America Online once again went into damage-control mode Thursday by reversing course and dropping plans to hand out members' phone numbers to telemarketers. "Upon further reflection," the company said in a statement, this might not be such a good idea after all.
Duh.
But give AOL credit for this much: Despite a flood of bad ink in recent months over prolonged busy signals, runaway growth, and alleged consumer fraud, the world's biggest online service can still find ingenious ways to piss off its 8.5 million subscribers. In the latest case, it's not so much what the company has done - although that's open to debate - but how it tried to do it.
The fact of the matter is that other online services have their own arrangements with telemarketers and junk mailers. The key difference, however, is that they generally ask new members up front whether they want to receive promotional materials from advertisers. If not, that's the end of it.
In AOL's case, the company's lengthy terms of service already provided for members' names and addresses being given to third parties. But in revisions to go into effect this fall, AOL this month quietly changed the wording to allow for phone numbers to be part of the package as well. What's more, if people didn't want their numbers being parceled out, they'd have to take it upon themselves to contact AOL and have themselves removed from any and all telemarketing lists.
"We should have been clearer about the fact that we changed the terms of service, and about the rationale for the change," CEO Steve Case said in a letter to AOL members Thursday. "Obviously, by not being more proactive, we've generated a lot of confusion and concern."
He explained that "the only calls we intended for you to receive would have been from AOL and a limited number of quality-controlled AOL partners." On second thought, Case said, "we will not provide lists of our members' telephone numbers, even to our partners whose products we still plan to offer you. The only calls you might receive will be from us."
This at least positions AOL closer to the Microsoft Network, which, if members give the go-ahead, will directly funnel promotional materials to subscribers on behalf of advertisers. "We will not give out information about our members to anyone," said Jessica Ostrow, MSN's group product manager.
At CompuServe, spokesman Steve Conway said members must first authorize the company to provide contact numbers to junk mailers and telemarketers. Interestingly, he noted that "quite a few" do indeed ask to be placed on promotional lists. "Some want it, some don't," Conway said. "But they all want to decide for themselves."
And that's where AOL went astray. For many members, the latest episode was a rerun of the sort of don't-give-a-damn disregard that marked the company's unabashed expansion efforts at a time when existing members were struggling to log on. The "access crisis," as AOL execs call it, compelled the company to throttle back on marketing and to invest heavily in new infrastructure.
You'd think that would have taught them a lesson. It didn't. Or perhaps AOL's judgment was impaired by the excitement of having climbed into bed with a bunch of high-paying new business partners.
The online service is receiving nearly US$200 million from bookseller Amazon.com, florist 1-800-Flowers, shopping network CUC International, long-distance carrier Tel-Save Holdings, and car dealer Auto-By-Tel. In return for their cash, each company gets placement on AOL's screens and access to millions of consumers.
Kenneth Leon, an analyst at the Chicago Corp., speculates that AOL may have crossed the line in trying to please its new pals. In serving up its members as a corporate asset, he said, the online service may have overlooked the fact that people seldom like being treated as a commodity.
Still, Leon believes AOL will bounce back - yet again - from its latest misstep. "This is a young company," he observed. "When they realize their mistakes, they make corrections. Chalk it up to experience."
And, over the long haul, members can be forgiving. "Consumers say they don't like this stuff," said Nick Donatiello, president of market researcher Odyssey. "But do they not like it enough to do something about it? Furthermore, what are they going to do? The choices for consumers are limited."
That, at least, seems to be one lesson that AOL has taken to heart.
