When America Online <www.aol.com> began offering a flat fee for unlimited use a year ago, it seemed like a win-win-win situation. Subscribers would pay less for unlimited service, advertisers would gain millions more online customers, and AOL would reap the profits. But there was one factor the company overlooked: Cybersex.
Cybersex is nerdspeak for something that goes on in AOL's People Connection, or "chat rooms," where users flirt in real time by typing sometimes explicit messages to one other. While AOL provides some 200 services, from stock quotes to computer games, the People Connection may be the company's killer app. Chat is the one service AOL does better than anyone else, and for those who are into cybersex, it is highly addictive.
AOL spokesperson Wendy Goldberg dismisses cybersex as a non-factor in AOL's popularity, or in the massive system overload that occurred when the company switched to a flat rate. AOL expected usage to increase by 50 percent as a result of the flat rate. Instead, it doubled, in all areas, Goldberg said. She said AOL is the world's largest on-line service provider not because of cybersex, but because it is the easiest way to get on the Internet.
Then again, she said AOL users are on the Web only 20 percent of the time, compared to 80 percent spent in AOL proprietary areas, including 25 percent in the 14,000 chat rooms of the People Connection.
PCMeter, an independent measurer of Internet use, found in April that the most-used area of the entire Internet was AOL e-mail, which transmits 15 million messages a day. However, the next highest rated AOL services were Buddy Lists (5th) and Instant Messages (6th), both chat features. The People Connection ranked 12th, compared to Computing (8th), Entertainment (13th), Marketplace (16th), Games (21st) and Today's News (22nd).
It is easy to understand why AOL would downplay chat. In the culture of the Internet, chat is at the bottom of the hierarchy of services such as e-mail, the Web and newsgroups. Also, AOL's chat rooms have generated a lot of controversy over obscenity, censorship, pedophiles, infidelity, even homicide.
But in going to a flat rate, AOL turned a cash cow into a loss leader, while creating a virtual modem gridlock, resulting in busy signals and pissed-off subscribers. Membership skyrocketed from 6 million before the flat rate to more than 8.5 million today. At one point 8 million AOL members were trying to dial in on only 200,000 modems, a ratio of 40 subscribers per modem, when a 12:1 ratio is considered optimal.
For cybersluts, many of whom who had a monthly AOL Jones in the hundreds of dollars, it was like telling addicts they could have all the heroin they wanted for $20 a month, then cutting the supply. Talk about panic in Needle Park!
In response, AOL invested $350 million in system upgrades. It invested millions more in reimbursing customers who sued for loss of service. Goldberg said AOL considers 20 subscribers per modem sufficient, and that "we're getting there."
According to Inverse Network Technology, a Santa Clara, Calif., company that rates service providers, customers trying to log on to AOL in July during peak evening hours were unsuccessful about a third of the time. Although better than the dismal 80 percent call failure rate INT found earlier this year, AOL is still a long way from the industry average of a 9.5 percent failure rate.
Ironically, if AOL was trying to put competing Internet service providers out of business by charging the same price while providing more services, the impact has been just the opposite. Because AOL's direct lines are so often busy, more members are using the smaller ISPs to get on AOL. However, these smaller ISPs now face the same problem as AOL. The more their customers lurk in AOL's chat rooms, the more their resources are strained.
To recoup revenue lost by going to a flat rate, AOL began selling ads that appear in the chat rooms. It also has marketing agreements with a buyers club and a long-distance phone company. But following angry protests, the company shelved a plan to sell members' phone numbers to telemarketers.
But rather than targeting children who play games, AOL ought to be going after the cybersluts who play in the adult chat rooms of the People Connection. Charging for cybersex might be harsh medicine for cybersluts. But it is in their own interest, as well as that of AOL and the entire Internet community.
Metering the People Connection would have a sobering
effect on chat room addicts, or at least enable their significant others
to better monitor their habits. Charging for cybersex also would turn a
loss leader back into a cash cow for AOL. And to the extent that it curbed
Internet abuse, it would relieve some of the capacity overload on AOL,
all ISPs, and the entire telephone network.