by Tim Wu
Prodigy pushed ideas that wouldn’t come to real fruition until at least a decade later. From its beginnings in 1989, it saw itself reselling the attention directed to computer screens. “IBM and Sears executives envisioned a new advertising medium,” wrote Wired in 1993, “that would assemble audiences for marketers much as niche TV channels do.” It believed that if its content was good enough and the service were cheap enough to attract a crowd, it would eventually attract enough eyeballs to resell for profit. “Visionaries at IBM and Sears figured they could sell advertising on every screen and tap a potential revenue stream far larger than the sum of the hourly fees charged by existing online services.”4 Like the penny press, Prodigy sought its mass audience by offering a low price—$9.95 a month, a money-loser unless advertising paid off. Unfortunately, unlike the New York Sun, revenue didn’t meet expenses, and by the early 1990s Prodigy had lost hundreds of millions.
In case advertising didn’t work out, Prodigy also envisioned another lucrative revenue stream, this one reflecting Sears’s ownership. It saw itself becoming the world’s dominant computer-based shopping network, something akin to an early Amazon. “We had a belief that goods will be sold electronically,” said the CEO, Ross Glatzer, “so why not establish dominance in the marketplace?”5 Unfortunately, the entire retail strategy was based on a faulty premise: that online retailers would naturally be able to charge more than brick-and-mortar stores. It didn’t help that, given the state of computer graphics in 1992, one only had a rough idea of what one was paying a markup for.
Under its relatively new CEO, Steve Case, AOL was hardly in a position to do what Prodigy did. As the smallest and most poorly funded of the networks, they had no money to spend on content and no relationships with advertisers. Almost by default, then, AOL’s approach was to let users entertain themselves, which the firm optimistically described as a bet on the “electronic community.” “We recognized that communications—a combination of chat and e-mail—were critical building blocks,” Case later told journalist Kara Swisher. “So our bias was on creating tools, empowering people, and letting them use them in any way they thought appropriate—sort of ‘Let a thousand flowers bloom.’ ”6
AOL’s software did make it easy for users to get in touch with, and in that way effectively entertain, one another. Its designers were dedicated to making AOL a happy, friendly place—and as such perhaps something of a cure for loneliness. As one employee, Randy Dean, later put it, “We wanted [our users] to have these little epiphanies, out there by themselves typing on their computer, that they were part of something bigger, that technology did not have to be a cold place, that there was comfort out there.”7 Just as television had initially presented itself as bringing family together, AOL would allow those living in modernity’s increasing isolation to reach out.
Among the sources of such comfort would be AOL’s infamous chat rooms. Chat rooms had actually been invented by CompuServe in the 1980s (under that ’70s handle “CB simulator”), but AOL allowed the creation of “private rooms,” which anyone could open, hosting up to twenty-three total strangers. By 1997, they would claim to have nineteen thousand different rooms. One key to this success: AOL had female users—not many, but enough to create a completely different atmosphere than the average CompuServe chat room, which might be, for example, a group of dudes conversing in medieval English. CompuServe may have had much the same setup, but being distinctly and persistently inhabited by hard-core computer users and other breeds of geek and nerd, they just didn’t know how to get the party going, not one the general public would care to join anyway. (A note to puzzled younger readers: in the 1990s, nerd-cool had not yet been invented.)
With its wide-open chat rooms, AOL seemed to tap into the excitement of what people then called “cyberspace,” and its tantalizing possibility for a new disembodied kind of human connection. Chat rooms could be used to discuss anything, and since no one had to use a real name, they allowed for a taste of that liberation Marcuse had dreamt of. One of AOL’s employees, Joe Schober, called them “frontier towns” and later recalled, “As a gawky kid entering high school, chat rooms were a haven from the awkwardness of real human interaction. I’d use them to discuss punk bands like Operation Ivy with other teenagers, to play the chat room–equivalent of Dungeons & Dragons, and talk to what I very much hoped were actual girls.”8 The AOL chat rooms developed a reputation for excitement and transgression. There was “the feeling that this was a new and semi-lawless space, that unexpected things could happen.”9
Like virtual sex, of course. There’s a popular folk theory, apparently of Freudian inspiration, that the driver of any technological advance is either sex or warfare. However exaggerated, like a broken clock, this theory is occasionally right. It was in the case of AOL, where users flocked for, if not sex exactly, then potential titillation, and who knows what might follow—much the same proffer that draws college students to frat parties. In any case, chat rooms catering to seekers of anonymous sexual titillation and flirtation were by far the most numerous and popular, so much so that over the mid-1990s, AOL became fairly synonymous with cybersex, anonymous virtual sexual encounters conducted entirely by typed messages. “The idea that you could play out your kinky fantasies and ideas with these strangers across the country who you’d never met, and have them be excited and responsive and engaged, was incredibly exciting to people,” said psychologist Rob Weiss.10 Here was the harbinger of the sexual future.
Early users of AOL are now grown up and have some tawdry experiences to recount. In 2014, writer EJ Dickson wrote of her virtual relationships when she was a ten-year-old.
His AIM handle was FrankZappy, and I believe he claimed to be a married man from Queens. I was Dana, a name I had lifted from a character on my favorite Purple Moon CD-ROM. Dana was 19, an aspiring veterinarian, and everyone told her she looked like Britney Spears. We met in an AOL chatroom in the “Friends” category, bonding over a shared interest in baseball and the inspiration for his screen name; I’d impressed him by referencing the lyrics to “Don’t Eat the Yellow Snow.”11
Eventually, one thing led to another. “Of course, I had no idea what I was saying; much of what I said was based on what I had seen on General Hospital and read in Jackie Collins paperbacks. And to be honest, I don’t think he knew what he was saying either. He wasn’t particularly imaginative, or even literate.” But in defense of the chat room, she writes that “early cybersex allowed young women to explore their early sexual identities and desires without the fear of guilt, judgment, or censure that would usually accompany such efforts at school or elsewhere.”
The chat rooms would persist even after the opening of the World Wide Web. Unsurprisingly, having so many sex-charged ones gave the service something of a seedy reputation. In a 1995 headline, the Philadelphia Inquirer called the service “A Tawdry Back Alley, Just Off the Information Superhighway.” Perhaps just as unsurprising, that reputation hardly slowed AOL’s growth and probably enhanced it, especially when the content of some chats was revealed in congressional committee, managing to scandalize members. Senator Herb Kohl, Democrat of Wisconsin, declared in a Senate subcommittee that “most Americans don’t know what it is out there on the Internet. If they did, they would be shocked.”12
In October 1992, Walter Mossberg of The Wall Street Journal reviewed Prodigy and AOL (which he referred to as “online database services”). Prodigy, he concluded, was “organized more like a broadcast network than a common carrier of information.” While he praised its news service, he ultimately found it “seriously flawed.” As he wrote, “its content promises more than it delivers” while splashing “distracting paid advertising across the bottom of many of the information screens.” AOL, in contrast, simply ran more smoothly; its “electronic-mail system is sophisticated and easy to use” and, Mossberg concluded, “I see America Online as the sophisticated wave of the future.”13
For almost all of its history, AOL’s most important feature was email; even m
ore subscribers used it than visited the chat rooms. We have already seen how email was able to induce a Skinneresque check-in habit even among the first scientists to use it. Perceiving straightaway email’s habit-forming properties, Steve Case and his team applied themselves to encouraging the addiction among subscribers. For one thing, users could send an unlimited number of emails. Prodigy, by contrast, having been slow to offer email, foolishly decided to charge users who sent more than thirty per month. At AOL, email was sent early and often. In fact, the whole user interface centered on the application. Immediately after logging on, one heard a pleasant male voice saying: “You’ve got mail.” With that appeared a whimsical picture of a postbox stuffed with letters, a virtual cornucopia of potential rewards in human connection.
Of course, by the 1990s AOL wasn’t alone in providing email to people outside computer science and government. Universities had begun handing out email addresses early in the decade to anyone interested, and to all students by the mid-1990s. In the late 1990s, companies began creating email addresses for their employees. The race was on, and in a classic example of network effects, the more people who had email, the more valuable it became.
It may be hard for some to imagine a moment when receiving email was considered a big deal. At the time, however, it seemed exciting enough for Nora Ephron to base a Warner Bros. romantic comedy on the story of two strangers (played by Tom Hanks and Meg Ryan) meeting through AOL email.*3 The Washington Post wrote that Ephron, herself a subscriber, depicted “the service as smooth, cool, a glamorous tool of glamorous people.”14 To capitalize on that aura, the original title of her film, You Have Mail, was changed to echo exactly AOL’s “You’ve Got Mail.”
In 1993 AOL had the rather brilliant idea to promote email by using what we now call snail mail. It had been a challenge for all of the services just getting people to try them. While Prodigy relied on retail sales (the “starter kit” cost $50, and was sold at Sears) and national advertising, that summer AOL mailed out several hundred thousand floppy disks,*4 offering a free promotional membership. The program was extraordinarily successful, achieving an average response rate of 10 percent (the norm is about 1 percent or less). Thus emboldened, AOL doubled down, and then doubled down again, moving to CDs, as people kept on signing up. By the mid- to late 1990s, “50% of the CD’s produced worldwide had an AOL logo on them,” according to Jan Brandt, then AOL’s chief marketing officer. “We were logging in new subscribers at the rate of one every six seconds.”15
By mid-decade, in fact, usage of all the networks (except GEnie) had soared; it was just as Prodigy had predicted but not for the reasons they had thought. For one thing, these “private” networks were also a way to get onto the Internet, which was its own sensation and attraction, and a stroke of luck for AOL and company. But the networks had also uncorked something that they did not themselves fully understand—the effect that in later jargon would be called “social.” The strategy of using people to gain the attention of other people was in retrospect inspired, even if arrived at more or less by accident.
As the new craze for social hit all the networks, Prodigy, with its fixed business model and regimented corporate culture, reacted more with alarm than excitement. It began to panic at the overuse of its email system, especially when an internal survey revealed that just 5 percent of members were sending over 3.5 million email messages. And so the overlords decided to levy surcharges on “email hogs”—those who sent more than thirty per month.
It would prove part of a pattern of misapprehension. Later, when its chat rooms took off, Prodigy became concerned that the wild, unpoliced forums might discourage advertisers and damage the company’s “family friendly” image. They therefore decided to ban profanity and other offensive speech, as well as any chats that reflected negatively on Prodigy’s owners or advertisers. Later, it banned flame wars (those extended bouts of troll against troll) among members. Eventually, postings even mentioning another member by name were forbidden. By then, every message was being examined for potential infractions. And so Prodigy wound up creating something more akin to the Camel News Caravan of the 1950s or today’s Chinese Internet than anything we would recognize as the free and open web.
Prodigy’s censorship, as well as its stubborn adherence to the ad-based model, helped AOL gain enough momentum to come from behind and overtake both Prodigy and CompuServe. By 1995, AOL would boast over four million subscribers. Slow and steady CompuServe had ridden the boom to just four million, while Prodigy was at two million and dropping. By 1997, when AOL cemented its dominance by buying CompuServe, which had effectively thrown in the towel, its usership rose to nearly 12 million.
—
AOL had, over the 1990s, decisively proven that the surest allure of the new computer networks was social—the prospect of interacting with other people. The point is more profound than it may at first appear. The discovery that traditional content was not the only basis for capturing attention, that our friends and acquaintances (or at least representations of them)—to say nothing of the attractive strangers we might hope to meet—that they, too, might have the same potential was nothing less than revolutionary. Of course it seems obvious in retrospect: however much of our attention we may devote to television, most of us pay at least as much, if not more, to friends, family, and co-workers, particularly if all our various means of communicating with them (texts, phone calls, etc.) are taken into account.
Ultimately it also suggests how incomplete the conquest of human attention was from the 1910s through 1960s, even after television had entered the home. For, though it had breached the private sphere, the domain of the interpersonal remained inviolate. In retrospect it was virgin territory for attention merchants, though before the home computer one couldn’t conceive how this attention might be commercialized. Certainly no one had ever considered the possibility of advertising messages over the telephone—before one placed a call, for instance—not that the telephone was in need of a business model. And so, as AOL finally turned to the reselling of attention, it brought the commercial model of the attention merchant to one of the last spaces thought sacred—our personal relationships.
—
While America Online was by the late 1990s pulling past its competitors, it nonetheless faced what its investors and Wall Street analysts perceived to be serious problems with its business model. By 1996 it was charging $19.95 a month for twenty hours, and then $2.95 an hour after that. But it faced price competition from both Microsoft and other “bare-bones” Internet services that were offering “all you can eat” for $19.95 a month or even less. At the end of 1996, AOL switched to unlimited time for $19.95. That brought in millions of new users but also crashes, busy signals, and an investigation by New York State’s attorney general accusing AOL of offering a service it could not provide. Its revenue growth trimmed, AOL began a mildly desperate search for alternatives.
That year AOL’s board hired its first executive from “old media”—Bob Pittman, cofounder of the cable network MTV who had also worked at Time Warner. With no particular experience in computing or networks he was, nonetheless, the new president. Yet another son of a minister (Methodist), Pittman had described himself while at MTV as “wildly passionate and naturally argumentative and incredibly inflexible.”16 By the 1990s he was known as a “brand master,” a “marketing genius,” and a “synergy guru.”
Most important for the board, Pittman brought with him the business mind-set of the New York media industries. At the time, in its search for revenue alternatives, AOL thought it could perhaps sell books, or offer its own brand of telephone services.*5 But on first look Pittman noticed that AOL had millions of customers staring at screens, and instantly concluded that its financial future was as an attention merchant. No matter that AOL had distinguished itself in the early 1990s as “ad-free” (in contrast to Prodigy). After years of building the AOL brand and attracting millions of customers, it was now time to “leverage the asset,” or, in Pittman’s
alternative terminology, time to “harvest.”
To sell the advertising, AOL tapped an experienced New York adman, Myer Berlow, who like Pittman had no experience with anything computer-related. But arriving in the suburban cubicle-land of AOL in black Armani suits and silver ties, with his hair slicked back à la Gordon Gekko, Berlow did bring with him the culture of Madison Avenue in its more lurid manifestations. Already wealthy, he might fly in the off hours to Las Vegas and park himself at a blackjack table to relax. Consequently, his tenure at AOL, amidst the khaki-clad geeks, had the makings of a fish-out-of-water story television writers used to love. And it wasn’t long before he began to clash with AOL’s programmers, who had the traditional geek’s antipathy to advertising (perhaps because they viewed it as a form of darkish Jedi mind control). When they refused to rewrite code to run ads, Berlow asked, “Who do I have to fuck to get you people to do your jobs?” Even CEO Steve Case, while no programmer, was geek enough to dislike the new advertising. When reviewing a healthy deal with Sprint to run a banner ad, he balked. “What really bothers me,” he said, “is the ads are in a place where members will see them.” Berlow asked his CEO with admirable candor: “Are you out of your fucking mind?”17
Nonetheless, despite resistance, over the late 1990s Pittman and Berlow managed to transform AOL’s business model; from a standing start, they brought it to nearly $2 billion in annual advertising revenue (one third of AOL’s total) by 2000. But if that revenue growth was staggering, it was carefully planned to seem that way, the result of an internal scheme named “Project Confidence” whose principal goal was to validate the theory that the real value of AOL lay in advertising potential. We have noted that the path of the attention merchants is risky, for it can call for compromises in quality and ethics. AOL, over a five-year period, would demonstrate that fact in a manner rarely equaled over such a short span.