AOL's Ad-based Business Model



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Code :BSM0058C

Year :
2006

Industry : Internet and e-commerce

Region : US

Teaching Note:Available

Structured Assignment :Not Available

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Internet Access Market of US In the 21st century telecommunication was no longer a separate industry. It had converged with broadcasting and broadband internet accessing and the mobile (wireless) and electronic equipment industries, and become one of the most competitive communication arenas in the world. These changes increased the dependence on internet for work, entertainment and retail in US and also created a booming market for the internet there. The US internet access market was a concentrated market with smaller number of companies generating the majority of the revenues. This had stimulated consolidation in recent years, particularly amongst the market's smaller, regional competitors. Several smaller companies had attempted to diversify their risk by expanding into other service areas, rather than by increasing their scale economies...

America Online Established in the year 1985 as Quantum Computer Services, America Online (AOL) offered online service on commodore business machines via PC modems. Their first product 'Q-Link' routed e-mails and messages through a communication network (via telephone cables) and had 10,000 users within a year. In the late 80s, the company pioneered many innovative online titles and games including graphical chat environments, interactive fiction series, fully automated games, Massively Multiplayer Online Role Playing Games (MMORPG) and many more...

Strategic Changes In order to revive AOL, the management decided to adopt a business model similar to its competitor Yahoo. Experts believed that AOL's move of replicating Yahoo was due to the fact that Yahoo was a media company like AOL, whereas Google and MSN were technology companies with expertise which AOL would need years to build on. Yahoo was an internet and media company and offered online navigational directories and online business services designed to enhance web presence of its clients...

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