According to the New
York Times
, Jonathan Miller, AOL‘s chief
executive, is presenting a proposal to Time Warner “…calling for a near halt in
marketing for AOL’s 17-year-old Internet access service, price cuts for
existing customers and thousands of layoffs…His [Mr. Miller’s] goal is to
devote all of AOL’s energy into building its free Web-based services”.

“Jessica Reif Cohen, an
analyst with Merrill Lynch, estimates that this plan could well cut its revenue
from domestic subscriptions (both dial-up and high speed) by 52 percent, or
$2.1 billion at an annual rate. And AOL’s operating profit could fall by $251
million, 14 percent of her estimate for this year.” 

What’s the logic behind
Mr. Miller’s proposal?

He feels that “to wring
every last dime from its dial-up subscribers is preventing AOL from being as
aggressive as it can in competing with Yahoo, Microsoft and Google on the Web” moving
away from domestic subscriptions is planned to “eliminate the conflicts between
preserving the past and building the future”.

Even companies that
recognize their business model is doomed often try to just tweak it around
the edges. How often does anyone blow it up
entirely and attempt to create something that’s more relevant to the market

Yesterday, we spoke about leadership’s
. If Jonathan
and Time Warner are genuinely prepared to forgo immediate revenue in
order to insure long-term growth, they’re sending out a powerful message to their
customers, investors, and – even more critical to changing their company – their

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