AOL Goes AWOL

I've been an America Online subscriber for more than a dozen years. Don't bother writing me about its shortcomings. I've also had a stand-alone broadband account since 1998. I just like the way AOL feels. It's comfort food.

I'm not naïve, though. I realize that AOL has been gradually falling out of favor. Time Warner's (NYSE:TWX) online service has seen its domestic subscriber base shrink from 26.7 million members to just 21.7 million since its captive audience peaked back in the third quarter of 2002.

With $20.5 billion in debt, it's not as though Time Warner were in a position to invest aggressively to win back its audience as a subscriber base. That's why the company has spent the last few months beefing up its online offerings. It's not a bad move. This past quarter, AOL reported a 17% gain in operating profits on the strength of online advertising -- one way Time Warner can grow its online revenue base without having to worry so much about retaining its subscriber headcount.

The problem here lies in the mixed signals that AOL is giving its subscribers. Earlier this month, the company pink-slipped its message board administrators. The company is in the process of migrating its once active forums to the slower loading Internet. It's a far cry from the proprietary format it used to house.

Longtime Fools may remember that well. Those boards were where The Motley Fool was born. Well, those walls are in the process of coming down, folks. Axing its community strollers in favor of self-policed behavior? Uh oh! It may not seem like that big of a deal, but killing off its popular newsgroup reader, and now eradicating its own walled forums? It's just one more step in making its service as indistinguishable as the competition.

That isn't meant as a shot at the likes of United Online (NASDAQ:UNTD), EarthLink (NASDAQ:ELNK), or Microsoft's (NASDAQ:MSFT) MSN 9 dial-up services. They all tack on a decent set of features to the otherwise vanilla browser-fueled experience. But the problem is that with AOL porting over so many of its once exclusive offerings to the accessible Web, it will give AOL's own subscribers less of a reason to stick around. Or, even worse, given the company's new bent toward contextual advertising, it will find the audience that it is able to retain spending less time on AOL and more time on their browser of choice.

Yes, Time Warner isn't entirely ignoring the AOL base. It has rolled out benefits like free anti-virus protection, while beefing up its spam filter technology. Still, this isn't the same company that those same longtime Fools cheered on to huge gains when it was a Rule Breakers recommendation. With every slice, it is becoming just that much more ordinary.

You've got related links:

• AOL's springtime spam commercial did have a few holes in it.
• Thinking about the Internet as a growth strategy isn't bad -- in theory.
• Check out the stocks making the Rule Breakers cut on this side of the millennium.

Longtime Fool contributor Rick Munarriz has been an AOL subscriber since 1992, but he doesn't own any of the stocks mentioned in this story. The Fool has a disclosure policy. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.