AOL not only retained them but also enticed them to spend more time on the service. Without an increase in price, AOL provides new features, functionality, and more members who enhance the experience even more. We own AOL in this Fund now because users cannot live without the network effect. They like the sheer volume of people there. The power of this medium is interactivity, and AOL knows how to harness it to increase the time users spend online.
More time online equals more advertising revenue dollars.
Its lower operating margin proves it. More opportunity to grow revenues revolves around monthly subscriber pricing. Competition is receding as new access business entrants are finally non-existent. Time Warner, on the other hand, remains a stock of the 1970's and 1980's, emitting gobs of cash from music and programming, but its top line growth is sorely lacking. We still worry that corporate governance may sway over time to Time Warner and that AOL executives may leave.