Twentysomething Earthlink founder Sky Dayton claims to be a "Generation X techie who absolutely defies that stereotype." Whatever that means. What is clear is that when Dayton says, "It's your Internet," he means it. Unlike other Internet service providers, Earthlink's only focus is on serving the customer. It doesn't create content or develop software, nor does it own or maintain its network. Founded in 1994, it is now the second-largest ISP, behind America Online. In addition to its e-mail and home page options, the company offers online shopping, multiplayer games, and a bi-monthly Internet magazine called bLink.'Total Access'
The keys to Earthlink's great success lie in its affordability, ease-of-use, and exceptional customer service. It was the first company to offer unlimited access for a monthly fee, and the company's "Total Access" software package walks the customer through a painless 10-minute connection process. More than half of Earthlink's employees are tech support and customer service representatives, so its support lines are always manned with human beings and the average wait is less than five minutes. Another customer favorite: an 88 percent call success rate. And Earthlink has also been recognized for instituting some of the toughest anti-spam strategies out there, cutting off and fining customers who violate their user contract by sending out mass junk e-mail messages. It also makes the Internet more user-friendly with a broad collection of web tutorials and advice.
Piggyback to success
EarthLink has a wise (and increasingly common) marketing strategy - piggyback on someone with more experience and money. Its most recent partnership is with Sprint. The long-distance and wireless service provider handed over its lackluster dial-up business to Earthlink in June 1998 as part of an $180 million deal. In addition to Sprint's 130,000 customers, the ISP benefits from Sprint's marketing muscle and brand name. It has made other marketing partnerships, including membership deals with Discover Card and discount wholesaler Sam's Club, as well as promotions for films like The Net and Contact.
'Opt Out' of AOL?
One of Earthlink's most successful independent ad campaigns was its "Get out of AOL Free" promotion, which waived the start-up fee for customers who switched over to its service from that ISP behemoth. It ran a similar campaign on the West Coast to lure overcharged netizens from the clutches of Pacific Bell. Most recently, EarthLink addressed consumer privacy concerns by offering dissatisfied AOL customers the opportunity to "Opt Out" by offering them a free month of service, and then donating $50 to EPIC (the Electronic Privacy Information Center) if they decided to sign up. The company also promises not to sell member information to third parties.Consolidation
The company went public in 1997, and filed a secondary offering in May 1998. Earthlink continued to secure its position in the market through acquisitions. In September 1999, Earthlink merged with fellow ISP Mindspring. The resulting company, which retained the Earthlink name, has 3.5 million subscribers, second only to AOL's whopping 22 million. The move is an effort to consolidate power in the face of fierce competition from both above and below - especially ISPs such as NetZero, which attract subscribers by providing free access to the Internet - while generating revenue via targeted advertising.
As an added benefit to the MindSpring merger, Sprint has decided to up its investment in the company, buying 26 million shares to the tune of $431 million in June, 2000. In the same month, Earthlink scooped up ISP OneMain.com for $308 million, expanding its coverage from major cities to smaller towns and rural communities. OneMain reaches about 1,2000 small towns in rural areas across the United States, and its subscriber base has about 730,000 narrowband accounts, 27,000 Web hosting customers and 5,000 broadband customers. The deal is expected to close in the fourth quarter 2000.
The merger with Mindspring led to the departure of several executives who see the company becoming a more traditional corporation, abandoning its freewheeling roots. The transformation is good news to subscribers, however, as the company is now in a position to offer more services, including adding e-commerce, and market itself more efficiently.
Time Warner opens its doors
EarthLink managed to reap benefits from the AOL-Time Warner merger. In November 2000, EarthLink and TimeWarner announced that the cable company would make EarthLink's Internet services available to its customers. The deal came on the heels of a Federal Trade Commision ruling stating that Time Warner had to sign a deal with a competing Internet-service provider in order to receive approval for the company's merger with AOL.
