83 PURCELLS DUMPED BY AOL
July 8, 1997
Since May 1994, Carl and Ann Purcell have been encouraging photographers and photo buyers to use America Online. Their Pictures of the World forum was the first major photo site on AOL, and part of the AOL Travel Channel. The Purcell's have encouraged other stock photographers to consider the benefits of promoting their work on an on-line forum.
Now they have been dumped by AOL.
They built a site that was internationally recognized in their field. Their forum had six community leaders across the country who answered questions building a strong sense of community involvement. They encouraged writers to put up illustrated stories and they ran contests.
The forum generated over a million dollars of income for AOL, entirely on connect-time which means users spent something in the range of 335,000 hours on the Purcell's site. For their efforts the Purcell's received 10% of the connect fees, or around $100,000. This was not profit because the Purcell's spent a great deal of time and money developing the site, inputing and keywording the more than 8,000 images that were on the forum when it was closed down, and providing daily support.
Individuals were allowed to download images from the Purcell's site and use them for educational or non-commercial purposes. If they wanted to use the images on a web site or any other commercial use they were required to contact the Purcell's and pay a fee.
Over the three years the Purcell's were able to license rights to approximately $100,000 in stock usages, including one $20,000 sale to use 305 images on a CD-ROM and a $10,000 sale to use another large block of images.
The Purcell's saw the potential of this technology and were willing to accept a marginal return in the early years to position themselves for the future. Now, when that future was about to be realized, and they could benefit from their three year investment, AOL pulled the plug. At the end, the forum was getting over 200,000 hits per month.
One of the keys to a forum's success is to recruit commercial accounts to advertise and sell products. The Purcell's had wanted to do this for some time, but their contract with AOL prohibited it. Finally, after months of negotiation, in March of this year, they were authorized to start recruiting commercial accounts. A little more than a month after this permission was granted, they were notified that the forum would be terminated at the end of June.
Where Is AOL Headed?
When AOL went to flat rate pricing for users last year they needed to find another way to generate revenue. As a result, they started charging suppliers $55,000 a year to maintain their site. The Purcell's were not offered this option, but their income level would probably not have supported such a payment.
Another reason for high annual fees may be to force marginal suppliers, who don't absolutely need to be on AOL, off the network, as a way of reducing traffic.
But, larger companies that might be able to afford $55,000 may also disappear. For example, Nikon, which was one of the first five major companies to join AOL, has decided to use these resources to beef up their WEB site rather than maintain a position on AOL.
When this shake out is complete the forums available on the new AOL may be quite a bit different that those current users have come to enjoy.
AOL partners have been disturbed by the way AOL has handled this transition from charging users for connect time to flat rate pricing. All along AOL had been telling the Purcell's that their connect time was meeting expected targets and that they were an asset to AOL.
While scores of other forums were closed as a result of flat pricing, the Purcells were specifically asked to attend a training conference for AOL partners in Phoenix this spring and scheduled to attend training for multimedia presentations. They were encouraged to spend $5,000 on a new computer system that will have little value now that they are no longer sending pictures to AOL.
In the future, organizations that are prepared to spend $55,000 a year to provide on-line services will probably look for assurances that they will be allowed to continue doing business until they decide the business is no longer viable, and not be in a position where someone else can shut them down on a whim.