Barry Schuler on AOL's Past and Future


If Steve Case is the visionary behind America Online (AOL), much of the credit for the popular Internet service's cheery look and easy-to-use offerings belongs to Barry M. Schuler. A self-described geek, Schuler has directed all the redesigns of AOL's flagship online service since 1995. He became chairman and CEO of AOL in January, when it merged with Time Warner.

Now the 47-year-old Schuler is in the hot seat, calling the shots in AOL's increasingly bitter negotiations with Microsoft over the online service's placement in Windows XP, the newest version of the Windows operating system. BusinessWeek's Amy Borrus recently spoke with Schuler about the service's continued growth, the company's deal with the big music labels, and the promise of broadband connections. Following are edited excerpts of their conversation. (For more on Schuler, see BW, 7/02/01, "AOL's Point Man in the Web War".)

On how AOL confounded the tech elite who predicted the company's demise:

Delivering technology to consumers [so] they don't have to think about the technology turned out to be the most important element of our success.

On AOL's triumph amid the dot-com blowout:

Having paid subscribers is different from having eyeballs and impressions. We have an audience that is very engaged and transactional.

On AOL's growth strategy:

Right now, our subscribers are on the service an average of 70 minutes a day. The more time people spend online, the more we can monetize it. To keep growing, we have to give people things that make their lives fun and convenient, so it's not just 70 minutes a day but two and three hours a day." [Examples of what Schuler has in mind are a digital-music-subscription service, to debut this fall, and making AOL accessible via cell phones, handhelds, and non-PC devices.]

On the promise of high-speed broadband Internet service:

Consumers don't buy speed for speed's sake. They buy the application of the speed. There really has been no killer application for broadband. We think the killer application for broadband will be home networks [which will allow two or more people in the home to be online at the same time]. It will be a huge door-opener.

On how the merger with Time Warner paved the way for AOL to team with Warner Music, EMI, Bertelsmann, and RealNetworks to create an online music wholesaler:

AOL was working for two years on digital delivery of music and having a real rough time trying to get the music industry to appreciate it as a business opportunity and not a threat. But with the merger, I [was able to] get with the guys running the music company [Warner Music executives] and listen to their needs and concerns.

When it was time to work with other labels, they could talk to the other [music] companies from inside the business. AOL goes walking into a music company, and we're Internet guys who love change and want to shake things up, and that can be very threatening. By working together to wrestle the issue down, we were able to break through and move the ball.

On what he learned when he was fired as president of Cricket Software when a bet-the-farm product didn't take off:

If your business isn't profitable, you don't control your destiny.

On his own dabblings in photography, sculpture, painting, and computing:

In the earliest part of my life, I was obsessed with virtually every form of art and media I could get my hands on. Every time I would take on a new medium, I got obsessed with figuring it out on my own, nailing it, and going onto the next one.

I play around a lot with digital photography now. I [also] walk around with a little pad and will try to draw in meetings, or if I have free time, on my boat. I'm afraid I'll wake up one day and just won't be able to do it.


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