Loading summary
Transcript5 lines
- [00:01]
Narrator
Before the Internet ruled our lives, AOL brought America Online with email and Instant messenger. By 2000, AOL was so powerful, it bought media giant Time Warner. This was a deal that was supposed to bring us into the future, revolutionize media. But instead, it became one of the messiest corporate disasters in history. So what went wrong? The dot com crash? Culture clashes? Or something deeper? Business wars gives you a front row seat to the biggest moments in business and how they shape our world. Because when your flight perks disappear, your favorite restaurant chain goes bankrupt, or new tech threatens to reshape everything overnight, you can bet there's a deeper story behind the headlines. I'm about to play a clip from the latest season of business, the AOL Time Warner Disaster. While you're listening, make sure to follow Business wars on the Wondery app or wherever you get your podcasts.
- [01:04]
Business Historian
In the mid-80s, online services seemed like a business full of promise. Fewer than 1 in 10 owns a computer in 1985. But that number is creeping up. So while there are established rivals like CompuServ, there's plenty of room for growth. CBC decides it will build an online service for the market leading personal computer of the day. The Commodore 64. And in May 1985, they mark this new direction by adopting a new name. Quantum Computer Services. Oh, you thought they were about to become aol, huh? Well, not yet, but that moment's coming. But what exactly is an online service in 1985? We're not talking about the Internet here, let alone the World Wide Web. That's. That's years away. In 1985, the online universe is made up of competing subscription services. They offer the stuff we take for granted nowadays. Email, chat, shopping, and News. But in 1985, each service is separate and self contained. For instance, CompuServe users can't email Quantum users, and vice versa. And online services are slow. So slow. How slow? Well, when CBC became Quantum Simple Minds. Don't you forget about me. Remember that song that was at the top of the Billboard Hot 100? You know, it was the song from the Breakfast Club movie. Say you wanted to download that song as an MP3 on a mid-80s modem. You'll have that file downloaded in about three days. But it gets worse. Being online in the 80s is expensive. Quantum's Q Link service charges a monthly subscription fee of $9.95, plus another 6 cents for every minute spent online. That's $3.80 an hour. Back when the average hourly wage was less than 9. So downloading that SimpleMinds MP3 will cost you more than $270. Just as well no one had invented MP3s yet. The long and short of it is it's cheaper, quicker, and easier to go to Tower Records. So going online is very niche. Something for the geeks. But that's okay with Quantum, because that's exactly who it's built the Q Link service for. At 6pm on November 1, 1985, Q link goes live.
- [03:39]
Voice Actor
Connect to the QuantumLink network and suddenly a diverse new interactive world of easy to use services is right at your fingertips. Beginning with People Connection, the social center of QuantumLink, where people from across the nation converse, exchange information, share ideas, and participate in informative lectures.
- [04:02]
Business Historian
Ah, just smell that digital idealism. People are going to get online and take part in informative lectures. They're definitely not going to doom scroll cat videos and argue like overtired toddlers. But chat isn't all the Q Link offers. There's email, sports reports from USA Today, breaking news from Reuters. In games like Hangman and Blackjack, there's even rock and roll news, so you'll always know what Phil Collins is up to. By early 1986, 10,000 people are signed up with Q Link. It's not enough to make it profitable, but it is enough to attract investment and get Quantum on firmer financial footing. But there's a problem. Commodore computers are losing market share. So Quantum moves to bring its online services to other computers, starting with Apple in 1986. Apple isn't the giant it is now. Its Apple II computers are past their prime, and Macintosh sales are weak. Even so, there are millions of Apple owners out there, all potential subscribers to Quantum services. But Case doesn't just want to put Quantum on Apple computers. He wants a marketing partnership with Apple to help attract subscribers. So he temporarily uproots to San Francisco and spends three months lobbying Apple employees nonstop. Eventually, his relentlessness pays off when one department agrees to a deal. Case returns to the Quantum head office in Virginia a hero and gets promoted to executive vice president in 1988. Quantum's Apple link service goes live. Soon after, it launches a service for PC owners. But Case is worried the services feel faceless. He wants them to feel friendly. Quantum's mission is to make getting online easier. So one afternoon in 1989, he floats the idea of adding a voice to the service. Right now, all users hear when logging on are the strange buzzes and chirps of their computer connecting with a service which sounds like this, Case tells his colleagues these sounds aren't welcoming. He wants users to be greeted when they log on and told when they get an email. The discussion is overheard by Quantum customer service rep Karen Edwards. She tells Case her husband is a voice actor. And so Elwood Edwards lands the job. He records the lines on a cassette deck at home. Quantum pays him $200 and then adds his tones to the service. Welcome. You've got mail. By the time Elwood's Voice debuts in October 1989, Quantum has 75,000 subscribers. But it's not sports news or Phil Collins updates that are keeping people online. It's the chat rooms, especially the ones about sex. Quantum isn't too happy about that. It wants to project a family friendly image. The worry is that all these chat rooms could cause a scandal. But the company's executives consider shutting down the chat rooms. And then they check the numbers. Users spend a lot of time talking dirty, and the longer they stay logged on, the more money Quantum makes. So the company looks the other way. Quantum wanted a squeaky clean image, right? But when the dirty chat room started driving revenue, he made peace with it pretty quickly. And if you're in the trenches of business, you may have to make peace with this, too. In business, ideological purity can be a luxury, while pragmatism often pays the rent. So what's the line you won't cross, and how far will you stick with it once you see what the competition's doing? But even with the sex chat rooms, Quantum is a distant third in the market. The market leader, CompuServe, has half a million subscribers, and the limited uptake of Quantum service prompts Apple to cancel its deal with the company. Losing that deal gives Case another headache. Apple owns the Apple Link name, so Quantum needs to rename its service for Apple computers. So Case holds a contest to select the new name. After sifting through the entries, he decides the best idea is his own. And it's a name that captures the company's ultimate goal. America Online. AOL is here, and soon everyone will know its name.
- [09:11]
Narrator
You can binge all episodes of Business the AOL Time Warner disaster early and ad free right now by joining Wondery. Start your free trial in the Wondery app on Apple Podcasts or Spotify.