CASE, STEPHEN M.

Under Stephen M. Case (1958–), America Online, Inc. (AOL)—the consumer-oriented on-line service company he co-founded in 1985—became the undisputed leader in its market throughout the twentieth century. AOL's user membership regularly doubled throughout the 1990s, to more than 14 million subscribers by late 1998. Case's tireless efforts to broaden the service's appeal and build a majority market share pushed the company's earnings past the billion-dollar mark in 1996, making AOL the first new-media company to reach this milestone.

AOL's success vaulted Case to the top ranks of executive pay. In 1998 alone, according to the New York Times, his direct compensation was $16.4 million and the value of his stock options in the company grew by $324.5 million.

Case was born in 1958, and was raised in Honolulu, Hawaii. An entrepreneur at an early age, he and his brother, Dan, had a neighborhood juice stand and delivered newspapers. In their teens, however, the Case brothers went beyond the usual boyhood enterprises and began to operate a direct-mail and a door-to-door sales business.

Stephen Case studied political science at Williams College. After graduation, he worked first with Proctor and Gamble and then for Pizza Hut. In 1983 he took a position as a marketing assistant with Control Video Corporation which was introducing an on-line gaming service. The firm soon ran into financial problems and fired its management. Jim Kimsey, a successful entrepreneur and restaurateur, was appointed chief executive officer. Kimsey retained Case to help redefine Control Video's business objectives and to seek out new venture capital.

In 1985 Kimsey and Case renamed the company Quantum Computer Services, Inc., and began offering on-line services to owners of then popular Commodore computers. In addition, they expanded their market by producing software for Apple and Tandy computers, and for DOS and Windows systems. The company's separate divisions merged in 1991, and the corporation was renamed America On-line, Inc. (AOL).

In 1992, when Kimsey became chairman of the new company, he named Case as chief executive officer. At the time, AOL's market share trailed far behind the leading on-line services, CompuServe and Prodigy. Case instituted an ambitious marketing campaign designed to close the gap. The company mailed thousands of floppy diskettes to potential customers, offering free trials of the service and lowered subscription fees. The strategy worked almost too well. By the end of the year, AOL was finding it difficult to handle the influx of new business.

Over the next few years, Case worked hard to provide a mix of products and services that would appeal to a wide variety of subscribers. The company offered its customers access to the Internet, opportunities to communicate in chat rooms and on bulletin boards, and a reliable electronic mail service. Case made deals and formed partnerships with companies such as NBC, the New York Times, and Hachette magazines to provide the content necessary to attract new business. An Internet browser was added to AOL's services in 1994 with the acquisition of a company called BookLink. Case also began to investigate high-speed cable connections with business partners such as Intel and Viacom.

Although competing services were owned by corporate giants, Case was determined to keep AOL independent. He was, however, not averse to alliances and acquisitions. In February 1995 he announced that AOL had formed a $100 million joint venture with the German media conglomerate Bertelsmann AG, in order to expand overseas. The following year Case struck a deal with AT&T for its new Internet access business. In late 1998, in a $4.21 billion purchase, AOL took over Netscape Communications Corporation, a pioneer in the Internet browser market, and acquired Moviefone for $388 million in 1999.

AOL's road to dominance in its market was not always smooth. In August 1996, problems encountered during a routine maintenance of the AOL network resulted in a 19-hour service blackout. More serious customer complaints resulted from the company's decision in December 1996 to move from a tiered payment system to an unlimited flat-fee-pricing plan. AOL's customers, who then numbered over seven million, began to stay on-line for longer periods, creating logjams in the system. Subscribers became increasingly frustrated at the unreliable service and turned to attorneys general in more than 30 states for help. As part of a settlement reached in early 1997, Case agreed to cease advertising until his company was able to handle customer demand.

In a 1998 speech to the Jupiter Communications annual conference titled "Ten Commandments for Building the Medium: Setting Priorities," Case said, "[T]hose of us in the Internet community have found ourselves on a mission. It's a mission to make this new medium as central to people's lives as the television and the telephone, and even more valuable. And perhaps the most important thing for all of us to remember about this mission, in order for us to succeed, is how far we still are from realizing it." At the end of the twentieth century, Stephen Case continued to lead his business towards realizing this goal.

See also: Internet, Netscape

FURTHER READING

Abelson, Reed. "Silicon Valley Aftershocks." New York Times, April 4, 1999.

Current Biography Yearbook 1996. New York: H.W. Wilson, 1996, s.v. "Case, Steve."

Hansell, Saul. "Mr. Moviefone is Hooking up with the "You've got Mail" Man." New York Times, February 2, 1999.

Lohr, Steve and John Markoff. "AOL Sees Netscape Purchase as Step Toward Ambitious Goals." New York Times, November 24, 1998.

Swisher, Kara. AOL.COM: How Steve Case beat Bill Gates, Nailed the Netheads and Made Millions in the War for the Web. New York: Times Business, 1998.

[t]hose of us in the internet community have found ourselves on a mission. it's a mission to make this new medium as central to people's lives as the television and the telephone, and even more valuable.

stephen case, jupiter communications annual conference, 1998