spoke at an industry news conference. According to the article, AOL is rapidly losing customers to NetZero and other lower-priced bare-bones Internet services, as well as to higher-priced high-speed cable and telephone providers. Pace also said the falloff in subscribers is much steeper than AOL had projected, so that the only way for the Internet unit to meet cash-flow targets for the year is to cut costs relentlessly.
I remember being at a meeting in Dulles last summer when AOL convened the Top 200 Managers, as they called us, to gather in Dulles and met Jon Miller, who had just been appointed to run the service. At that gathering, Ted Leonsis ambled to the front of the room and told stories about the AOL crisises he’d weathered: the move to flat-rate pricing and the subsequent access problems, the need to get more network capacity, fast, the threats to the business from MSN and others eager to get their subscriber base. The stories were funny and inspiring, and at the end, Leonsis slammed his hand on the podium and roared, “The worst is over, we’ve hit bottom this time and we’re only going up!”
By last fall, it was clear bottom was further down and we’d sink a bit more before we got to move up. I left the company in January 2003, and it seems clear that AOL perhaps has not yet found the bottom.