"What is amazing is that AOL ever became big in the first place when ten years ago they were already an anachronism," writes David Galbraith.
He's forgetting what it was like to find, join, and set up an Internet service before the mid-'90s. It was a hassle on any Microsoft operating system prior to the release of Windows 95 -- anyone remember winsock clients? -- and even when you did connect at a blazing 14.4- or 28.8-bps, there wasn't much to do until the August 1995, Netscape IPO sparked a land rush of innovative Web publishing.
AOL was a solid alternative to the Web prior to 1996, a reasonably good interface to Internet services for several years after that, and it remains one of the easiest ISPs for computer novices today (though it's remarkably overpriced -- $23.90 a month for unlimited access is robbery).
AOL's ability to prosper in the short run (for the reasons you state, and others)does not make it less of an anachronism. It took no great insight to see (yes, even in 1993) that the forces of the Web were diametrically opposed to AOL's business model. The Web is democracy to AOL's central planning.
That AOL prospered to the degree that it did even while the Web was staring everyone in the face, and while the other proprietary services were going down with barely a wimper, is truly amazing, and is to Case's credit (though I suspect it was as much about teenchat, IM and porn as it was about passing out shiny discs). AOL's surging market cap and its take-over of Time Warner stand as perhaps the most astounding example of not merely an overhyping of the Internet, but of a simultaneous and complete misunderstanding of its most fundamental nature.
The clock was always ticking, though. Still is. AOL may well survive, but you can be sure there will be no comeback, and no vindication for Case as a visionary who was ahead of his time. The Web was always way ahead of him.
I was an very early member of AOL. I think they actually named me a charter member and promised me a "lifetime" discount on the cost of the service. They did not keep this promise.
At the time AOL was, by far, the very best option that people had to get online at a reasonable cost. I had been using Compuserve at great expense and with a very unfriendly UI - especially for a Mac user.
I remember being at a MacWorld in SF. I was offered a free disk to upgrade to the latest version of Compuserve. The rep didn't beleive me when I asked if he had ever heard of AOL. They didn't get that CS was toast.
These days one can assume that AOL is toast. Except for one thing. I have tried mightily to convince some very intelligent people to leave AOL and I have not been very successful.
I think Case will be remembered most for the incredible timing of the AOL Time Warner merger. Selling the company mere months before the Internet bust, when its value was grossly overinflated, was an astounding bit of either luck or genius.