The AOL List: Death of a Salesman

David Cassel (
Wed, 27 Nov 1996 16:25:48 -0800 (PST)

		 D e a t h   o f   a   S a l e s m a n


AOL's fight against Sanford Wallace hit a snag.  There's thousands of
ISPs.  Ten have signed up to host his spam-mail service, with another 50
waiting in the wings (according to Wired News). This allows Wallace's
messages to evade AOL's blocks on specific sites indefinitely.  "We don't
believe we'll ever be shut down," he boasted. 

Some people are getting discouraged.  "[T]he Internet has always seemed
remarkably resilient and forgiving," Roger Ebert writes in the December
issue of Yahoo! Internet Life.  "Until recently.  I opened my AOL mailbox
today and found two legitimate messages and 29 examples of 'spam'." 

Sanford Wallace moved fast.  Just two weeks ago he sent out a bulk mail
saying he had set up five servers across the country and was looking for
TOP DOLLAR FOR IT!") In his pitch for the "bandwidth partnership" program,
Wallace noted that "Almost every T-1 connection to the internet has plenty
of bandwidth just sitting around, doing nothing."  The plan was simple. 
"We will ship you one of our pre-configured PCs.  At that point, all you
will need to do is unpack our equipment, plug it in, and connect it to
your network with an RJ-45 connector.  That's it."  CyberPromotions would
access the accounts remotely. 

The scheme was cast as a legitimate business opportunity.  "Join us," 
Wallace wrote, "and let's prosper together."  He promised to share profits
with any service providers "who want to grow WITH US, NOT AGAINST US!" 

In a recent column, the Wall Street Journal's Walter Mossberg wrote "AOL
has its own form of junk mail -- unsolicited ads for merchandise".  And
there's another irony.  Walter Mossberg once asked me, "Why do you blame
AOL for the junk-mailings on the net?  Are they really being primarily
sent by AOL users, not others?"  I answered that originally, AOL had
unintentionally created a haven for spam.  Up until late 1995, AOL didn't
authenticate the credit cards entered to activate free-trial accounts.
This summer AOL reported they'd shipped their 100 millionth disk--and by
then, the disposable accounts had created their subculture of
"disk-dancing" troublemakers.  (The Washington Post reported that between
March and June, AOL cancelled 370,000 accounts for "credit card fraud,
hacking, etc".)

But AOL continues positioning itself as an advertising kingpin. 
Yesterday's AOL-Excite annoucement puzzled the San Francisco Chronicle's
business columnist.  "The real question in some investment circles is why
Excite's stock jumped 62 percent on the news, while the steadily rising
America Online rose another 5 percent."  An investment analyst the
columnist spoke to was just as puzzled; "If you look at what has been
announced, there's nothing definitive to how it will help the earnings of
either guy." 

In fact, right now, "On-line services are trapped between paltry ad
revenue and competition from Internet service providers," USA Today noted,
"which is forcing the adoption of profit-eating, flat-rate prices." 
Nonetheless, in their quarterly report, AOL wrote they hoped subscribers
fees will become less important, as "growth in other revenues, assuming
such growth continues, will be the primary source of future profit

Time will tell.


The NewsLinx service linked to a story about the new class action lawsuit
over AOL's rate change. Their headline?  "AOL Faces New Suite Over Its
Price Structure"  


        David Cassel
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