AOL - MSN Beats Out Google

In May of 1997, two iconic online services AOL and MSN announced that they would be joining forces to form a joint venture company. With a combined user base of around 45 million unique visitors per month at the time, AOL-MSN was created as the world’s largest online service. In comparison, Google had only attained about 10 million monthly users by this time period.

What were the results? Nearly 50% of all new paid subscribers went to AOL-MSN while no other company gained more than 10%. Additionally AOL-MSN services were grossing $700m in annual revenue that same year.

What can this all mean? Well, for one thing it’s a clear example of how rapidly the internet economy moves. Today, Google is far and away the most powerful search engine company in the world, and Yahoo-Dow Jones is still a very formidable competitor. The reason for this? Competition drives innovation. Competition creates better products, keeps prices down and provides consumers with access to more information than ever before.

So when I think about AOL-MSN I think about innovation in both user technology and business models. Back in 1997, the internet was a very different place and both AOL and MSN were pioneers in their own right.

The first major technological innovation that marked AOL’s era of dominance was the release of its proprietary dial-up service a few years earlier. This allowed millions of users to access the internet for the first time, as well as creating true competition against other online services. Additionally, AOL made massive investments into developing technology that allowed it to change its dialup service into a broadband business model.

The second major innovation that made AOL-MSN so successful was the introduction of robust content and marketing platforms. Both AOL and MSN immediately began developing their own proprietary content management systems (CMS) that allowed them to create their own homepages, online forums, and email services to name a few. This allowed them to take advantage of the enormous growth in internet usage fueled by search engines, which were based on CPM advertising models. AOL used its technology to create its popular portal known as The Huffington Post while MSN created its version known as MSN Services. Through these investments AOL was able to attract advertisers that were interested in using the internet for branding campaigns.

The AOL-MSN vision was to create a technology company that would have an influence on the media business as well. In order to achieve this, AOL-MSN invested heavily into the creation of new advertising platforms, especially email. In June of 1998, the AOL-MSN email services were combined and renamed MSN Hotmail in an effort to increase brand usage. The company also continued exploring online publishing opportunities with its popular internet portal for news and information called MSN.com.

To round out their offerings, both companies created a suite of software products that made it easier for consumers to manage their online interaction with third party websites and services.

Conclusion

Microsoft made the decision to separate itself from AOL in 2005, and today you can find Yahoo-Dow Jones as its primary competitors. But the influence of AOL-MSN on the internet is clearly felt in all aspects. Technologically, both companies helped to create a version of what we have today with broadband internet connections, social media platforms and search engines. On a more business wise level, both companies have been at the forefront of online advertising for years. It’s also interesting to note that they were among the first companies to move into online media publishing with their respective portals Yahoo! News and MSN.com.