About a year ago everyone’s favorite internet service provider and newly inducted member of the relevancy deadpool, America Online, was having problems with account cancellations. The problem wasn’t only that too many accounts were being canceled (which was also true), but aggressive customer service agents were making it difficult for fed up customers to move onto greener pastures.

This isn’t surprising, considering many of these same customer service agents were being paid upwards of $3,000 for every customer that they managed to retain. Regardless, there was a huge dust up in the blogosphere along with with the requisite poster child for the outrage in the form of Vincent Ferrari.

Recently, after an extended investigation, AOL has settled for the sum of $3 Million.

America Offline

The $3 Million dollar settlement is designed to compensate the 48 states that participated in this investigation for their effort. The money will be split equally among them. On top of this, America Online will be forced to compensate anyone who can prove that they continued to be charged after attempting to cancel their account.

Considering AOL has lost 9 million subscribers since 2005, this additional financial burden will only serve to cripple the already wounded company.

Web 2.0 Roundup

A year later, I have had time to digest this situation. What I have come up with is that AOL has completely lost touch with what the web requires of it. As one of the first real internet portals, it had the advantage of being the only kid on the block when the internet was still too afraid to cross the proverbial street.

Now, we live in a world where portals are a dime a dozen, email is free and walled gardens are only useful when they provide real added value. AOL has tried to reinvent itself in many ways over the course of the last year, but it has completely ignored its one undeniable strength — a massive installed base.

If AOL wants to improve itself, here are a few suggestions.

Become a Media Company. While internet portals are boring, content portals are still relevant. AOL has the full power of Time Warner behind it. It’s only focus now should be producing and delivering original, interesting and unique content to its installed base. With 12 Million eyeballs, there is still a lot of room to generate buzz.

Simplify. Back when AOL was the internet, a little complexity was to be expected. These days, people want a portal with a clear focus. The next version of AOL and its surrounding web presence should be redesigned to make it as simple as possible for people to access their resources. Feature creep is not going to save this company, reducing customer frustration just might.

Strength Community. AOL’s community features are absolutely fantastic, if this was 1995. We live in a generation ruled by the social network. With an installed base as vast as AOL has, they should take advantage of this fact. While the AOL social network might not be the killer app needed to save the company, if you combine new community features with the only good thing to come out of the company (AIM) you might have a system to rival newcomers like Pownce.

Just this once, I’d like to wish AOL good luck. They’ve taken a lot of hits over the last year, and they could use a bit of good fortune.

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