A VCAIMing High
In my opinion, the single greatest asset that AOL has is AIM. It's the only thing related to AOL that I have used in the past ten years (until they bought weblogsinc) and I use AIM every day.
The amount of real business that is conducted over AIM every day is truly amazing. Hedge funds use AIM to make trades, developers working together from opposite sides of the world use AIM to talk about their projects, I use AIM to talk to most of my investments every day (via Trillian).
And yet, AIM has been seriously underexploited by AOL for years.
In the late 90s, I was an investor in ITXC. Tom Evslin, the founder and CEO of ITXC, called on AOL and offered them the opportunity to use ITXC's global VOIP network to power a VOIP service for AIM. AIM could have and should have been Skype. But it wasn't because AOL missed the opportunity to offer a free and easy VOIP service on top of AIM. I am not saying that they should have done business with ITXC, but they should have done business with someone and gotten agressive about integrating VOIP with AIM. By the time that AOL did offer VOIP on top of AIM, Skype had done it better.
USA Today has a story today on AIM's new VOIP service that gives away a free local phone number. That's pretty neat because a local phone number on Skype costs $4/month. And for $14.95 per month, you can get unlimited calls over AIM, both local and long distance. I might try out AIM as a replacement for Skype In and Skype Out, but that will require making an effort. Intertia is a hard thing to overcome.
There have also been reports that AOL is about to launch a MySpace competitor called AIMSpace that will allow AIM users to port their buddy lists to a MySpace style social networking application.
The bad news is that my girls, two hard core AIM users, have already built social networks on MySpace that are as large or larger than their AIM buddy lists. Maybe my girls and their friends aren't the target for AIMSpace, but I fear that AOL is again a day late and a dollar short.
If I were AOL, I wouldn't try to replicate MySpace using AIM as a platform, I'd try to collapse MySpace somehow using AIM. Maybe that's what AOL is after by opening up AIM as a developer platform. But as I've said on this blog before, they haven't opened up AIM fare enough for my taste.
If I could take my buddy list anywhere I wanted to take it, if I could use it to build a social network on MySpace, LinkedIn, or Friendster, now that would be something.
AOL used to be the top dog. Top dogs use lock-in to control their market position. That used to work for AOL. Now it works for Apple, Google, and possibly Yahoo!
But AOL is not a top dog anymore. Underdogs use open systems to undercut the top dogs who are using lock-in. That's what AOL needs to do at this point. And opening AIM all the way to the buddy list is where I'd start if I were AOL.
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Posted May 5, 2006 in Venture Capital and TechnologyComments
When word of AIMSpace first got out, I went looking for companies AOL might bring into the fold. It was then that I noted Xfire might be a fit (of course Xfire has since been acquired). But while looking into this I came across some interesting news items; like AOL's "Scary Internet" commercial. I've since discussed this on BW's Blogspotting and said there I believe AOL has baby boomers square in their sites.
That means MySpace is of little consequence. And it means Skype's market share isn't an issue. Neither is the sale of Xfire a big deal (this crowd is largely playing so-called Casual Games). Those are all the apps for a "young" demographic. The Gen X'ers. Or the "Gold Collar" crowd who, from my own personal observations, may be feeling the pinch (kicked out of the parent's home, burdened with credit card debt, highly susceptible to employment turnover, used to spending money a bit too casually, aso).
My personal bet is that AIMSpace will be the walled garden for the wary and largely-unconnected 40-somethings and over.
Most of my contemporaries (mid-40's) are only marginally connected. They don't use Skype, they have more-than-adequate cell phone plans. Email is fine for home use. They don't have BitTorrent. They don't do a lot of the things those of us with blogs assume they would. It may sound odd, but about the only thing they might have that qualifies them as connected is an iPod and iTunes.
These people are ripe for AOL imo. I'm just waiting to see something that confirms my suspician.
Posted by: csven | May 5, 2006 8:40:08 AM
Maybe AIM is AOL's greatest asset, but even that suffers from the threat of erosion--AIM is only big in the States (possibly Asia, I don't know), but not at all in Europe. MSN Messenger and Skype owns instant messenging in Europe, and it is understandable--their products are simpler and better... at least compared to when I installed AIM in the fall of 04.
Posted by: Bjorn Ruwald | May 5, 2006 8:53:32 AM
I agree. It is the single best thing AOL has. In terms of people migrating from other sites. I don't see a problem the web is a transient place. One email and boom everyone knows about the change.I like Skype, but I think this is going to be huge.Also the commercial click to call x business angle needs to be exploited.
Posted by: Loren Feldman | May 5, 2006 9:06:38 AM
AOL Journal and MySpace both need APIs.
Posted by: Raj Bala | May 5, 2006 9:29:01 AM
I've always thought that one of the reasons AIM is so successful is that AOL didn't try to do anything with it.
Posted by: Rick | May 5, 2006 9:54:09 AM
Fred, I'm glad someone else is seeing the true value of AIM. With the current trends of the web, especially social networks, users are very likely to switch services. A good amount of people could leave myspace and other social services for another service in a couple of years (friendster effect). On the other hand, AIM users will never leave their screenname. We did a small survey, and most individuals had their AIM names for five, sometimes even ten years. They may get Yahoo! messenger, but that may be just to communicate with other users for work,etc.. Basic fact, there is a deep psychological tie and time invested value for individuals to their buddy list and AIM screenname like none other. AIM did open their APIs in the OpenAIM initiative on March 6th to allow others to build around the AIM system. Since then, we ourselves have built some really neat things around AIM for our startup's project, which will finally launch early next month, to reduce friction for our users. All in all, AIM may not compete directly with MySpace at first, but may take a different approach that steals the same group of users at the end of the day. Good question to ask your kids, you, colleagues,etc.: If you had to abandon one service, never to have it again (gone, deleted, not able to come back on,etc.), which would you get rid of, your Myspace page/friends or your AIM buddylist/screenname?
Jason L. Baptiste
CEO of Viral Ventures
Posted by: Jason L. Baptiste | May 5, 2006 10:26:26 AM
So I was at the Producer's Guild of America event a few weeks back that discussed the fall of the producer. Marketing guy was there from MySpace… and their mission is to make communication as easy as possible. In my opinion AIM is a much better way to communicate with people. In a sense MySpace pages have replaced what were AIM profiles. This is what aim has to do to make this successful.
1. Allow people again to express themselves through AIM… that includes the AIMspace concept
2. Allow people to discover new people through others on their buddy lists… my AIM contact list only includes people I know… this does not create a social network.
3. Allow people to leave messages comments, and even instant messages through AIM when the person is not online.
Just like how they are now giving away free phone numbers, I wish AIM would have done something like MS live and given away domain names… this would be even LESS restrictive than myspace, and would create even more personality.
They have all of the pieces in place. A web platform, a mobile platform, a client platform… they just have to tie them together seamlessly in a way that allows for personalization.
If they did these things…in an easy intuitive way, I am positive it would be a VERY real challenge to MySpace.
Posted by: David Dundas | May 5, 2006 1:53:27 PM
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