AOL, Yahoo! & The Evolution of Social Networking

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If AOL had been managed by successful strategists, it would most likely be competing head-to-head with MySpace, Facebook and Yahoo!. Aside from it’s incredible customer base, AOL was the founding father of Social Networking: chat rooms, instant messenger, home pages, etc. As a company, AOL was positioned better than anyone to dominate and profit from it’s large numbers. If managed correctly, services like Facebook and MySpace could have evolved naturally from America Online.

Unfortunately, AOL got a little too comfortable with it’s monthly subscription income and failed to recognize the changing field. Pretty sad for an internet company. Time Warner didn’t exactly help the situation either. Jeff Bewkes, COO of Time Warner said yesterday, “There’s no reason we shouldn’t be a leader in social networking.” Too little too late my friend.

Yahoo! on the other hand, became successful because they offered free email, IM, homepages, and search. Yahoo! was essentially a free AOL in the beginning and is still the most popular website on the internet. I don’t think it’s too late for Yahoo! to innovate and maintain it’s popularity. I’m not sure what the right answer is right now but perhaps Yahoo! should focus less on reacting to Google and focus more on it’s natural evolution.

I think the lesson to be learned from AOL & Yahoo! is: when it comes to the internet, companies cannot be complacent at all. Innovation and experimentation must be constant and companies must remain as nimble as possible despite growth and expansion. Google’s success is largely based on this notion and I think they will continue to lead.

Related Links:

MySpace, Facebook & iVillage Compared

MySpace vs. iVillage

[tags] google, yahoo, aol, time warner, social networking, marketing.fm, marketing blogs [/tags]

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