Losing money on AOL after you cancel? It’s a small consolation, but…

AOL is losing money on itself, too. In the last five years its valuation (what people think it might be worth if sold to another entity) has dropped from the $20 billion Google pegged it at in 2005 to a mere $4 billion to $4.3 billion, according to several analysts.

If you cancel AOL but can’t get them to stop billing you, how does this affect you? It doesn’t. It can be hard to fight AOL for your money back, but it can be done. In the meantime, you can comfort yourself with thoughts of karmic retribution visited upon the company by itself, which has seen it’s value sliced, diced and basically diminished to nothing over the years by its own mismanagement.

AOL bought back Google’s 5% stake in the company last July, effectively ending the little-understood partnership in which Google was to help AOL make their online properties more visible in Google’s search results (that never panned out, so honestly, AOL isn’t losing much by ending this “deal”). Google, on the other hand, lost a nice chunk on the buyback – nearly three quarters of a billion dollars.

AOL is preparing to “spin off” (become an independent company, free of Time Warner’s influence and control) soon by selling shares of the company on the stock market in what’s called an IPO (an initial public offering). Anyone reading this want to buy it? For the sake of your personal bottom line, I hope not.

Tim Armstrong’s leadership is looked upon hopefully by most remaining employees of AOL, but it remains to be seen what he can do with what’s left of the one-time giant among internet services. Most importantly, Tim has not voiced many concerns about the company’s remaining money-maker, the dial-up access business (down to an all-time low of 5.8 million subscribers, from a supposed high of 20 million to 26 million).

Tim won’t discuss access much, outside of letting on months ago that he planned to keep it part of AOL (rather than sell it to another company such as Earthlink), and also letting on that he doesn’t think there’s much he can do to make more money off of it in the future.

The fact that he doesn’t say much about access is troubling if only because by avoiding the topic he also avoids discussing how AOL seems to be as hard to cancel, judging by recent email and comments on this blog, as it was three years ago, when there was quite an uproar over it that ended in AOL settling a lawsuit with 48 states.

It’s an open secret that AOL stays alive by keeping a chokehold on a graying population of dial-up users, who account for 100% of AOL’s profits, who don’t know how to argue with snarky, aggressive call reps who are not above lying about canceling people’s accounts.

AOL claims a further financial advantage by preying on how trusting and naive older members are. They’re known to be unlikely to check their monthly debit and credit card statements to make sure AOL has stopped billing them after they cancel.

Come to think of it, no wonder Tim remains mum on the access topic – if he spoke up, the first thing he’d have to do is admit that the system at AOL of fleecing canceling customers is wrong and must stop immediately.