By Catherine Yang Debuting at a splashy party at New York's Lincoln Center on Oct. 15, AOL 8.0 is the opening salvo of America Online's comeback plan. The Internet giant has a lot riding on the latest iteration of its software: Not only is Wall Street skeptical about the outfit's prospects but the competition from Microsoft's much-improved MSN is becoming more intense.
AOL 8.0 showcases new broadband content, introduces personalized features such as customized Welcome screens, and highlights many of the community and communications features that used to be the heart of the service. Like other recent upgrades, the improvements are evolutionary, not revolutionary -- although this particular package has a lot more of them.
INCENTIVES TO STAY. The new bells and whistles are aimed at persuading AOL members to stick with the service, addressing (if not solving) the profit-sapping problem of customer churn. AOL 8.0 includes many more new services than did the unambitious AOL 7.0, whose splashiest new attractions were a poorly thought-out local news-headlines feature tailored to subscribers' ZIP codes and an improved online radio service.
The real challenge for 8.0 and subsequent versions: To offer enough AOL-only broadband content to keep customers from bolting to high-speed competitors, rather than keeping their AOL subscriptions as they switch to DSL or cable-modem lines. I think 8.0 shows enough programming acumen to let AOL hold its position in the heated competition with MSN, Yahoo!, and others for broadband users.
The first and most striking new feature appears when you log on: 8.0 offers to personalize the Welcome screen, so you can go straight to the content you most want. Be it particular stocks or the latest score of a favorite teams, one click will do the trick. Until now, all 26.5 million U.S. users got largely the same Welcome screen. Then, users had to navigate to My AOL, where they clicked through several windows to delineate personal choices for news and other content. AOL 8.0's wrinkle: It tries hard to make setting up your personal preferences easier than sites like Yahoo.
SIMPLE CHOICES. AOL conveniently dumbs down the selection process by offering pre-selected custom settings. One click can bring up, for example, "headlines, the latest music, games and homework help" or "headlines and all you need to manage family life." I decided I was really a Screen 1 ("headlines, business news and sports"), though I'd rather be the more exciting Screen 2 ("headlines, nightlife and great discoveries"). AOL is betting that this will suit neophyte users, who probably aren't willing to endure the tedium of personalizing their entire service by clicking through window after window of choices.
Jupiter Research analyst David Card estimates that only a quarter of any big Web site's users opt for personalization, and he applauds AOL's go-slow approach as a means of engaging more subscribers. As members get used to the idea, AOL plans to continue pushing personalization into more channels and enable users to configure the toolbar to their own liking. Already, AOL's Entertainment Channel can dish up a guide to the coming week's TV shows tailored to a user's specific interests.
While both dialup and broadband subscribers can get the new personalization, AOL users with fast connections will gain the most -- and it can come as a pleasant surprise. I was initially underwhelmed, for example, to learn that AOL was buffing up its broadband content with more exclusive movie trailers, music videos, and news clips. What's so great about movie trailers?
IN THE PICTURE. To my surprise, I was soon hooked -- thanks in part to the fun features accompanying the offerings. For example, not only can you see an exclusive video promo for Red Dragon, Anthony Hopkins' new Hannibal Lecter thriller, you can also order tickets, bring up biographies of the stars, and see what the reviewers have been saying. After watching the flick, you can post your own reviews and chat with other AOL users.
Another useful addition: the e-mail and instant messaging icons atop each screen. These make it easy to send songs or video clips to friends, which is great when listening to one of 8.0's most appealing new broadband features: CD-quality radio. If you particularly like one of the 125 stations that range from World Music to Dance & Electronica, you can easily e-mail the page and link. AOL 7.0 offered a similar Radio@AOL service, but the new broadband-only version, while still less refined than MSN.com's radio offering, comes with crisp digital sound.
The emphasis on instant messaging and broadband content highlights a key theme in 8.0: AOL's goal of returning to its roots as a chat community or "cybercommons." AOL views instant messaging and chat as core strengths that distinguish it from competitors (see BW Online, 10/8/02, "AOL's Ted Leonsis Keeps the Faith"). Through a new service called Match Chat, subscribers enter their interests in an online profile, and AOL alerts them when other users who share those interests log on.
PEST CONTROL. Because so many people use AOL primarily to communicate, 8.0 also gives a long-overdue, but still disappointing, upgrade to AOL Mail, which has long been technologically weak. To address complaints about spam, AOL now tags incoming messages with icons that indicate "People I Know," "Bulk Senders," and "Unknown Senders." I found the icons a little confusing and difficult to distinguish.
However, while less sophisticated than many spam-fighting technologies, this is at least a step forward. In addition, subscribers now can block mail and instant messages from specific senders. For fun, members can choose patterns and colors for e-mail backgrounds and personalize instant messages with a selection of icons and sounds, from a baby crying to breaking glass.
AOL claims to be returning to its roots as a member-focused online community. While the most recent versions of the service seemed intent on peppering members with ads, 8.0's goal is to enhance the programming content itself. AOL hopes evolving enhancements will stanch the departure of members to other dialup and broadband competitors. It's too early to tell if the new software will achieve that goal, but at least AOL has restored its user-oriented focus with more thoughtful programming. Yang covers America Online from BusinessWeek's Washington bureau