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The service traces its history to an online service known as PlayNET. PlayNET licensed its software to Quantum Link (Q-Link), that went online in November 1985. A new IBM PC client was launched in 1988, and eventually renamed as America Online in 1989. AOL grew to become the largest online service, displacing established players like CompuServe and The Source. By 1995, AOL had about three million active users.[2]
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AOL was one of the early pioneers of the Internet in the 1990s and was (at one point) the most recognized brand on the web in the United States. AOL once provided a dial-up internet service to millions of Americans and pioneered instant messaging and chat rooms with AOL Instant Messenger (AIM). In 1998, AOL purchased Netscape for US$4.2 billion. By 2000, AOL was providing internet service to over 20 million consumers, dominating the market of internet service providers (ISPs).[3] In 2001, at the height of its popularity, it purchased the media conglomerate Time Warner in the largest merger in US history. AOL rapidly shrank thereafter, partly due to the decline of dial-up and rise of broadband.[4] AOL was eventually spun off from Time Warner in 2009, with Tim Armstrong appointed the new CEO. Under his leadership, the company invested in media brands and advertising technologies.
On June 23, 2015, AOL was acquired by Verizon Communications for $4.4 billion.[5][6] On May 3, 2021, Verizon announced it would sell Yahoo and AOL to private equity firm Apollo Global Management for $5 billion.[7] On September 1, 2021, AOL became part of the new Yahoo! Inc.
AOL began in 1983, as a short-lived venture called Control Video Corporation (CVC), founded by William von Meister. Its sole product was an online service called GameLine for the Atari 2600 video game console, after von Meister's idea of buying music on demand was rejected by Warner Bros.[8] Subscribers bought a modem from the company for $49.95 and paid a one-time $15 setup fee. GameLine permitted subscribers to temporarily download games and keep track of high scores, at a cost of $1 per game.[9] The telephone disconnected and the downloaded game would remain in GameLine's Master Module and playable until the user turned off the console or downloaded another game.
In January 1983, Steve Case was hired as a marketing consultant for Control Video on the recommendation of his brother, investment banker Dan Case. In May 1983, Jim Kimsey became a manufacturing consultant for Control Video, which was near bankruptcy. Kimsey was brought in by his West Point friend Frank Caufield, an investor in the company.[8] In early 1985, von Meister left the company.[10]
On May 24, 1985, Quantum Computer Services, an online services company, was founded by Kimsey from the remnants of Control Video, with Kimsey as chief executive officer, and Marc Seriff as chief technology officer. The technical team consisted of Seriff, Tom Ralston, Ray Heinrich, Steve Trus, Ken Huntsman, Janet Hunter, Dave Brown, Craig Dykstra, Doug Coward, and Mike Ficco. In 1987, Case was promoted again to executive vice-president. Kimsey soon began to groom Case to take over the role of CEO, which he did when Kimsey retired in 1991.[10]
Kimsey changed the company's strategy, and in 1985, launched a dedicated online service for Commodore 64 and 128 computers, originally called Quantum Link ("Q-Link" for short).[9] The Quantum Link software was based on software licensed from PlayNet, Inc, (founded in 1983 by Howard Goldberg and Dave Panzl). The service was different from other online services as it used the computing power of the Commodore 64 and the Apple II rather than just a "dumb" terminal. It passed tokens back and forth and provided a fixed price service tailored for home users. In May 1988, Quantum and Apple launched AppleLink Personal Edition for Apple II[11] and Macintosh computers. In August 1988, Quantum launched PC Link, a service for IBM-compatible PCs developed in a joint venture with the Tandy Corporation. After the company parted ways with Apple in October 1989, Quantum changed the service's name to America Online.[12][13] Case promoted and sold AOL as the online service for people unfamiliar with computers, in contrast to CompuServe, which was well established in the technical community.[10]
From the beginning, AOL included online games in its mix of products; many classic and casual games were included in the original PlayNet software system. The company introduced many innovative online interactive titles and games, including:
In February 1991, AOL for DOS was launched using a GeoWorks interface; it was followed a year later by AOL for Windows.[9] This coincided with growth in pay-based online services, like Prodigy, CompuServe, and GEnie. 1991 also saw the introduction of an original Dungeons & Dragons title called Neverwinter Nights from Stormfront Studios; which was one of the first Multiplayer Online Role Playing Games to depict the adventure with graphics instead of text.[14]
During the early 1990s, the average subscription lasted for about 25 months and accounted for $350 in total revenue. Advertisements invited modem owners to "Try America Online FREE", promising free software and trial membership.[15] AOL discontinued Q-Link and PC Link in late 1994. In September 1993, AOL added Usenet access to its features.[16] This is commonly referred to as the "Eternal September", as Usenet's cycle of new users was previously dominated by smaller numbers of college and university freshmen gaining access in September and taking a few weeks to acclimate. This also coincided with a new "carpet bombing" marketing campaign by CMO Jan Brandt to distribute as many free trial AOL trial disks as possible through nonconventional distribution partners. At one point, 50% of the CDs produced worldwide had an AOL logo.[17] AOL quickly surpassed GEnie, and by the mid-1990s, it passed Prodigy (which for several years allowed AOL advertising) and CompuServe.[10] In November 1994, AOL purchased Booklink for its web browser, to give its users web access.[18] In 1996, AOL replaced Booklink with a browser based on Internet Explorer, allegedly in exchange for inclusion of AOL in Windows.[19]
AOL purchased search engine WebCrawler in 1995, but sold it to Excite the following year; the deal made Excite the sole search and directory service on AOL.[21] After the deal closed in March 1997, AOL launched its own branded search engine, based on Excite, called NetFind. This was renamed to AOL Search in 1999.[22]
AOL charged its users an hourly fee until December 1996,[23] when the company changed to a flat monthly rate of $19.95.[9] During this time, AOL connections were flooded with users trying to connect, and many canceled their accounts due to constant busy signals. A commercial was made featuring Steve Case telling people AOL was working day and night to fix the problem. Within three years, AOL's user base grew to 10 million people. In 1995, AOL was headquartered at 8619 Westwood Center Drive in the Tysons Corner CDP in unincorporated Fairfax County, Virginia,[24][25] near the Town of Vienna.[26]
AOL was quickly running out of room in October 1996 for its network at the Fairfax County campus. In mid-1996, AOL moved to 22000 AOL Way in Dulles, unincorporated Loudoun County, Virginia to provide room for future growth.[27] In a five-year landmark agreement with the most popular operating system, AOL was bundled with Windows software.[28]
On March 31, 1996, the short-lived eWorld was purchased by AOL. In 1997, about half of all US homes with Internet access had it through AOL.[29] During this time, AOL's content channels, under Jason Seiken, including News, Sports, and Entertainment, experienced their greatest growth as AOL become the dominant online service internationally with more than 34 million subscribers.
In November 1998, AOL announced it would acquire Netscape, best known for their web browser, in a major $4.2 billion deal.[9] The deal closed on March 17, 1999. Another large acquisition in December 1999 was that of MapQuest, for $1.1 billion.[31]
In January 2000, as new broadband technologies were being rolled out around the New York City metropolitan area and elsewhere across the US, AOL and Time Warner Entertainment announced plans to merge, forming AOL Time Warner, Inc. The terms of the deal called for AOL shareholders to own 55% of the new, combined company. The deal closed on January 11, 2001. The new company was led by executives from AOL, SBI, and Time Warner. Gerald Levin, who had served as CEO of Time Warner, was CEO of the new company. Steve Case served as chairman, J. Michael Kelly (from AOL) was the chief financial officer, Robert W. Pittman (from AOL) and Dick Parsons (from Time Warner) served as co-chief operating officers.[32] In 2002, Jonathan Miller became CEO of AOL.[33] The following year, AOL Time Warner dropped the "AOL" from its name. It was the largest merger in history when completed with the combined value of the companies at $360 billion. This value fell sharply, to as low as $120 billion, as markets repriced AOL's valuation as a pure internet firm more modestly when combined with the traditional media and cable business. This status did not last long, and the company's value rose again within three months. By the end of that year, the tide had turned against "pure" internet companies, with many collapsing under falling stock prices, and even the strongest companies in the field losing up to 75% of their market value. The decline continued though 2001, but even with the losses, AOL was among the internet giants that continued to outperform brick and mortar companies.[34]
In 2004, along with the launch of AOL 9.0 Optimized, AOL also made available the option of personalized greetings which would enable the user to hear his or her name while accessing basic functions and mail alerts, or while logging in or out. In 2005, AOL broadcast the Live 8 concert live over the Internet, and thousands of users downloaded clips of the concert over the following months.[35] In late 2005, AOL released AOL Safety & Security Center, a bundle of McAfee Antivirus, CA anti-spyware, and proprietary firewall and phishing protection software.[36] News reports in late 2005 identified companies such as Yahoo!, Microsoft, and Google as candidates for turning AOL into a joint venture.[37] Those plans were abandoned when it was revealed on December 20, 2005, that Google would purchase a 5% share of AOL for $1 billion.[38]
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