America Online has become the biggest online provider in the world within a decade. How did it happen?

At the national Apple User Group Conference in 1988, I was waiting to get on an elevator when I noticed an attractive women standing next to me, also waiting. Since she had the same style name tag on I began talking to her about her role at the conference.

The young lady, Kathy, was the marketing director of a small company from Virginia called Quantum Computer Services and they had a small online service for Commodore 64 users called QuantumLink, or I-Link. Apple Computer was getting bad press for the lack of service to its customers, so Apple hired them to make a consumer version of their electronic link to dealers called AppleLink.

Apple wanted to go head to head with The Source, CompuServe, and GEnie, the leading commercial online providers at the time (this is before the Internet as you know it). Kathy was looking for Apple II beta testers for her new service. It was going to be called AppleLink Personal Edition.

Over dinner a few fellow Mac users and I tried to convince Kathy that she should be developing a Macintosh client for the service instead of an Apple II version. Rumors were flying about Apple dropping the Apple II line and concentrating on Mac development. She asked me if I could round up some Mac beta testers. No problem. I had recently started a computer news service for all Mac user groups in the world so had plenty of folks to choose from.

She agreed to develop the Mac client and I arranged for about 200 beta testers. I also took over the User Group Forum that had recently started on the beta system.

Other online services were entering the market at this time. Later that year Tandy entered the online word with TandyLink (or PC-Link) also through Quantum Computer Services. A company called Connect had recently launched a Mac only online service called MacConnect. You could never 'connect' to it and it folded. Prodigy was also developing.

In September, 1989, Quantum changed the name of AppleLink Personal Edition to America Online and began working on a PC version. AOL, as it was being called among beta users, was the first stand alone graphical user interface to a commercial online service (not counting MacConnect which didn't work and AppleLink that was available only to dealers). Apple was still pushing the service to Apple II users.

I remember telling Kathy, now a best friend, that she should be prepared for Apple dropping the Apple II line, as was rumored. So in September, Quantum began seeking 25,000 Beta testers. They never reached that many, but we worked out a program that every Apple user group could have one free ambassador and would offer a special discount price to their members to build up an online membership.

America Online planned to debut October 2, 1989. For a $5.95 monthly fee, users would receive a custom user interface program and one hour of service/month, with additional $5/hour fee for additional time. The service offered stock quotes, access to Grolier's Academic Encyclopedia, bulletin boards, news, electronic mail, and the usual forums found on CompuServe and others. If you signed up before January 31, 1990, you received a special 20% lifetime rate reduction for charter members. This was less expensive than CompuServe and the other online services. There were no unlimited one monthly fees back then (and modem speeds were a painful 1200 bps).

Quantum started to advertise in the Mac magazines to get sign ups.

Sure enough Apple took one step forward and two back. They dropped America Online in late 1989 before they launched officially. Fortunately, Quantum had negotiated in their contract that if Apple dropped the ball, Quantum kept the technology. No strings attached.

Kathy called me frantically breaking the news and was worried they would not be able to launch effectively. So, AOL sponsored my computer news disk in January, 1990 (and again a few months later) and I helped them get their first few thousand members. I wish they had stock options then. I'd be rich!

My news service was disk based. Each month the editors of all the user groups received a disk filled with articles, reviews, tutorials, and shareware and it was sponsored by a third party company. On the disk was the sponsor's ad, and if the editor used any material on the disk the ad was placed in their newsletter as payment. A win-win for all. The editors got tons of great stuff to print for their membership for free, and the company promoted their products (usually at a discount) to thousands of thankful Apple users.

Apple did drop the Apple II and AOL was a Mac only service for most of the year until they introduced a PC version later in 1990. The two worlds did not talk to each other however. In June 1990, they offered a special online service to IBM's ill fated and short lived PS/1 Computer, called Promenade. Eventually, AOL merged all their online services into one America Online allowing everyone to talk to each other. They officially changed the name of the company to America Online dropping the Quantum name (which confused people with the hard drive manufacturer anyway).

When I was writing my book EcoLinking (the first public Net book) in 1990, I mentioned to Kathy that AOL should have free Internet access. Compuserve and others were offering it for an extra fee (like everything lese they offered). She remarked, Why? It was two more years before AOL introduced Internet access, but in her defense, it was free when they did.

CompuServe, GEnie, Prodigy and the other online services looked down at this small online company called Quantum Computer Services. When the press published features about the upcoming online revolution, they usually ignored AOL. They didn't even mention them. That infuriated the people at AOL. I remember at a meeting they vowed to own them all!

Prophetically, AOL bought GEnie first in 1996 and killed the service. AOL purchased CompuServe in 1997, the grand daddy of online services and chief competitor, and now limps along under AOL's thumb. Prodigy barely survives, and Microsoft Network goes through more revamps than an old hollywood actress at the plastic surgeon. In 1999, AOL merged with Netscape, the best Web browser on the market.

AOL is a remarkable story. In 1991, a full year after launching, AOL had 131,000 members. In 1992 AOL went public at $11 a share. Now, ten years later it has 20 million members, enough money to buy Time Warner, and become the largest online media provider in the world.

Oh yeah, Kathy retired a few years ago at 30 and is worth millions.

Now you know the rest of the story.

©2000 Don Rittner