AOL’s shift to flat-rate pricing caused capacity crashes and regulatory trouble

Evidence

By 1996 it was charging 19.95 a month for twenty hours, and then 2.95 an hour after that. But it faced price competition from both Microsoft and other “bare-bones” Internet services that were offering “all you can eat” for 19.95 a month or even less. At the end of 1996, AOL switched to unlimited time for 19.95. That brought in millions of new users but also crashes, busy signals, and an investigation by New York State’s attorney general accusing AOL of offering a service it could not provide. Its revenue growth trimmed, AOL began a mildly desperate search for alternatives. — Tim Wu, The Attention Merchants, 725

Categorization

• XREF: connects to: Platforms degrade service quality over time as they prioritize their own profits — W. David Marx, Blank Space: A Cultural History of the…, 707

Broader Connections

• Platforms degrade service quality over time as they prioritize their own profits #exemplifies (0.85) — W. David Marx, Blank Space, 707