September 03, 1998

Article at Washington Post

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AOL.COM How Steve Case Beat Bill Gates, Nailed the Netheads, And Made Millions in the War for the Web By Kara Swisher Times Business. 331 pp. $25

How do you write the history of a skyrocket's flight?

That's the project Kara Swisher, former staff writer for The Washington Post and now Silicon Valley correspondent for the Wall Street Journal, took on with "," an account of America Online's journey from its undercapitalized beginnings as a bottle rocket launched from behind a car dealership in suburban Vienna, Va., through its arrival as the enormous mother ship it has become, hovering at its mooring near Dulles International Airport.

Through unprecedented access to AOL executives and records, Swisher has made it clear that the company's history has been nothing if not a thrill ride. All the highlights are here: the service's humble beginnings as the reconfiguration of a defunct dial-up computer game delivery system that originated in the fall of 1982; its morphing into one of the three nascent proprietary online services that began slugging it out for market dominance as the decade turned; its carpet bombing of America with diskettes offering free time online; the public offerings and the skyrocketing valuation of the company's stock; the multimillion customer sign-ups; the staring matches with Bill Gates, in which the Redmond Sphinx was forced to blink; the leapfrogging over competitors like CompuServe, Prodigy and Gates's Microsoft Network into a position of undisputed world dominance in the brand-new online industry.

Swisher's history doesn't skimp on detail in telling the other side of the story. She goes to some pains to show that the flight hasn't always been smooth, especially in the black year of 1996 -- a year Chairman Steve Case and company would just as soon forget -- when gravity began to exert its inexorable pull on the AOL rocket. That year, "churn" -- the phenomenon whereby customers cycle off an online service nearly as fast as they join -- finally began to slow the growth of the company's customer base. A customer lawsuit was instituted over questionable hourly charging practices, and the Federal Trade Commission added to the company's troubles when it began looking into billing problems.

Internet service providers began conducting raids on AOL by providing low-cost, flat-rate access to cyberspace, and when AOL countered by instituting its own flat-rate pricing, it felt the wrath of its proprietary-content providers, who had gotten used to receiving a fat share of connect-time charges. Technical problems brought on by an increasing number of subscribers led to one of the company's most embarrassing debacles, an awful 19-hour stretch on Aug. 7, 1996, when AOL's system froze and its network did a complete and full-out face plant.

These mounting pressures finally made themselves felt where they hurt most -- AOL's stock price -- which lost 70 percent of its value in less than six months, sliding from more than $70 a share in February 1997 to $22.37 1/2 in October of the same year. Wall Street demanded that AOL answer investors' concerns by altering its accounting practices, and when the dust settled in the first quarter of 1997, the books showed a $353.7 million loss. As if that weren't enough, 1996 was also the year that anti-pornography forces centered their cross hairs on the Internet, America Online included.

Swisher makes excellent use of her resources to show how Case and his hand-picked management team met these challenges, rebuilding their rocket not once but several times. Competent reportage of such inherently dramatic stuff makes for good reading. And yet, and yet . . . one reads and wants more.

For example, gearheads coming to the book hoping for a peek inside the box at the technological and structural innovations that helped make AOL's market dominance possible will leave disappointed -- "" is long on analysis of the company's corporate culture but short on nuts and bolts. Swisher would have helped the book greatly by leavening its boardroom anthropology with some discussion of how the system's network architecture, content offerings and user interface meshed and evolved.

The narrative would have been helped, too, by having more space devoted to the emergence of the friendly online face and sense of community that AOL loyalists, Steve Case and company collaboratively strove to create and to which the service's success is largely owed. Without such additions, the book sinks at times into a plodding this-happened-then-that-happened recitation of the service's rising and falling (but mostly rising) fortunes.

But this is a little unfair. Swisher never pretends that "" is more than a history of events, and her book makes a valuable addition to the canon of literature emerging on the history of the online communications revolution. Still, one could wish that she had made more penetrating use of her forays in AOL's offices and files. The company's familiar triangular logo has, over the past decade, come to stand for far more than Steve Case's brainchild: It symbolizes a phenomenon that has added e-mail, chat rooms, Web pages and cyberspace to the national lexicon. "America Online" is as much a statement as a brand; America is online, and a true accounting of how that has been accomplished would require a more comprehensive examination than is offered here. That's a history that remains to be written. By Mark Baechtel, who writes frequently about the Internet and computers.