Where Do They Go?

AOL is shifting from a subscriber based business to an advertising based business and it seems like the transition is working to a degree. In its first quarter report, Time Warner reported that although AOL lost about 1 million subs (at approx $20/sub, thats $20 million per month), they gained $81 million in ad revenue.  That’s a net positive if my math is right.

But one of the challenges is to keep the email addresses of those subscribers who are "leaving" AOL.  What those people are really leaving is the AOL the ISP. They don’t have to and shouldn’t leave AOL the email and IM address.

AOL has been offering free email and IM via its AOL Network offering for a while now. I don’t know if you can convert a screen name (or a set of screen names) from the paid service to the free service. If that’s possible, I should do that because I have been keeping two fully paid AOL accounts for years just so my family and I can keep email addresses and AIM accounts.  We have not used AOL as an ISP in almost 10 years.

The very fact that I don’t know what the deal is on that is an indication to me that AOL is missing an opportunity.  If I were them, I’d be heavily marketing the fact that you can keep your email and AIM addresses without paying AOL.  Because if they don’t, they’ll continue to lose these people and they are valuable as audience (as the first quarter numbers I mentioned at the start of this post show).

The thing that got me thinking about all of this is this post by Matt Blumberg, CEO of Return Path which operates the Internet’s largest email change of address service.

Return Path saw over 1 million email change of addresses in the first quarter (not the same 1 million who left AOL, probably only a subset of them) and here are the stats:

AOL users defected as follows:

To Yahoo! — 42.5%

To broadband providers in aggregate (cable, etc.)– 23.5%

To Hotmail/MSN — 19.5%

To Gmail — 2.7%

The Gmail number surprises me. I guess I travel in a circle that is overwhelmingly Gmail because I would not have thought they would be getting such a low number of AOL defections.  Yahoo! is clearly the biggest beneificiary of AOL’s losses.

Very interesting numbers to say the least.