Remember All Those AOL CDs? There Were More Than You Think

In July 1993, America Online (now AOL) embarked on an aggressive direct marketing campaign in order to become the dominant market leader in providing Internet service to households across the country and, later, much of the world. For over a decade, the company did whatever it could to get a free AOL floppy disk, and later, CD (and with it, an offer for dozens if not hundreds of free hours of access to the service) into the hands of customers. A 2002 CNN article noted that ubiquity of the discs; they were regularly found “in magazines, at the movies, in the mail and at parties.” In 2007, just months after AOL stopped the direct marketing program, PC World estimated that the company had set over a billion promo CDs into the wild over the course of the 13 year campaign.

The sheer number of discs was mind boggling. And the truth even more so.

Various former AOL employees and executives took to online Q&A site Quora to discuss the costs and benefits of the company’s strategy to blanket the universe with the CDs. Steve Case, the co-founder and former CEO of the company, explained that each subscriber stuck on the service for just over two years and was worth about $350 in revenue, and the company would spend 10% of that to get a new user. With $35 available, therefore, to gain a new customer, the company had the opportunity to produce a whole lot of CDs. The company’s former chief marketing officer (and, as she described herself, “carpet bombing queen”), Jan Brandt, posted that AOL spent over $300 million on the program and that “[a]t one point, 50% of the CDs produced worldwide had an AOL logo on it.” Amazing — and only half the story. Reggie Fairchild, a product manager for AOL’s version 4.0 release in 1998, responded with this amazing (and probably exaggerated) claim:

When we launched AOL 4.0 in 1998, AOL used ALL of the world-wide CD production for several weeks. Think of that. Not a single music CD or Microsoft CD was produced during those weeks.

While the strategy created a lot of waste and, therefore, complaints, it was very successful. Brandt noted that at the peak of her “carpet bombing” campaign, AOL was signing up a new subscriber every six seconds. Fairchild stated that before AOL 4.0, there were 8 million AOLers; a year later, there were 16 million. And Steve Case told Quora readers that in 1992, before the CDs became ubiquitous coasters, there were only 200,000 members, but “a decade later, the number was in the 25 million range.”

Bonus fact: With broadband Internet access now nearly as universal as the AOL CDs once were, it seems strange to think that many people are still AOL Internet subscribers. But a lot are. According to AOL’s third quarter 2012 earnings report, 2.9 million people still use the service as paid members (or as one of two exceptions: users in a free trial period or reduced-fee members in hopes of retaining their business). But the trend is dramatic: that 2.9 million number is down from nearly 3.5 million in quarter three 2011 and just over 4 million in quarter three 2010.

From the Archives: Stupid Google Tricks: Fun things you can do with Google, no CD or membership required.

Related: In 2000, AOL’s Online Advisor (to consumers), Regina Lewis (no relation), wrote a book titled “AOL Wired in a Week: Master the Internet in 10 Minutes a Day.” It’s still available, here, and is interesting only as a historical relic. But it comes with a free CD, of course!