AOL sees future value in instant messaging
By David A. Vise
Washington Post
WASHINGTON — America Online, it seems, can do little right these days.
Its core subscriber base is shrinking, its users are being swamped with junk e-mail, and its financial woes have forced founder Steve Case and other top officials to resign.
Yet in one area, America Online Inc. enjoys spectacular success: It is the leading purveyor of instant messaging, the world's most popular electronic communications tool. The only problem is, the service is free and no one has figured out how to make much money from it.
Every day, about 2.3 billion instant messages are sent around the world via America Online, eclipsing e-mail as the favored way of communicating with family, friends and co-workers. About 40 percent of all Americans from age 14 to 24 use AOL's instant messaging services, the company says.
America Online's new senior management, led by chief executive Jonathan Miller, has focused on instant messaging as a way of providing the company with fresh revenue to restore growth.
AOL has begun trying to sell specialized versions to businesses. For example, it has a revenue-sharing partnership with a cell phone company, Nextel Communications Inc., to offer instant messaging to its customers, and it is pushing for more such deals. And while it has no plans to charge consumers for the existing service, AOL is considering selling add-ons such as matchmaking and games.
Instant messaging once was seen mostly as an alternative for teenagers who otherwise would be chatting on the phone. But it also has taken strong hold among workers sitting at their desks.
The strong appeal of instant messaging stems from various features that distinguish it from e-mail. While e-mail is more like a letter that lands in the recipient's electronic in-box, instant messaging resembles a phone call, with two parties chatting at once.
Its popularity is tracked at America Online's Dulles, Va., headquarters, where television screens monitor how, minute by minute, use of instant messaging outpaces other AOL features.
Users of the dial-up service receive instant messaging software as part of their monthly $23.90 subscription, but non-subscribers can download the software for free.
Many AOL officials believe that a major reason consumers keep their America Online subscriptions for Internet access is to retain their screen names and the "buddy lists" of friends and contacts for instant messaging. In that sense, instant messaging already is an indirect source of revenue, but AOL executives are hoping to garner more.
