Prodigy's lessons for AOL, MSN
Prodigy learned a lesson back in the 1980s that other online services perhaps have yet to get: Don't force too many changes on your members.
That's why Prodigy is doing two things that its chief rivals Microsoft Network and America Online (AOL) aren't doing: maintaining its proprietary network while it converts to an Internet-based service and allowing members to choose whether they want to go to flat-rate pricing.
Prodigy announced today that it's offering unlimited pricing for its proprietary network at $19.95 a month and made it clear that members must opt for the new pricing plan. If they want to stay with the $9.95 plan, they don't have to do anything.
AOL incurred the wrath of members and the legal community alike when it decided to automatically switch members to its new unlimited pricing plan; members could keep their old plan only if they specifically request to do so.
MSN, on the other hand, will be killing its old service by July 1997, a move that has angered many loyal users of "MSN classic."
"We've gone through other product migrations," said Mike Darcy, spokesman for Prodigy. "One thing you learn, even when you come up with a better product, is that there are a lot of people who say, 'This is better.' But there's always a segment that's very comfortable with the old product and wants to remain with it."
In other words, while the online world changes at hummingbird speed, many consumers need a little more time to embrace the latest and greatest options, especially after investing time becoming familiar and comfortable with the "old" system.
Darcy added that despite the industry's migration to the Internet, it's not a panacea. Many users log on with slower modems and computers that don't have enough power to handle an Internet connection. Many users--even those with souped-up Pentiums and access to the Internet with other providers--don't want to move because they have found their online home. They prefer using a closed network where the world is contained and manageable, and perhaps more important, where they have found friends and a community.
"Once you're online and in a community, you really grow attached to it," Darcy said.
Just ask some disgruntled MSN members. Some have become so angry that the service is breaking up their community and forcing them to move to the new service that they have launched an initiative as well as a Web page, The official MSN2 hate site, to publicly put down the new MSN.
Many of these members are frequent users, spending hours on the service to build community. Their request? To maintain the year-old service while building the new, jazzed-up, television-like MSN.
But MSN has said no. It is focusing its attention on the new service, which is being promoted with a $100 million ad campaign this year. Besides, MSN executives have said that the new service is so superior to the old that it would be folly to maintain both.
Prodigy learned that regardless of how good the new service is and how many love it, there still will be people who want to stick with the tried-and-true service.
"Just shutting things down and telling people they have to go to a new service does not play well," Darcy said. "We learned that lesson back in the '80s, and maybe Microsoft is going to learn that in 1996."
As far as pricing goes, Prodigy is following the same strategy: letting people choose. When AOL announced it was going to a flat-rate pricing plan, it decided to automatically move all its members to that price unless they specifically took the time to go online and request that they keep their old pricing plan. They have also been given the option to call to maintain their old price; waits on the phone have reportedly been as long as an hour.
One member filed a class-action suit, and AOL was snowed under with bad press when attorneys general in 20 states objected to the way the service implemented the plan, calling it an illegal "negative option" scheme.
Darcy said Prodigy never had a plan to automatically convert its members. But based on its past experience with forcing change on customers, it could have told AOL what to expect.
"Let's just say that we knew that what they were doing was going to cause some outrage."