Case, Stephen M

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CASE, STEPHEN M.

Stephen Case is chairman of media colossus AOL Time Warner Inc. Credited with making the Internet accessible to the general public, Case oversaw America Online's growth from a small online service into the world's number one Internet access provider, with 28 million members. One of the first profitable Internet ventures, America Online also was the first Internet-based company to be listed in the Fortune 500. Case developed a business model that allowed his firm to make money in a variety of ways, include charging subscription fees, selling online advertising, and developing e-commerce deals with online retailers. Prior to its 2001 merger with Time Warner, employees at AOL, where Case served as chairman and CEO, totaled 14,000 and revenues had reached nearly $7 billion.

A native of Hawaii, Case earned his undergraduate degree in political science at Williams College. He launched his career as a marketing manager at Procter & Gamble, where he developed brands of different health and beauty products. In the early 1980s, he joined Pizza Hut and began developing new types of pizza for the chain. Well before personal computers became commonplace in American homes, Case went online, using a service known as the Source, along with his Kaypro personal computer and a 300-baud modem. He began working in the marketing department of Control Video, which ran an online service for Atari users, in 1983.

When Control Video went bankrupt, the 26-year-old Case and partner Jim Kimsey secured $2 million in financial backing for a new venture. In May of 1985, the pair established Quantum Computer Services Inc. in conjunction with Commodore International Ltd. At first, Quantum offered Q-Link, its modem-based online service, to Commodore personal computer (PC) users only. Owners of PCs made by Tandy Corp. and other companies were able to link to the service starting in 1987. That year, the firm achieved profitability for the first time on total sales of $9 million. Case made online services available to owners of IBM-compatible PCs in 1988 and unveiled a version compatible with Macintosh machines the following year. Enticed by the potential of a mass market for interactive online services and content, Case put together a nationwide online network for PC owners called America Online (AOL) and eventually convinced his partners to change the firm's name toAmerica Online Inc. When the service was officially launched in 1989, it included games, e-mail, and real-time chat capabilities.

Case was named president of AOL in 1990. One of his first moves was to orchestrate a reorganization that entailed consolidating operations to focus on IBM-compatible and Macintosh computer markets and upping the firm's subscribers base via intense marketing efforts, like giving AOL software away for free, and partnerships with media firms. For example, to strengthen its position in the Midwest, AOL forged an alliance with Tribune Co., publisher of the Chicago Tribune, to develop an online information service consisting mainly of local news for residents of Chicago and surrounding areas. As part of the deal, Tribune paid $5 million for a minority stake in AOL. Case took his firm public in 1992 and was appointed chairman and CEO the next year.

After convincing his board to turn down a buyout offer from Microsoft in 1993, Case forged content deals with media firms like Knight-Ridder and CNN. He also steered AOL's development of a version of its online service for the Windows platform. In response to predictions that the World Wide Web would render online services like AOL obsolete, Case decided in 1994 to develop a gateway, AOL.com, to offer subscribers a link to the Internet from AOL. That year, the number of AOL members exceeded 1 million for the first time.

Case took his firm international for the first time in 1995 with service in Germany. Subscribers grew to 3 million. He entered Canada, France, and the United Kingdom the following year and also oversaw a landmark deal with Microsoft in which AOL agreed to include Microsoft's Internet Explorer browser in its software, and Microsoft agreed to include AOL software on its Windows 95 platform. Determined to position his firm as the leader in online services, Case reached similar cross marketing deals with AT&T, Apple, Sun Microsystems, Hewlett-Packard, and Netscape Communications. In October of 1996, AOL hired Robert Pittman as president and chief operating officer. Case put him in charge of AOL's e-commerce strategy, and Pittman began securing agreements from online retailing giants like Amazon.com to sell their merchandise on AOL. With revenues of more than $1 billion, AOL entered Japan in 1997. Membership grew to more than 10 million subscribers that year. According to Case, the reason for AOL's success was its simplicity. In an October 1996 Forbes article he stated, "If you want to reach a mainstream audience, you have to make it more plug and play. One-stop shopping. One disk to install. One price to pay. One customer service number to call."

AOL's meteoric rise to dominance certainly wasn't glitch-free, however. For example, the firm became the target of a class-action lawsuit regarding its billing practices in the mid-1990s. Also, a technical snafu in 1996 shut the service down for 19 hours. When the firm launched a $19.95 per month flat fee program, with no limits on usage, it was ill-prepared for the crush of increased traffic it received. Users trying to get online became increasingly frustrated by busy signals, and eventually representatives from 36 state attorneys general offices met to address the issue. In an effort to counter the negative publicity, Case put in place a $350 million expansion program that included upping AOL's system capacity and hiring 600 new customer service representatives. The firm also agreed to give refunds to U.S. customers who frequently were unable to access their accounts.

Despite being lambasted for AOL's troubles, Case stuck to his strategy of offering a user-friendly, comprehensive online service to an increasing number of subscribers. With the technical snags behind him, Case oversaw two major acquisitions in 1998: instant messaging firm ICQ and rival CompuServe Inc. In 1999, AOL added Netscape Communications to its growing list of holdings. Case's tenacity served him well. According to BusinessWeek Online writer Catherine Yang in September 1999, "more than any other leader in e-business, the 41-year-old chairman of America Online Inc. is responsible for bringing the Internet revolution to the masses."

The following year, AOL began offering online access to wireless consumers with AOL Mobile Messenger, after recognizing that an increasing number of Web surfers were using things like cell phones and broadband technology, rather than PCs, to access the Internet. AOL also purchased MapQuest.com Inc. In 2001, Case made a bold move designed to cement AOL's future position as a leading Internet player. He orchestrated one of the largest mergers in media industry history—the $183 billion union of AOL and Time Warner Inc. to form AOL Time Warner Inc. Case accepted the post of chairman of the newly merged firm and began focusing his efforts on honing AOL Time Warner's strategy. The impact this merger will have on both firms, as well as on the Internet and media industry, remains to be seen.