Speaker 1: Welcome to text Tuff, a production from my Heart Radio.
Speaker 1: Hey there, and welcome to tech Stuff. I'm your host,
Speaker 1: Jonathan Strickland. I'm an executive producer with I Heart Radio
Speaker 1: and I love all things tech. It is time, once again,
Speaker 1: my friends, for a tech Stuff classic episode. This episode
Speaker 1: published October seventh, two thousand thirteen. I call it the
Speaker 1: Prodigy Story. Yeah, we're gonna talk about online service providers, y'all.
Speaker 1: So let's sit back and listen to this classic episode.
Speaker 1: Ages ago, Chris and I did an episode about online
Speaker 1: service providers, but this time we want to specifically look
Speaker 1: at Prodigy, partly because it was one of the earliest,
Speaker 1: in fact, depending upon whom you ask, the earliest online
Speaker 1: service provider. Now, online service providers are different from Internet
Speaker 1: service providers. So I'm gonna blow your minds out there, kids.
Speaker 1: So you young uns out there, there was a time
Speaker 1: when we did not all have access to the internet.
Speaker 1: It was a terrifying time. Dinosaurs roamed the earth. Occasionally
Speaker 1: you would go camping and an enormous guy in a
Speaker 1: hockey mask would chase you around. The eighties were tough, y'all.
Speaker 1: I actually do remember that time, dimly. I mean I
Speaker 1: I was, you know, not necessarily eating all solid food yet,
Speaker 1: and I could barely read. But I do, in fact
Speaker 1: for call a time before the internet. I grew up
Speaker 1: in that time, and uh, I bear the scars to
Speaker 1: this day. Also, I don't read that much currently. But
Speaker 1: at any rate, now we're talking about a time where
Speaker 1: the computer revolution had really taken hold of. The personal
Speaker 1: computers had already become a rising trend. It still was
Speaker 1: kind of a rarity to find someone who owned a
Speaker 1: personal computer. It wasn't like there were PCs everywhere, certainly not,
Speaker 1: but they were certainly getting very popular in the mid eighties,
Speaker 1: and more and more people were adopting them as the
Speaker 1: price was becoming more affordable for the average household rather
Speaker 1: than for hobbyists only. Right, right, So those those bleeding
Speaker 1: edge technology adopters who somehow have the jobs that allow
Speaker 1: them to to indulge their obsession with technology, they had
Speaker 1: already gone through the first wave, and now it was
Speaker 1: trickling down to everybody else. All right, we're talking about
Speaker 1: the kind of the two eight six sort of days
Speaker 1: is where Prodigy started kicking out. So during those times,
Speaker 1: your computers, you know, the early early computers were really,
Speaker 1: especially for personal computers, were just self contained devices. Right.
Speaker 1: It was whatever software you had to run on that machine,
Speaker 1: and that was pretty much it, which you would put
Speaker 1: on the machine with fancy fancy uh five and a
Speaker 1: quarter inch floppy disk. Yeah. Yeah, you wouldn't necessarily even
Speaker 1: have a hard drive. You might just run it directly
Speaker 1: from the discs. So, in other words, once that disc
Speaker 1: was popped out, that was it. You didn't have program,
Speaker 1: You just had your basic operating system, although you might
Speaker 1: not even call it that um anyway. Eventually you started
Speaker 1: seeing things like modems where you could do things like
Speaker 1: connect to a local bulletin board system or bbs. This
Speaker 1: was usually something that was hyper local, as in something
Speaker 1: that would might be running the same city that you
Speaker 1: live in, because in order to connect to most bbs is,
Speaker 1: you had to dial a specific number, and usually it
Speaker 1: was a it was a local number, yeah, because you
Speaker 1: could dial into a BBS that's run in a state,
Speaker 1: you know, twenty states away. But long distance charges at
Speaker 1: the time were also such that that that it would
Speaker 1: have been incredibly cost prohibited. Yeah, anyone, any kid who
Speaker 1: experimented with connecting to bbs is might find out rapidly
Speaker 1: from his parents or her parents that uh, it was
Speaker 1: not the best idea to do that without parental agreement beforehand,
Speaker 1: because you could rack up huge bills. I mean, this
Speaker 1: is the era where long distance charges were a real thing.
Speaker 1: I know that a lot of people today aren't even
Speaker 1: that's not something they even think about because in most
Speaker 1: cases you don't have a long distance charge anymore. About
Speaker 1: once a month, I marvel at the incredible present and
Speaker 1: the fact that I can call people all over the
Speaker 1: country without having any without worrying about, oh, you know,
Speaker 1: we've taught for five minutes, this is gonna cost me
Speaker 1: twenty bucks or whatever. Uh and and they have not
Speaker 1: said anything of value, so so at any rate, at
Speaker 1: this time, that was pretty much it. And then there
Speaker 1: became this idea of the online service provider away for
Speaker 1: companies to create services that would open up brand new
Speaker 1: opportunities for consumers. And it was before the Internet had
Speaker 1: rolled out to being something that the general public could access,
Speaker 1: so be sure, but but you know, people were looking
Speaker 1: for a way to provide service to you know, to
Speaker 1: a consumers who wanted to communicate and be two companies
Speaker 1: who wanted to sell more stuff, give give companies an
Speaker 1: outlet to sell more stuff. Right, So so this was
Speaker 1: this was the idea, like instead of instead of the Internet,
Speaker 1: think of the Internet, it's it's the network of networks, right,
Speaker 1: It's all these different computers. They're connected together, and lots
Speaker 1: of different types of communication goes across the Internet, from
Speaker 1: email to file transfers to web traffic. All of that
Speaker 1: stuff is going on across the Internet. An online service
Speaker 1: provider is more like a very small network. It's not
Speaker 1: a network of networks. It is a network in which
Speaker 1: you use your computer to dial into a host computer,
Speaker 1: and the host computer serves up all the information on
Speaker 1: it that it has. So, in other words, instead of
Speaker 1: having access to everything in the world, you just have
Speaker 1: access to whatever the host computer has on it. Uh
Speaker 1: and online service providers did this in different ways. So
Speaker 1: let's talk specifically about Prodigy. To talk about how it
Speaker 1: came to be, you have to look back at nine four.
Speaker 1: That's when a couple of tiny companies IBM was one
Speaker 1: of them, uh Sears was another, and CBS was a third,
Speaker 1: formed a joint venture they called trend texs Now, this
Speaker 1: trend Text venture was specifically meant to provide something called
Speaker 1: video text services, And you might all wonder what the
Speaker 1: heck video text is because it's not a term that
Speaker 1: you see today really, But this was a technology that
Speaker 1: would allow you to connect a terminal. So it could
Speaker 1: be a computer, or it could just be a very
Speaker 1: specific terminal made for this purpose, or even a television
Speaker 1: with special yea. Yeah, so you have one of these
Speaker 1: things that connect to a phone line and then can
Speaker 1: call into a centralized computer to get content that way. Now,
Speaker 1: the this is sort of a predecessor to the kind
Speaker 1: of modems that we would see uh later on, although
Speaker 1: at this time in the in the early eighties, a
Speaker 1: modem was something that very few people had. It was
Speaker 1: certainly something that was used in commerce shell purposes. You
Speaker 1: had companies using it like IBM certainly had plenty of modems,
Speaker 1: but your average computer owner did not have a modem
Speaker 1: at this time. They certainly they also were not part
Speaker 1: of a standard computer like there was a time where
Speaker 1: you would get an internal modem like a dial up modem,
Speaker 1: and you would just plug a phone cord into the
Speaker 1: back of your computer and from that to the outlet
Speaker 1: in your wall. Before that, you had external modems that
Speaker 1: would connect to a port in your computer and then
Speaker 1: you would connect your telephone connection to the external modem.
Speaker 1: That's the kind I had, of course, yeah, I I
Speaker 1: do also want to mention this is the same year
Speaker 1: that um IBM introduced the portable PC weighing a mirror
Speaker 1: thirty pounds or what's that like fourteen kilos, Yeah, something
Speaker 1: like that. So you're talking about portable depending upon your
Speaker 1: upper body string. Uh So, so that was that was
Speaker 1: kind of the life of the times. UM the entire
Speaker 1: video text thing was doing a little bit better in Europe.
Speaker 1: There were a bunch of countries that already had something
Speaker 1: like this, but it was really the first time this
Speaker 1: whole trend text thing was really the first time that
Speaker 1: had been rolled out for commercial use for customer use
Speaker 1: for the United States and the US. Yeah. In fact,
Speaker 1: the the concentration in Europe would mean that uh, companies
Speaker 1: like Prodigy in America Online would end up sort of
Speaker 1: foregoing any kind of penetration attempts in Europe because it
Speaker 1: was already substated. UM and CBS had did a did
Speaker 1: a trial of video texts in a three with a
Speaker 1: T and T in about two households somewhere in New
Speaker 1: Jersey just to see how much interest there would be,
Speaker 1: and there was a lot. So that is why CBS
Speaker 1: was involved. Sears was you know, if you're saying why
Speaker 1: was Sears and Roebuck involved in this internet a venture,
Speaker 1: it's because Sears had the complex billing system and the
Speaker 1: customer base like the mail order customer base. Sure. Yeah,
Speaker 1: the Sears catalog is like a legacy right to retail.
Speaker 1: Not only that, but Sears itself has had a long
Speaker 1: history in being involved in electronics. In fact, for a while,
Speaker 1: if you wanted to buy a computer that you would
Speaker 1: either go to a very specialized computer store or you
Speaker 1: would go to a Sears would buy your computer there. Yeah.
Speaker 1: And IBM actually in contemporary literature people were talking about
Speaker 1: IBM being the most surprising company of the three, which
Speaker 1: doesn't make any sense to me. But but but their reasoning
Speaker 1: behind calling it that was that they had been really
Speaker 1: only hardware with a tiny bit of software involved up
Speaker 1: until then, and so now they're trying to create an
Speaker 1: infrastructure that would essentially be a lot of software. So
Speaker 1: nine four, this partnership is founded. But it wasn't all
Speaker 1: smooth sailing. They did some you know, some pilot testing
Speaker 1: and and in general, it just looked like it wasn't
Speaker 1: really catch gun. It might have been ahead of its
Speaker 1: time in the United States, or may have just been
Speaker 1: the execution that didn't match people's expectations. At any rate,
Speaker 1: it didn't get adopted as quickly as all three parties
Speaker 1: were hoping. And one of those three parties, CBS, decided
Speaker 1: to say see you later, alligators and drop out of
Speaker 1: the partnership. Yeah, that was in That was a six,
Speaker 1: did you say, Yeah? And so then a eight um
Speaker 1: series and IBM decided to stick with it. They doubled down. Yeah,
Speaker 1: they invested four and fifty million in startup. Yeah, so
Speaker 1: which is that was an eight? So if we are
Speaker 1: just for inflation, that's what eight hundred and sixty million.
Speaker 1: That's a lot of money. That's so many dollars. Yeah,
Speaker 1: so huge, huge investment here. And that's when they actually
Speaker 1: created the company that's called Prodigy Services Company. Now, don't
Speaker 1: get too used to that name, because one of the
Speaker 1: things we can talk about with Prodigy, and we will
Speaker 1: talk about is the fact that their name changes every
Speaker 1: few years. Yeah, it usually retains the term Prodigy. That's
Speaker 1: about it. But that's it. Yeah. So Prodigy Services Company
Speaker 1: is formed to oversee the trend texts uh technology, and
Speaker 1: by June of the entire project changed its name to Prodigy,
Speaker 1: So I mean they no longer talked about Trient Tech.
Speaker 1: Trent text was a thing of the past. It was
Speaker 1: now rolled into Prodigy and that launched in eight and
Speaker 1: it became the world's first consumer based online service provider. Now,
Speaker 1: at the time, IBM had made an estimate. They looked
Speaker 1: at all the households in the United States and they
Speaker 1: estimated how many households out there would have computers that
Speaker 1: would actually be sophisticated enough to run the Prodigy software.
Speaker 1: And when I say sophisticated enough, it's not that the
Speaker 1: project software was this mind bending, amazing looking uh software.
Speaker 1: You it was a visual interface, which was which was
Speaker 1: a new thing. It was a huge improvement over local bbs.
Speaker 1: Is that we're all text based, right, so there were
Speaker 1: there were graphics involved, but they were very simple graphics.
Speaker 1: And uh, we'll try to effect. Lauren found a great
Speaker 1: commercial just before the podcast that she shared with us,
Speaker 1: so we'll we'll try and put that up on the
Speaker 1: Facebook page and link it to Twitter as well, so
Speaker 1: that you guys can see what Prodigy look like when
Speaker 1: it launched, because the commercial actually comes from this era. Yeah,
Speaker 1: but you know, six machines were just coming out. They
Speaker 1: had several megs of RAM, which was big and new
Speaker 1: and and three point five inch floppies were blowing people's minds, right. Yeah.
Speaker 1: And so IBM looks at all these households, says, five
Speaker 1: million homes and the entire United States are probably capable
Speaker 1: of running Prodigy software. They probably have computers that can
Speaker 1: do this. So five million, that's our target audience. We
Speaker 1: want to hit those five million folks. Um. Yeah, that
Speaker 1: was that turned out to be an ambitious target. In fact,
Speaker 1: five million ends up being ambitious spoiler alert through the
Speaker 1: entire life of Prodigy. Um yeah, but we'll we'll get
Speaker 1: into that as we go further. So, the first cities
Speaker 1: that received the service were San Francisco, There was Hartford, Connecticut,
Speaker 1: and there was some other city, Atlantaza. For once Atlanta
Speaker 1: gets something first. Um yeah, it ended along with technological
Speaker 1: innovator Hartford, Connecticut. I well, you know, I don't make
Speaker 1: fun of heart for Connecticut. Those people will scold you
Speaker 1: at any rate. Yeah. So Atlanta, San Francisco, and Hartford
Speaker 1: are the three cities that get it first, And I
Speaker 1: honestly don't know why those three cities were the ones chosen.
Speaker 1: Perhaps that the telecommunications infrastructure was just uh the best
Speaker 1: in those three for for the services of Prodigy. But
Speaker 1: so the startup package for getting this service was a
Speaker 1: little bit complex because, like Jonathan was saying earlier, people
Speaker 1: didn't have modems. They certainly didn't come in computers at
Speaker 1: the time. Um, it was an add on sort of thing.
Speaker 1: So the original kit cost at nine dollars and cents
Speaker 1: to include that that motive, the software, and three months
Speaker 1: of initial service. Three months of service yeah. Um, you
Speaker 1: could also hypothetically if you happened to have a modem
Speaker 1: by just software for right, and then how much was
Speaker 1: service per month with with a yearly subscription it was
Speaker 1: a month and a month to month it was twelve.
Speaker 1: So there you go nine dollars per month if you
Speaker 1: if you sign up for a full year, or twelve
Speaker 1: ninety five per month if you were going month to
Speaker 1: month basis uh and uh. And so they figured that
Speaker 1: with that pricing, with that subscription model, if they got
Speaker 1: enough people to subscribe, that would be an ongoing source
Speaker 1: of revenue. Right, it's the same sort of model that
Speaker 1: we see with things like pay to play um M
Speaker 1: M O RPGs you know which now when now we're
Speaker 1: seeing more and more of those move away from that
Speaker 1: model and go to free to play and then pay
Speaker 1: to access certain types of content. So nonetheless, the month
Speaker 1: to month subscription fee was a change up at the
Speaker 1: time I think that any anyone else who was in
Speaker 1: the business, and maybe because maybe a O L was
Speaker 1: starting at the same it was starting around the same time.
Speaker 1: Yet and most other services that would be beginning around
Speaker 1: that time, we're using UM pay per usage like per
Speaker 1: per the minute or per per hour the data set. Right,
Speaker 1: You didn't have you didn't have that many people offering
Speaker 1: or that many companies I should say, offering a monthly
Speaker 1: fee for their service. It was almost always uh you know,
Speaker 1: maybe you get the first half hour of content at
Speaker 1: one amount, and then above that it would be more
Speaker 1: because another limitation on some of these early online service
Speaker 1: providers was that they only had so many UH connections
Speaker 1: that they can make at a single time within a
Speaker 1: particular region. So if you if you have a phone
Speaker 1: number that you're supposed to call with your computer, it
Speaker 1: may be that the computer can handle, say one connections,
Speaker 1: and beyond that, it can't handle more than that. And
Speaker 1: so so allowing people continual access was potentially dangerous to
Speaker 1: your customer base because you know, because everyone say like,
Speaker 1: well I got your software, but I can never connect.
Speaker 1: So it's just busy signals for years, right right, So
Speaker 1: but now bigger companies, the next generation is never going
Speaker 1: to have those Yeah, sorry, okay anyway, but yeah, so
Speaker 1: the larger companies at this time could actually handle lots
Speaker 1: of phone calls your local BBS is. I mean, I
Speaker 1: remember this era where I would call into a local
Speaker 1: BBS and there would be maybe five lines, and if
Speaker 1: you called when those five lines were in operation, you
Speaker 1: just had to wait and try and call again, like
Speaker 1: in the half hour or an hour, or every ten
Speaker 1: seconds if you were someone like me. But at any rate,
Speaker 1: that's you know, this was this was a step up
Speaker 1: above those local bbs is a big step up, not
Speaker 1: just a tiny little incremental step. But but Prodigy was
Speaker 1: in fact still regionally operated. It's I mean, they were
Speaker 1: advertising in lots of other cities that they were planning
Speaker 1: on expanding out to. Yeah, in fact, there was a
Speaker 1: pretty extensive advertising campaign, including that fantastic commercial you showed
Speaker 1: me before the episode, Lawrence, Well that one is from
Speaker 1: all the way in clearly. Wow, so we're talking Prodigy
Speaker 1: story is so different. But yeah, no, it's they were
Speaker 1: really trying to drive adoption of this because it was
Speaker 1: a brand new thing. You know. This is like I said,
Speaker 1: this is before people for the most part, had ending
Speaker 1: knowledge whatsoever of the Internet. You know, anyone who knew
Speaker 1: about the Internet was working on the Internet, like building
Speaker 1: the Internet. And so yeah, so talking to people about
Speaker 1: you know, posting to bbs is or doing online shopping
Speaker 1: or anything like that, or you know, looking at stocks
Speaker 1: or weather online, people were like say, one, yeah, yea,
Speaker 1: this is my computer, the thing that I used to
Speaker 1: play a game on and occasionally try and create a
Speaker 1: little program that says hello world. Um yeah, it's it
Speaker 1: was a big change, a huge change as far as
Speaker 1: computer use goes. It was really opening up the gates
Speaker 1: to the potential for computers. And then on top of
Speaker 1: that we then saw by the end of eight so
Speaker 1: all of this is happening at eight eight, this is
Speaker 1: a huge year for Prodigy, right, it's their launch year.
Speaker 1: By the end of eighty eight, they have extended their
Speaker 1: service to three more cities particularly Actually, I think it's
Speaker 1: for cities. I just wrote down three, but their cities
Speaker 1: in California, and those included Los Angeles, San Diego, Sacramento,
Speaker 1: and I think Santa Barbara was also one. I just
Speaker 1: didn't write it in my notes. Uh. And so you
Speaker 1: had this, this this cool system, arguably cool. I guess
Speaker 1: for me it was cool. I was an early Prodigy
Speaker 1: user because I live in Atlanta. Uh. And they did
Speaker 1: have their rivals, not just what would become American America Online,
Speaker 1: not American but America Online, but also compu Serve, mind Spring,
Speaker 1: earth Link. These are all they came on the scene
Speaker 1: at different times, but they would all become rivals. Now.
Speaker 1: The way this would work, generally speaking, is that when
Speaker 1: you would use your computer to call into whatever computer
Speaker 1: was in charge of your region, that computer could then
Speaker 1: serve up all the information that was available on it.
Speaker 1: And we'll talk more about the kind of services that
Speaker 1: Prodigy offered towards the end of the podcast, but this
Speaker 1: also includes you know, pretty basic stuff like news items,
Speaker 1: financial stuff, bulletin boards where you can actually leave messages
Speaker 1: and retrieve messages. There was even an email, although originally
Speaker 1: that email would only allow you to send messages to
Speaker 1: other people on the Prodigy service um and you could
Speaker 1: get all that information. But although early ads talked about
Speaker 1: it being updated throughout the day, originally the way these
Speaker 1: services worked is that the the regional computer would connect
Speaker 1: back to headquarters to a master computer once a day,
Speaker 1: once a day, now once every twenty four hours, they
Speaker 1: would get new content. So then that way, when you
Speaker 1: log on the next day, you would get new news articles,
Speaker 1: new financial reports, that kind of thing. But it would
Speaker 1: stay like that all day long. It wouldn't get updated
Speaker 1: throughout the day because again, these were all general computers
Speaker 1: that were only intermittently connecting with a master computer. It
Speaker 1: wasn't like a truly integrated network at this point. So
Speaker 1: this was definitely a different kind of approach than what
Speaker 1: we see today. By eighty nine, the estimate that IBM
Speaker 1: had made had increased. No longer did they think that
Speaker 1: there were five million homes out there that could run
Speaker 1: Prodigy software. Now they believed there were nine million homes.
Speaker 1: So that shows that the adoption of the personal computer,
Speaker 1: and not just personal computers but more sophisticated personal computers
Speaker 1: was on the rise. Uh. This still is before the
Speaker 1: true explosion in personal computers. I mean there was a
Speaker 1: time I think we even mentioned it in one of
Speaker 1: our podcasts where Bill Gates had kind of projected out
Speaker 1: how many computers he thought were going to be adopted,
Speaker 1: and it turned out it was like a seventy fewer
Speaker 1: than what actually happened, and now no one could predict it. Um.
Speaker 1: The actual number of Prodigy customers at the time was Yeah.
Speaker 1: So they remember, they're aiming for a customer bay that
Speaker 1: they have estimated to be nine million people, and they
Speaker 1: they land sixty thousand. That is brutal. I mean, that's
Speaker 1: such a tiny percentage um. And then Prodigy launched in
Speaker 1: New York City, but it only had partial coverage in
Speaker 1: in the city. They had the thirteen markets in New
Speaker 1: York City, but that meant that they had left out
Speaker 1: about the population of New York City who had the
Speaker 1: who had the technology to connect right, They had the ability,
Speaker 1: but they didn't have the actual support, so they could
Speaker 1: not be members of Prodigy at that time, so they
Speaker 1: weren't able to capitalize on that very at least not efficiently. However,
Speaker 1: by Prodigy did become available across the United States, I
Speaker 1: believe when I got Prodigy up near Cleveland, Dish. Yeah, see,
Speaker 1: I was already living not in Atlanta, but close enough
Speaker 1: to Atlanta where I got the support, and by the
Speaker 1: end of that year, their numbers had exploded almost tenfold. Really,
Speaker 1: we're talking from six thd to six hundred thirty five thousand.
Speaker 1: So but now granted they managed to go nationwide. Now,
Speaker 1: so now you're talking about the entire US, not just
Speaker 1: these little regions that they had been hitting previously, but
Speaker 1: still only six thousand, and that put them in second place.
Speaker 1: The first place provider was compu serve Um, which we
Speaker 1: could also do an episode about copy serve at some point.
Speaker 1: But compu Serve would eventually be acquired from H and
Speaker 1: R Block, which at the time they were there the
Speaker 1: owners at the time. The new owners would be America Online,
Speaker 1: and of course America Online UH ends up being the
Speaker 1: big daddy of the online service providers and probably made
Speaker 1: I would say, I would argue that it made the
Speaker 1: most effective transition from online service provider to internet service provider.
Speaker 1: The two things are different. Yeah, I've seen estimates, by
Speaker 1: the way, that about twenty five million households now held computers. Wow.
Speaker 1: So yeah, huge numbers that are jumping up here. Right,
Speaker 1: We went from five million to nine million, and nine
Speaker 1: million to five million, So and you might be wondering, like,
Speaker 1: how how is this even happening? This is Moore's law
Speaker 1: in play, right. Moore's law is not just about how
Speaker 1: computers get twice as powerful every two years or so.
Speaker 1: It's also about how, because the processes get more sophisticated
Speaker 1: over time, the technology itself decreases in price and cost
Speaker 1: so more people can afford it. So not only are
Speaker 1: they becoming more powerful, they're becoming more affordable, so you're
Speaker 1: seeing higher adoption rates. This in particular way that was
Speaker 1: a giant boom time. Yeah, yeah, this is and and
Speaker 1: you know this is also ten years before we see
Speaker 1: the the dot com bubble and uh so this is
Speaker 1: right when the just the promise of the computer age
Speaker 1: was really becoming realized. And still before the Internet is
Speaker 1: a common household term. We don't see the World Wide
Speaker 1: Web even start to emerge until two and we're just
Speaker 1: in right now. Yeah. I mean, big big news for
Speaker 1: Prodigy that year was they added an encyclopedia and zach
Speaker 1: It's guide. Yeah yeah, and It's interesting also that even
Speaker 1: though we're seeing this explosion at this time of adoption UH,
Speaker 1: the analysts were looking at it and saying, well, you know,
Speaker 1: you've got more subscribers, but you spent so much money
Speaker 1: setting up this this company, perhaps as much as a
Speaker 1: billion dollars by this time, that it's going to take
Speaker 1: you years for you to become profitable, even and I
Speaker 1: love I love how in my notes I don't know
Speaker 1: what I was thinking in my notes by said dramatic
Speaker 1: increase in Survivors. Apparently I had some sort of horror
Speaker 1: movie going on in my brain. I meant, customers, you
Speaker 1: are you are going to go be a zombie on stage?
Speaker 1: That is true that I do have. I do have
Speaker 1: to be a zombie in UH in approximately four hours.
Speaker 1: So you allow to be a zombie on Talk Like
Speaker 1: a Pirate Day? Is that? I mean? We're only recording
Speaker 1: on Talk Like a Pirate Day. And I promised Lauren
Speaker 1: that I was not going to torture her on Talk
Speaker 1: Like a Pirate Day, particularly since by the time this publishes,
Speaker 1: Talk Like a Pirate Day will be along in the past.
Speaker 1: So you guys are going to be spared both the
Speaker 1: zombie and the pirate. Uh. At any rate, Uh, the
Speaker 1: survivors would be would still not end up giving enough money,
Speaker 1: generating enough revenue for the company to be profitable for
Speaker 1: several years. Hey, guys, Jonathan from twenty twenty here interrupting
Speaker 1: the classic episode because it's time for us to take
Speaker 1: a quick break, did something that was incredibly controversial within
Speaker 1: the Prodigy community. Yeah, they started introducing these censorship rules. Yeah,
Speaker 1: so which I mean, I mean, I guess it's not
Speaker 1: censorship if it's not on a government. Yeah, they of all,
Speaker 1: we we use censorship as as sort of the kind
Speaker 1: of shorthand way of saying. Essentially, what they were saying
Speaker 1: was that they didn't want to have any sort of
Speaker 1: profanity or objectionable material on the Prodigy service because they
Speaker 1: wanted it to be family friendly. So, now keep in mind,
Speaker 1: some of the stuff that was going on on Prodigy
Speaker 1: included these bulletin board systems where you could create messages,
Speaker 1: leave messages, respond to messages. They almost became like a
Speaker 1: message board. And I don't know if you guys have
Speaker 1: ever been on the Internet, but sometimes people on this
Speaker 1: sort of thing can get a little bit profane. Flame
Speaker 1: wars can break out yeah, they can, they can start
Speaker 1: throwing in some personal attacks. They can use some language
Speaker 1: that is, as the pirates would say, salty. Uh so
Speaker 1: so yeah, so for first profanity was outlawed, then flame
Speaker 1: wars were outlawed, then the mention of another users handle. Yeah,
Speaker 1: you weren't supposed to use any sort of member names.
Speaker 1: In fact, I read one report that said that one
Speaker 1: group got very much frustrated because it was a group
Speaker 1: of coin collectors and they had a a thread about
Speaker 1: the Roosevelt dime then, and because they were collectors who
Speaker 1: were interested in Roosevelt dimes. But but one member had
Speaker 1: to handle Roosevelt dime, which meant that they could not
Speaker 1: actually write about it because it was a member handle. Yeah,
Speaker 1: so these were these were got started. Yeah, well, handles
Speaker 1: certainly had played a role in it. But yeah, you
Speaker 1: see at this time that the users were really starting
Speaker 1: to get aggravated by these policies. They felt that it
Speaker 1: was unnecessary and that it was hampering their ability to communicate.
Speaker 1: It was taking functionality away from the service that they
Speaker 1: were paying for, right and uh And however it was
Speaker 1: only on those those bulletin boards, So a lot of
Speaker 1: traffic started shifting to email. Right, So people were using
Speaker 1: the email service on Prodigy, which at this time was
Speaker 1: still uh still very much restricted to Prodigy. It's not
Speaker 1: like you were emailing outside. So imagine that your school
Speaker 1: or your the business you work at that you have email,
Speaker 1: but you are only able to email anyone else who
Speaker 1: is also on that particular server, right, So you could
Speaker 1: not email someone who works for another company or goes
Speaker 1: to another school. You could only only other people who
Speaker 1: were there are the ones that you could send messages to.
Speaker 1: That's kind of what we're talking about at this time.
Speaker 1: I mean, however, it wasn't like there were other services
Speaker 1: that had had it much better, right right. You know,
Speaker 1: until we see the inner connectivity to the internet, it
Speaker 1: just doesn't really you don't get the the expanded capabilities.
Speaker 1: Although again in commercial business that had already happened there
Speaker 1: were businesses that had email or you could send it
Speaker 1: to people other than the ones that were on your
Speaker 1: email server. Consumer level, consumer levels still pretty much a
Speaker 1: novelty UM. Now. I will also say that this is
Speaker 1: when Prodigy changed one of its other email UM policies,
Speaker 1: but I'll talk about that when we get into the
Speaker 1: services that they provide. It was. It was in response
Speaker 1: to the fact that everyone started using more email. Uh see,
Speaker 1: you also have to keep in mind that the data
Speaker 1: that is being sent back and forth, while it's it
Speaker 1: tends to be in small packets. Once you get up,
Speaker 1: you know, you have those numbers increase. Data transfer wasn't free,
Speaker 1: you know, sending information across telephone company lines cost money,
Speaker 1: and it cost Prodigy money. And in fact, that was
Speaker 1: one of the biggest problems that Prodigy had was that
Speaker 1: their their costs were much greater than the revenue they
Speaker 1: were bringing in. So if they were to offer up
Speaker 1: something that originally was free, as in it was part
Speaker 1: of what your paid service already covered, and everyone started
Speaker 1: using it, then they would start incurring greater costs as
Speaker 1: a result. So that would end up giving them the
Speaker 1: incentive to make it less free. In other words, you
Speaker 1: would have to pay an extra surcharge on top of
Speaker 1: your monthly feet in order to use certain services, because
Speaker 1: that's only way that Prodigy could either put a little
Speaker 1: bit of a control on the traffic that you know,
Speaker 1: it would decrease the traffic because people didn't want to
Speaker 1: pay for it, or they could recapture costs if people
Speaker 1: really wanted it, and they would pay for it anyway. Right.
Speaker 1: That was also they increased their monthly subscription fee too,
Speaker 1: and they also in response to that, they also had
Speaker 1: more subscribers by then too, right, yeah, one seven million. Yeah,
Speaker 1: so that's you know, they're they're on the on the rise.
Speaker 1: And I'll keep in mind that by now we're talking
Speaker 1: about millions and millions of computers capable of running Prodigy.
Speaker 1: But the Prodigy was still losing money at this time. Yeah,
Speaker 1: they still were not making a profit. In fact, Walter
Speaker 1: Mossberg and anyone who has followed technology for any length
Speaker 1: of time has heard that name. Walter Mossburg has written
Speaker 1: extensively about technology companies over the past couple of decades,
Speaker 1: criticized Prodigy, saying it lacked many features and then it
Speaker 1: was really kind of difficult to use. It was slow,
Speaker 1: and it wasn't necessarily intuitive. That you know, while it
Speaker 1: might be easier to use than say an old Bold
Speaker 1: and Board system where you had to you know, tip
Speaker 1: through text commands to to navigate through it, it still
Speaker 1: didn't make a whole lot of intuitive sense, according to Mossburg.
Speaker 1: And that didn't new Prodigy very many figures moving on
Speaker 1: to ninety three. That's when Prodigy incorporated a new feature
Speaker 1: and its software, which was Internet connectivity. Now, they weren't
Speaker 1: giving you the next necessarily giving you the access to
Speaker 1: a web browser. You could get a web browser and
Speaker 1: use Prodigy to connect to the Internet, but there wasn't
Speaker 1: one incorporated directly into Prodigy at that time, so they're
Speaker 1: really still just an online service provider. However, what it
Speaker 1: did allow you to do is use email to send
Speaker 1: messages to people, yes, people who were not on the
Speaker 1: Prodigy island, and that year the company we actually start
Speaker 1: having figures now for how much money the company was losing.
Speaker 1: Keep in mind during this time, Prodigy is a privately
Speaker 1: run business. It's not it's not its own publicly traded company.
Speaker 1: It's a partnership between IBM and Sears, but it's not
Speaker 1: itself a publicly traded company, so it doesn't have to
Speaker 1: file all of its corporate finances with the government, or
Speaker 1: well does, but not with the public like we don't
Speaker 1: have access to it. The government certainly did because otherwise
Speaker 1: the ass gets a little ansy. But the company that year,
Speaker 1: according to some sources, lost about sixty million dollars, so
Speaker 1: a sixty million dollar loss is not only not profitable,
Speaker 1: but ouch. Yeah. This this figure comes from funding Universe,
Speaker 1: and I got to give them a shout out because
Speaker 1: they have a great uh summary of prodigies history and
Speaker 1: I managed to find a lot of my research from
Speaker 1: funding Universe. Uh. So that's when Prodigy hits its customer
Speaker 1: base peak about two million. Yeah, now that's that's its
Speaker 1: peak based upon on its own customers during the heyday
Speaker 1: of Prodigy. There is something that will change dramatically changed
Speaker 1: Prodigy late in its life that that blows that number
Speaker 1: all the water. But you can't really count it because
Speaker 1: it's it's not customers that Prodigy themselves gleaned, right. It
Speaker 1: was almost like Prodigy was thrust upon them as opposed
Speaker 1: to as opposed that they came to Prodigy, right, But
Speaker 1: we'll talk about that when we get there. So two
Speaker 1: million customers, so obviously they never really hit that that
Speaker 1: promised five million that they really wanted to get. Uh.
Speaker 1: And they also expanded UM in October. I think you're
Speaker 1: about to say they they expanded UM to let users
Speaker 1: use us net using usenet. That was a great phraseology
Speaker 1: that it's almost impossible to avoid. I mean that when
Speaker 1: you're services name is used net, it's going to happen.
Speaker 1: But yeah, use net is another bolton board message board
Speaker 1: kind of system where anyone who's used us net knows
Speaker 1: that this was c tells you can't get around it.
Speaker 1: Anyone who has taken advantage of use net services knows
Speaker 1: that this is someplace where people where it would share
Speaker 1: lots of different things, files, pictures, information about different topics.
Speaker 1: A lot of message boards that you will find on
Speaker 1: the Internet really had their origin back in the use
Speaker 1: net days, and you could find pretty much any interest
Speaker 1: you can imagine. There was a use net dedicated to it.
Speaker 1: There was a more a thread dedicated to thinking back
Speaker 1: here reminds me a little bit of like Reddit these days. Yeah,
Speaker 1: right right, Yeah. It's just or just like the idea
Speaker 1: that somewhere someone has made a web page about the
Speaker 1: thing you're thinking of. The example I will give is
Speaker 1: I remember when I was working for a consulting firm
Speaker 1: years ago. I decided to are one of the consultants
Speaker 1: I was working with wanted in a particular presentation to
Speaker 1: have a picture of a wammy. You know what a
Speaker 1: wammy is no more? Wammy's no more wammy's. So there's
Speaker 1: a game show in the eighties called Press Your Luck,
Speaker 1: maybe early nineties called Press Your Luck, And uh, the
Speaker 1: way the game show worked was this little board would
Speaker 1: light up and at the light would move from one
Speaker 1: block to the next, and you would press a button
Speaker 1: and that would stop the light and it would either
Speaker 1: land on a great prize or something called a whammy.
Speaker 1: And if you've got too many whammy's, you were out
Speaker 1: of the game. So she wanted a picture of a whammy.
Speaker 1: And I thought, surely someone this. Keep in mind, this
Speaker 1: is in the nineties when I'm saying this, So surely
Speaker 1: someone's made a web page about whammy's. And I did
Speaker 1: did the search, and sure enough I found five now,
Speaker 1: which just goes to show that if you could think
Speaker 1: about it, someone's made a web page about it. So so,
Speaker 1: so this was for an additional fee that was for
Speaker 1: three dollars and sixty cents per hour because it was
Speaker 1: so information so data intensive. Well, yeah, it took up
Speaker 1: telephone lines again, so you know the fact that it
Speaker 1: was requiring Prodigy to have these lines open, and thus
Speaker 1: they had to pay for them. They ended up putting
Speaker 1: three dollars and sixty cents per hour as the surcharge.
Speaker 1: They also introduced chat rooms that year, and they introduced
Speaker 1: them free of charge. As it turns out, was a
Speaker 1: terrible idea. Yeah, from a business perspective, it was a
Speaker 1: terrible idea, because every from a customer perspective, it was
Speaker 1: a brilliant idea. And now I can communicate with people
Speaker 1: in real time and chat rooms with lots of other
Speaker 1: people all at the same time. But for Prodigy there
Speaker 1: were two big problems. Well, that's also really data intensive, yeah,
Speaker 1: and also people will say the darnedest things when they
Speaker 1: get together. Uh. And so the telecommunications charges went through
Speaker 1: the roof, and the content was something that Prodigy could
Speaker 1: not control. They couldn't censor that the way they could
Speaker 1: the bulletin board messages or the other services. In fact,
Speaker 1: there was a time where there was even a rumor
Speaker 1: that they were looking at emails, although they never were,
Speaker 1: but the rumor broke out that they were. So uh.
Speaker 1: They ended up shutting down the chat rooms um eventually
Speaker 1: because of the the rising cost of operating them and
Speaker 1: the fact that they could not be certain that people
Speaker 1: would behave themselves in the chat rooms. According to Prodigies,
Speaker 1: idea of how people should behave themselves. The company that
Speaker 1: year lost fifty two millions, so although it lost a
Speaker 1: lot of money, it was less money than it lost
Speaker 1: the year before. I guess, um, that brings us up
Speaker 1: to right. So, oh, ninety five, that's when that's when
Speaker 1: Rock and Roll found Prodigy. Um the former head of
Speaker 1: VH one, or one of the former heads of VH one,
Speaker 1: Edward Bennett, who had really turned the company around. Yeah,
Speaker 1: I had really turned VH one from a struggling channel
Speaker 1: into a success. I'm sure pop up video must have
Speaker 1: been one of those things that was just came out
Speaker 1: of that that era. He joined, He joined Prodigy as
Speaker 1: the new CEO. Yep, And that same year they launched
Speaker 1: a web browser, Prodigy branded web browser, so you would
Speaker 1: go into your Prodigy account and then you could access
Speaker 1: the world Wide Web. Uh. And in ninety five, it
Speaker 1: was still still pretty much a Wild West kind of territory,
Speaker 1: although it was certainly getting larger adoption by then. The
Speaker 1: customers also could uh. Well, they now accounted for about
Speaker 1: let's see, I think there's one million of them, so
Speaker 1: the numbers are actually dropped than before. But the company
Speaker 1: claimed that it was on track to becoming profitable, which
Speaker 1: had been claiming for the past ten years, right, right,
Speaker 1: But they're they're saying, no, we really mean it now,
Speaker 1: we are we are on the road to becoming a
Speaker 1: profitable business. They lost thirty four point six million dollars
Speaker 1: in that year, but less than the previous two years
Speaker 1: half of half, like two years ago. Yeah, so they're
Speaker 1: losing less money year over year, which means that, in
Speaker 1: a way, you could say they're on the road to
Speaker 1: being profitable, assuming they can continue that trend. However, IBM
Speaker 1: and Sears basically bailed. Yeah, they said, you know what, guys,
Speaker 1: it's been fun, but it's also been holy heck on
Speaker 1: our wallets, right, because I mean they you know, definitely
Speaker 1: over a billion dollars in investments spent at that point
Speaker 1: and in laws and revenue. The fact that they were
Speaker 1: losing money year over year meant that that one billion
Speaker 1: was just a starting point. They had to keep the
Speaker 1: company afloat during these years too, um so they so
Speaker 1: they wound up selling Producy Services Company to a company
Speaker 1: called International Wireless Incorporated. That the new management team was
Speaker 1: still led by Edward Bennett. But but yeah, they had
Speaker 1: some they cleared some house. Yeah yeah, in order to
Speaker 1: get it ready for the sale. I think that they
Speaker 1: dropped seventeen percent of their workforce. Yeah. Yeah. It was
Speaker 1: one of those strategies that companies sometimes used in order
Speaker 1: to make them look better than than how they're operating.
Speaker 1: They lower operating costs in a way to lower operating
Speaker 1: costs get rid of some of those pesky salaries. Yeah,
Speaker 1: I mean that, you know. Either way, this sale was
Speaker 1: for seventy eight point two million, which is embarrassing. Yeah,
Speaker 1: when you look at it, over a billion dollars in
Speaker 1: investments over the years, plus however much was need to
Speaker 1: keep the company afloat. Selling it for somebody eight point
Speaker 1: two million is really cutting your losses whether or not.
Speaker 1: That's the biggest uh, you know, biggest uh dump as
Speaker 1: far as it goes. No, there are other ones that
Speaker 1: are even worse. I mean you can argue like things
Speaker 1: like MySpace and uh and there are other properties that
Speaker 1: had really dramatic investments and then a huge drop off.
Speaker 1: But it's it's definitely up there. So uh. The new
Speaker 1: strategy that the company has is to really kind of
Speaker 1: branch out to still offer the online service provider provider
Speaker 1: services that it had. So in other words, you know,
Speaker 1: this would still be something that you would log into
Speaker 1: and you would have your curated content. Uh. And you
Speaker 1: could then also access some Internet functionality that was packaged
Speaker 1: under the name Prodigy Classic, right, or you could actually
Speaker 1: use Prodigy as an Internet service provider, and this would
Speaker 1: be the company that would give you the access to
Speaker 1: the Internet, so you could browse the Internet, send email,
Speaker 1: all the kind of stuff that we do all the time.
Speaker 1: And that one that that service had an interesting name,
Speaker 1: So you had Prodect Classic, and then the Internet service
Speaker 1: provider branch was called Prodigy Internet. Really really creative marketing
Speaker 1: forces here. The company that year had also changed its
Speaker 1: name to Prodigy Incorporated. Yep, yep, So now it's Prodigy Inc.
Speaker 1: And uh, they changed the subscription package. Now it was
Speaker 1: no longer for either service. It was now you had
Speaker 1: to spend whether it was Prodigy Classic or prod Internet
Speaker 1: didn't matter which. Uh. And that year the company lost
Speaker 1: ninety point eight million dollars. Yeah, And so I mean
Speaker 1: you keep in mind that the overall market all had
Speaker 1: been adding some three thousand subscribers per month um and
Speaker 1: had in fact declined to take over Prodigy yeah. They
Speaker 1: they supposedly visited the premises at some point and went,
Speaker 1: you know, we're doing okay. They went to White Plains,
Speaker 1: New York, which is where Prodigy was headquartered, and Microsoft Network,
Speaker 1: which had been online for less than a year, had
Speaker 1: already surpassed Prodigy and subscribers. Yeah, so this is one
Speaker 1: of those things where, uh, and we'll talk a little bit,
Speaker 1: I guess towards the end about what we think kind
Speaker 1: of went wrong with Prodigy. I can at least speak
Speaker 1: to that a little bit. But it became pretty clear
Speaker 1: in hindsight that Prodigy made some poor choices. Jonathwenty here again,
Speaker 1: we're gonna take another quick break, but we'll be right back. Alright,
Speaker 1: So we left off in nineteen six, so logically we
Speaker 1: should then move on to crazy talk. That was when
Speaker 1: Prodigy split into three divisions. So you had two divisions
Speaker 1: that looked at the core services. One of them were
Speaker 1: was specifically focused on domestic and one on international. But
Speaker 1: you had a third division as well, right, That one
Speaker 1: was all about software developments. That was about building a
Speaker 1: new functionality and improving the existing functionality of the Prodigy service.
Speaker 1: That was all that it was doing, which they were doing.
Speaker 1: They had, around as the similar time, launched a supposedly
Speaker 1: the first bulletin board archive, which was essentially a search engine,
Speaker 1: and that was kind of a new crazy thing within
Speaker 1: the bulletin board messaging board world. Yeah, we had some
Speaker 1: early search engines in those nineties cash, I remember things
Speaker 1: like web crawler. But this is you know, this is
Speaker 1: right when companies like Google are just starting to bloom.
Speaker 1: They're not even really on the horizon yet for most people.
Speaker 1: So it was certainly something that was still seen as
Speaker 1: very much innovative. UM. As for the international UH efforts
Speaker 1: on part of Prodigy, we mentioned earlier that Europe was
Speaker 1: very much saturated with online service providers and internet service
Speaker 1: providers of their own, so Prodigy really didn't see like
Speaker 1: there was a great in road in Teably never even
Speaker 1: went there. They were just like, you know, so they
Speaker 1: started looking at other markets, and mainly at that time
Speaker 1: it was Africa and China. They also started to make
Speaker 1: some impact in Mexico and in fact that would become
Speaker 1: more important, very important. UM they had around well in
Speaker 1: ninety seven, they estimated that they needed about one point
Speaker 1: five million customers in order to break even. UH. They
Speaker 1: did not have one point five million customers. In ninety
Speaker 1: seven they had about sixteen thousand compared to A O
Speaker 1: L's like eight million, right, and and that six thousand.
Speaker 1: They actually had more customers than that, but six and
Speaker 1: thirteen thousand were the billable customers because because you know,
Speaker 1: they might have joined the service, but they were in
Speaker 1: that free free period, so they weren't being build for that. Actually,
Speaker 1: that was the year that FTC that the the Federal
Speaker 1: Trade Commission charged Prodigy, compu Serve, and a O L
Speaker 1: with all having made unclear free trial offers that didn't
Speaker 1: sufficiently warn their customers about being automatically built at the
Speaker 1: end of the trial period. Excellent. I actually saw that lawsuit,
Speaker 1: like I had the information up on my page. I
Speaker 1: felt like I didn't have enough time to read it.
Speaker 1: So I'm glad you did because I was like, there's
Speaker 1: something legal happen in ninety seven. Moving on, Uh so,
Speaker 1: how much money did the company lose in nineteen seven
Speaker 1: and thirty two point seventy eight million? Wow? Wow, So
Speaker 1: keep in mind just a few years earlier. It was
Speaker 1: it was back in when they thought that they were
Speaker 1: on the road to profitability. That's when they lost thirty
Speaker 1: four million dollars back in ninety five, and then just
Speaker 1: two years later they lose a hundred thirty two million,
Speaker 1: almost a hundred thirty three million dollars. Clearly things were
Speaker 1: not moving in the same direction as they had perceived
Speaker 1: back in ninety five, and certainly not where they were
Speaker 1: hoping now. Right. So, apparently there were a lot of
Speaker 1: things going on in the market at that time, including
Speaker 1: this increased competition from the other rivals in the space.
Speaker 1: Uh and and so the company decides to do something
Speaker 1: really dramatic, something that they had only done a couple
Speaker 1: of times before. They were their their their name change. Yeah,
Speaker 1: they changed to Prodigy Communications Corporation. Right. So then they
Speaker 1: also decided to lower the monthly fees back to about
Speaker 1: fifteen fifteen bucks, and they promised a new digital service
Speaker 1: that would be specifically geared for the brand new blistering
Speaker 1: le fast fifty six K modems. Yeah, I remember having
Speaker 1: a twenty four hundred mottem. I think in that time,
Speaker 1: I actually did think that K was blisteringly fast. I
Speaker 1: think I still had a fourteen four at the time,
Speaker 1: so I essentially two point four is what mine was. Man, Yeah,
Speaker 1: you would you would just hope that whatever link, whatever
Speaker 1: thing you were looking at was just text, because if
Speaker 1: there was anything other than text, you were going to
Speaker 1: be there for a good couple of hours until my
Speaker 1: x files fan pages loaded very slowly. Um well, the
Speaker 1: truth was out there. Uh So the news service was
Speaker 1: supposed to be much faster. K optimized service is supposed
Speaker 1: to be faster and have more rich content than the
Speaker 1: older services. Now, remember we said that the older services
Speaker 1: services had graphics, but these graphics were akin to what
Speaker 1: you might see in an old clip art, uh folder, Right,
Speaker 1: they weren't. They weren't like photo realistic pictures or anything
Speaker 1: along those lines. And when you see the commercial, you'll
Speaker 1: understand what I what I mean, because that be feeder.
Speaker 1: It's pretty gorgeous. It's it's it's. My My favorite thing
Speaker 1: is the reaction of the old man when he sees
Speaker 1: the page load up about England and it's a little
Speaker 1: cartoon of a B feeder and he's like, Wow, how
Speaker 1: easily we were impressed back in those days, Like you know, yeah,
Speaker 1: like like pixel art on the level of that, Like
Speaker 1: Diesel Sweeties makes fun of these days, right. Yeah. So
Speaker 1: at this time, the company was still maintaining two different services,
Speaker 1: Prodigy Classic and Prodigy Internet uh and combined those two
Speaker 1: services had eight hundred thirty thousand customers, only six hundred
Speaker 1: seventy one thousand of which were considered billable customers. So
Speaker 1: the company lost money yet again, but less than they
Speaker 1: had the year previous, less than half, only sixty five
Speaker 1: point eight million point eight million. Yeah, it's tiny compared
Speaker 1: to the hundred thirty two So yeah, good at least
Speaker 1: at least it was a reverse in the trend because
Speaker 1: they had been losing more and more money each year. Yes. Um,
Speaker 1: So the next year they launched an I p O
Speaker 1: because why wouldn't you, Well, you've been losing money year
Speaker 1: over year, And I think I think that was one
Speaker 1: of those desperate bids to avoid bankruptcy kind of kind
Speaker 1: of I p O s. Because there's two kinds of IPOs.
Speaker 1: There's the kind that we are like, wow, we're so
Speaker 1: excited and we think that everyone's going to give us
Speaker 1: even more money to do these wonderful things. And there's
Speaker 1: oh crap, oh crap, my car, don't take my car.
Speaker 1: Please put money in us, because we promise we are
Speaker 1: going to be much more profitable, very very soon. We
Speaker 1: promised we're going to sell it to a sucker right there, exactly.
Speaker 1: That may also be the case, like we'll we'll only
Speaker 1: be publicly tradeable shortly, and then we'll we'll endure a
Speaker 1: hostile takeover, which will actually be just a takeover because
Speaker 1: we'll be like, please take over. But they raised about
Speaker 1: a hundred and sixty million out of that, Yeah, so
Speaker 1: they did raise money. The stocks share price originally was
Speaker 1: fifteen dollars from what I understand. According to Funding Universe,
Speaker 1: the highest point of the stock price in ended up
Speaker 1: being about fifty dollars per share. But that was a
Speaker 1: time where the investment companies were very much excited about
Speaker 1: technology companies. We're talking about. This is also, yeah, this
Speaker 1: is the cusp. This is before, This is while the
Speaker 1: dot com bubble is inflating, right, So this is when
Speaker 1: we were all believing that the Internet was going to
Speaker 1: be the way everyone was going to do business from
Speaker 1: that point forward, that that the brick and mortar stores
Speaker 1: were going to die out almost immediately. This is how
Speaker 1: everything's gonna work. We just have to make sure that
Speaker 1: we've got the business plan in place that makes it
Speaker 1: all magically happen. And I apologize for this age reference, Jonathan,
Speaker 1: but but this was right before I graduated from high school,
Speaker 1: and I've been married for two years, and and it
Speaker 1: was right about that time that all of my friends
Speaker 1: were going, like, we are going to make our fortunes
Speaker 1: doing this Internet thing. Yeah. So obviously that's one of
Speaker 1: those if you're a company that offers access to this
Speaker 1: magical world called the Internet, you're in a good position.
Speaker 1: So they did do pretty well with that I p
Speaker 1: O and the subsequent year of investment, but not so
Speaker 1: well that they were actually able to generate a lot
Speaker 1: of revenue from this um. They would eventually, by the
Speaker 1: end of ninety nine lose eighty point four nine million,
Speaker 1: So again it's gone up since the last time. But
Speaker 1: they also would undergo kind of a change as well
Speaker 1: because of this I p O. It allowed a company
Speaker 1: called Carso Global Telecom Essay c V. It's a Mexican company,
Speaker 1: to end up with sixty percent ownership of Prodigy. So
Speaker 1: this was one of those companies that ended up investing
Speaker 1: in Prodigy when they started making those in roads into Mexico,
Speaker 1: and in fact, Prodigy to this day is very important
Speaker 1: in Mexico. But we'll get into that. So Prodigy launched
Speaker 1: a bilingual I SP service in the United States and
Speaker 1: also entered a joint venture into Mexico's largest I s P,
Speaker 1: which was called telmex And at that time the company
Speaker 1: also went ahead sold off its African assets, those those
Speaker 1: regional areas in Africa that had been supporting for only
Speaker 1: two point eight one million dollars. But later in Prodigy
Speaker 1: acquired a company called flash net Communications, which was a
Speaker 1: rival I s P and OSP where a hundred thirteen
Speaker 1: million dollars. That did add two hundred and fifty thousand
Speaker 1: customers to their base. So now they've they've almost artificially
Speaker 1: added more customers in a way, because they ended up
Speaker 1: acquiring all the ones that had belonged to flash Neet.
Speaker 1: And then Prodigy and SBC Communications Incorporated, which is a
Speaker 1: telephone company, announced plans for a limited partnership and that
Speaker 1: partnership would make Prodigy the exclusive I s P for
Speaker 1: SBC consumers. So, you know when I said earlier about
Speaker 1: how two million was kind of the peak for Prodigy,
Speaker 1: this is where the caveat comes in, because because SBC
Speaker 1: had something like seventy millions seventy seven million high speed
Speaker 1: Internet customers, which meant that because this agreement made Prodigy
Speaker 1: the the exclusive provider, it it boosted Prodigies numbers to
Speaker 1: an insane amount. But that's the thing is that these
Speaker 1: were not people who were subscribing directly to Prodigy. Well
Speaker 1: they you know, it's they were because they had to,
Speaker 1: but they were subscribing to SPC and so it wasn't
Speaker 1: generating the revenue directly through Prodigy the way. The way,
Speaker 1: because prod also made money through advertising. They would put
Speaker 1: ads on their pages, usually one ad per page, so
Speaker 1: it's not like you would have tons of ads on everything.
Speaker 1: So they would generate some revenue that way, so that
Speaker 1: there was also, you know, a method of making some
Speaker 1: money besides just direct subscriptions. Anyway. Uh, that was also
Speaker 1: the year where probably was shut down temporarily on purpose.
Speaker 1: Internally they shut down they or they turned off the lights,
Speaker 1: as some people have said, because there was something going
Speaker 1: on in ninety nine that a lot of people just
Speaker 1: I mean, you've heard the phrase, but you've probably forgotten
Speaker 1: all about it. Whole two K thing. Yeah, back when
Speaker 1: we thought the world was going to end because all
Speaker 1: computers had only been programmed to run up through We're
Speaker 1: through through. No one had bothered to well, they had
Speaker 1: used they had only programmed the date for the year
Speaker 1: as two right, so computers would read ninety nine as
Speaker 1: And then everyone thought, wait a minute, what happens when
Speaker 1: they hit zero zero for two thousand? Uh? Does that
Speaker 1: mean the computers are just going to assume it's nineteen
Speaker 1: hundred because it's going to reset to that value. It
Speaker 1: doesn't understand that there is another year here, and if
Speaker 1: that happens, how is this going to affect everything else?
Speaker 1: And so you had people saying, well, you're probably gonna
Speaker 1: have some interruptions and services, but that's about as bad
Speaker 1: as it's going to be. And then you have the
Speaker 1: other side of the spectrum where they said all of
Speaker 1: the world shall end, the financial markets shall crash. Basically
Speaker 1: be I know that fight Club hasn't did fight Club
Speaker 1: come out that year? I know that fight Club wasn't
Speaker 1: a big thing at that point, but but but like
Speaker 1: basically the end of fight Club, I was just saying,
Speaker 1: like dogs and cats living together, maths hysteria. Yeah, so
Speaker 1: that that's essentially what we're looking at in fact, And
Speaker 1: it was one of those things where even I at
Speaker 1: the time. I was not working at how stuff works
Speaker 1: at the time, but even at the time, I was
Speaker 1: thinking where do I want to be when becomes two
Speaker 1: thousand and I decided to go to a very flamboyant
Speaker 1: club in Athens and it was fabulous because I figured,
Speaker 1: if if the world is going to end, I wanted
Speaker 1: to end with some amazing music. It's that's entirely fair. Um.
Speaker 1: Why two K was also the they retired Prodigy Classic
Speaker 1: that year and they started why twok is one of
Speaker 1: the reasons, along with other architecture problems that you know,
Speaker 1: it was not really a system that was intended to
Speaker 1: go along with all of these new crazy innovations, right,
Speaker 1: so they were really taking taking a similar model to
Speaker 1: America Online, where where the Prodigy service would launch you
Speaker 1: into a portal page where there then you could go
Speaker 1: and do whatever it was you wanted to do. But uh, yeah,
Speaker 1: they wanted to kind of get away from having to
Speaker 1: support this this legacy system of Prodigy Classic because it
Speaker 1: was becoming less and less relevant and it required a
Speaker 1: diversion of revenue, it required a diversion of of assets.
Speaker 1: I should say, right, sure, it's still affected some two
Speaker 1: hundred and eight thousand subscribers, which Prodigy tried to move
Speaker 1: to um to their Internet service with with middling success. Yeah,
Speaker 1: if you've ever worked with someone who was very much
Speaker 1: used to a particular type of system and then watched
Speaker 1: as they tried to navigate a new system, you can
Speaker 1: see how quickly they can become frustrated and disenchanted. They
Speaker 1: actually they actually provided a new homepage like at like
Speaker 1: a different port for the Classic customers who were moving
Speaker 1: to Internet that looked more like the original Classic port
Speaker 1: to help less of transitioning. I think about every time
Speaker 1: anyone upgrades their operating system, or even when Facebook changes,
Speaker 1: I mean, you know, the Internet riots. Yeah, no, not
Speaker 1: my favorite thing to post at that is, the new
Speaker 1: Facebook changes are the worst thing to happen since the
Speaker 1: last Facebook changes, because that's how it always seems like.
Speaker 1: At any rate. Getting back onto Prodigy and two thousand SBC,
Speaker 1: the company we talked about, the telephone company purchased at
Speaker 1: interest in Prodigy, and earlier Prodigy had been looking at
Speaker 1: possibly merging with earth Link and MindSpring, which would have
Speaker 1: been a very interesting outcome because all of these companies
Speaker 1: had sort of been suffering a against the onslaught that
Speaker 1: was America Online UM and SPC would essentially end up
Speaker 1: with controlling interest in Prodigy within the next year, so
Speaker 1: they bought controlling interests, right. So moving ahead to two
Speaker 1: thousand two, SPC formed another strategic alliance, this time with
Speaker 1: a little company called Yahoo. Yeahoo Yeah. So two thousand two,
Speaker 1: this is this is back when Yahoo was doing some
Speaker 1: serious business, right, I mean, this was not the era
Speaker 1: where we all were wondering what Yahoo was going to
Speaker 1: be able to do to turn things around. This is
Speaker 1: when Yahoo is really on the rise, and uh, the
Speaker 1: alliance ended up creating a new kind of Yahoo portal.
Speaker 1: So if you've been to, like, if you ever visited
Speaker 1: Yahoo back in this time, you remember that there was
Speaker 1: one of these things where you would get news and sports,
Speaker 1: and it's very similar to what you see today, although
Speaker 1: today it's much more of a sophisticated layout than it
Speaker 1: was back in the day. But this was sort of
Speaker 1: taking taking a queue off those old online service providers
Speaker 1: which had this curated content that everyone likes so much.
Speaker 1: So that's when we see uh Prodigy sort of start
Speaker 1: to fade away, and in fact, SPC stopped allowing new
Speaker 1: Prodigy accounts. In two thousand two, they did let people
Speaker 1: who were hardcore fans of Prodigy retain their Prodigy dot
Speaker 1: net email addresses, which people still retain today. Yeah. Yeah,
Speaker 1: It's one of those things where it's almost like a
Speaker 1: badge of honor. It's like I was there concert t shirt.
Speaker 1: Yeah yeah, yeah. But eventually it would get to a
Speaker 1: point where if you were to try to go to
Speaker 1: prodig dot net, it would lead to uh my A
Speaker 1: T A T T dot net page until around two
Speaker 1: thousand nine, and after that you just get an error. Yeah.
Speaker 1: So now these days, if you go to Project donet,
Speaker 1: at least as of the recording of this podcast, if
Speaker 1: you go to prodect dot net, you get an error message.
Speaker 1: By the time this comes out, maybe they've actually figured
Speaker 1: out some way of resuscitating the brand. So really a
Speaker 1: few years later it becomes um uh that that SPC
Speaker 1: was looking at actually selling the brand name Prodigy to
Speaker 1: someone else who would want to whoever would want to
Speaker 1: use it. Right around two thousand five, there is a
Speaker 1: big push um they were There were a lot of
Speaker 1: rumors floating around that they were trying. Yeah, but no one,
Speaker 1: No one's purchased it now we will say that Prodigy
Speaker 1: Internet still is a thing. There is a Prodigy Internet.
Speaker 1: It is in Mexico and it's the largest I s
Speaker 1: P in Mexico. So it's not that Prodigy has completely disappeared,
Speaker 1: but in the United States it's pretty much a non
Speaker 1: factor these days. UM. So let's talk a little bit
Speaker 1: about some of the services they would provide. We've mentioned
Speaker 1: a few of them already, and that this this idea
Speaker 1: of curated content we talked about the bulletin boards. UM. Also,
Speaker 1: early on they did not allow foul downloads. It was
Speaker 1: really the idea was that you were consuming content but
Speaker 1: not producing it or sharing it. Yeah. But but later
Speaker 1: they would allow file downloads, although they would look at
Speaker 1: those as well to make sure that they've met the
Speaker 1: standards that they had set for everywhere else on Prodigy.
Speaker 1: Uh an electronic mail. Back in ninety one, we talked
Speaker 1: about how UH they ended up seeing a big surge
Speaker 1: in electronic mail use because due to their censorship of
Speaker 1: the boards, and so in response, what did they do.
Speaker 1: They decided that, well, you know, this huge amount of
Speaker 1: electronic mail is putting a taxation upon our our transaction
Speaker 1: fees with the telephone company so let's pass that along
Speaker 1: to the consumer. Every month, you'll get thirty messages for free,
Speaker 1: and if you want to send more than that, you
Speaker 1: need to spend money. It costs money to have more
Speaker 1: than thirty messages in a month. And so that was
Speaker 1: sort of the response to this surge and email use.
Speaker 1: And again that did not make users happy because firstly,
Speaker 1: since sinsored the bulletin boards and other messaging systems, and
Speaker 1: then they made it harder to send email. Yay that
Speaker 1: that some people would argue. That ended up being a
Speaker 1: major reason why Prodigy ended up failing was because they
Speaker 1: had a lot of consumer unfriendly practices. Even though their
Speaker 1: original model, this idea of a flat fee and you
Speaker 1: get access to almost everything was very attract the way
Speaker 1: that they were creating policies was so against what the
Speaker 1: average consumer wanted that it ended up making it ended
Speaker 1: up alienating their their customer base. So then you get
Speaker 1: to uh the news again, the curated news. You get
Speaker 1: to travel. You can make travel arrangements on Prodigy. Uh.
Speaker 1: They had specific partnership with American Airlines, so you could
Speaker 1: make a reservation on American Airlines through Prodigy. This again
Speaker 1: before the Internet, this or before we had access to
Speaker 1: the internet, this online service provider stuff. That's not like
Speaker 1: you could just go to American Airlines dot com and
Speaker 1: do whatever you want to do. This this precedes that
Speaker 1: Triblocity did not exist. They could also you could also
Speaker 1: make hotel and car rental reservations through that same system,
Speaker 1: although keep in mind again this is through partnerships that
Speaker 1: they Prodigy had made with specific companies. It's not like
Speaker 1: you had access to everybody, all right, right, you wrote
Speaker 1: in your in your notes that it was like going
Speaker 1: to a mall, Like, not every mall is going to
Speaker 1: have the stories that you want. It's going to be
Speaker 1: you know whatever, Yeah, exactly, yeah, so you know just
Speaker 1: what you exactly right. If if that store wasn't in
Speaker 1: that mall, you had to go to a different all well,
Speaker 1: the same sort of thing. If if you could not
Speaker 1: get access to a particular vendor through Prodigy, then that
Speaker 1: meant that, well, you have the wrong online service provider
Speaker 1: for your needs. The same same thing applies to the
Speaker 1: shopping obviously, Sears clearly being a founding partner. Sears Merchandise
Speaker 1: had heavy representation in online shopping on Prodigy and around
Speaker 1: well more than forty other direct mail marketing kind of vendors,
Speaker 1: like any company that would other places that had large catalog. Yeah,
Speaker 1: that whole, the whole, like we will mail you are
Speaker 1: stuff because this is still you know, this isn't a
Speaker 1: time where this that was not the most common method
Speaker 1: of delivering stuff. Right, Usually you would have this retail
Speaker 1: experience where you go into a store, so direct to
Speaker 1: customer was something that only a few vendors offered at
Speaker 1: that point. You could also do banking. The banking was
Speaker 1: through New York's manufacturers Hanover Trust Bank, so if you
Speaker 1: weren't with that one, too bad. And stocks yep, yep.
Speaker 1: That was through Donaldson, Lufkin Engine Rhett, which was a
Speaker 1: Wall Street company that would handle the stock purchases so
Speaker 1: you could become a day trader if you wanted to.
Speaker 1: Early early on, they did groceries. They did online groceries.
Speaker 1: But I think that the price and availability of service
Speaker 1: was just so yeah, there was very low adoption and
Speaker 1: also it just costs a lot of money to run
Speaker 1: that kind of operation. Now, I will say I never
Speaker 1: used Prodigies grocery shopping service, but I've used other online
Speaker 1: grocery shopping services. Back when they were more common, like
Speaker 1: webvan would be the I think that's even webban was
Speaker 1: the one I used, and I loved it, but it
Speaker 1: again was one of those things where I just could
Speaker 1: imagine exactly it had to be phenomenally expensive to operate,
Speaker 1: and unless you have a huge customer base right out
Speaker 1: of the gate, you're going to be operating at a
Speaker 1: loss for several years, kind of like Prodigy. And then
Speaker 1: later on when it became when it started to do
Speaker 1: the prodec internet services, it began to offer things like
Speaker 1: curated content online, so you would go to your little
Speaker 1: online portal and that's where you'd see things like sports,
Speaker 1: business news, world news, that kind of stuff, kind of
Speaker 1: like yeah, who does um. They also did have have
Speaker 1: news writers. They had had they had an editorial team,
Speaker 1: the dedicated editorial staff that worked out a White Plains,
Speaker 1: New York. So they had editors and writers working specifically
Speaker 1: to write content just for Prodigy users. So it's the
Speaker 1: same sort of stories you would see in other sources,
Speaker 1: like if you were to get a newspaper, but it
Speaker 1: was written specifically for the Yeah. And then they also
Speaker 1: had instant messaging, Like they said, they had chat rooms
Speaker 1: for a little while, and then they had things like
Speaker 1: financial tools like portfolio management and personal finance tracking, so
Speaker 1: you could follow how your your finances were doing over time.
Speaker 1: Like when you see all your dot com stocks on
Speaker 1: like a meteoric rise and you think, I am going
Speaker 1: to be in the world's next multi billion air and
Speaker 1: two thousand one, when you think, where where's my change? Jar?
Speaker 1: I want to go to McDonald's. Yeah, yeah, they I
Speaker 1: you know, I do think that in a lot of
Speaker 1: ways it was ahead of its time. I think that
Speaker 1: if Prodigy had come out in that wave that A. O.
Speaker 1: L did just a couple of years later, um, that
Speaker 1: the technology would have been such that they would have
Speaker 1: had greater adoption. But but some of those I mean,
Speaker 1: I hate to use the word draconian for an Internet
Speaker 1: service provider, but who but who reads their bulletin board
Speaker 1: content and make sure that I mean that's that's right. Yeah, yeah,
Speaker 1: I would say that those decisions were what stood in
Speaker 1: Prodigies away from becoming like the dominant osp was that
Speaker 1: it wasn't that the service they provided was bad. A
Speaker 1: lot of it was good, but they were not prepared
Speaker 1: for the initial costs that they incurred as they began. Um,
Speaker 1: they weren't prepared to endure that for as long as
Speaker 1: it was necessary for them to build up the customer base.
Speaker 1: They may decisions that upset customers, including not just the
Speaker 1: censorship or however you want a word it not just
Speaker 1: that policy, and not just the policy of charging more
Speaker 1: for email, but they started to do surcharges on other
Speaker 1: features as well. So not all features were not free
Speaker 1: but free with with subscription, right. Not all of them
Speaker 1: were free with subscription. Some of them you would have
Speaker 1: to pay on top of your subscription fee. And these
Speaker 1: were things where people were saying, well, yeah, you you
Speaker 1: build this as I pay one monthly fee and then
Speaker 1: I have access to all these amazing things. But in truth,
Speaker 1: I pay one monthly fee and then I have the
Speaker 1: opportunity to buy more stuff all of these services that
Speaker 1: I kind of want to use. And so it may
Speaker 1: very well be that their business plan, perhaps they had
Speaker 1: just priced themselves too low at the very beginning, and
Speaker 1: they maybe if they had gone with a slightly higher
Speaker 1: subscription fee at the very beginning, uh, it could have
Speaker 1: offset some of the costs they incurred when they started
Speaker 1: offering up these services, and maybe then they could have
Speaker 1: kept those services free with the subscription, and then they
Speaker 1: might it might be a totally different story today. Maybe
Speaker 1: today we wouldn't be talking about A O. L. You know,
Speaker 1: like we wouldn't say that A O. L. Was had
Speaker 1: become the you know this this name, but we still know.
Speaker 1: Maybe we'd be talking about Prodigy. Maybe all of us
Speaker 1: would be talking about how many c D s we
Speaker 1: have that we accumulated over the years as Prodigy, c
Speaker 1: D after c D after CD, of of the basic
Speaker 1: kits as you can install it. Yeah, and analysts named
Speaker 1: Richard Adler. I found this quote and I believe a
Speaker 1: New York Times piece from said somebody is going to
Speaker 1: make a lot of money in this business someday. I
Speaker 1: just don't know if it's going to be Prodigy. Yeah,
Speaker 1: and he was right. Some lots of people made lots
Speaker 1: of money in this It's just like this was this
Speaker 1: was unfortunately not the story for that, but I thought
Speaker 1: was an interesting one. Lauren and I both used Prodigy,
Speaker 1: so we're both prodigy kids. Uh, we're both prodigies. Really.
Speaker 1: We don't want to our own horn or anything. It's
Speaker 1: just true. So, you know, no false modesty on this
Speaker 1: show at any rate. Uh, you know, it's an interesting story,
Speaker 1: and like I said, we'll probably talk about other ones
Speaker 1: in the future. Maybe we'll will have an episode where
Speaker 1: we talk about copy Server, maybe one about mind Spring. U.
Speaker 1: These are other interesting internet companies and kind of see
Speaker 1: what formed the basis of how we think of the
Speaker 1: Internet today and which ones are still around in which
Speaker 1: ones are just a name that we associate with. Yeah,
Speaker 1: time's gone by. Stuff you missed. Industry class would probably
Speaker 1: cover these two if they looked at more recent history.
Speaker 1: And there's not a whole lot of online service providers
Speaker 1: in the days of the Vikings. And that wraps up
Speaker 1: this classic episode of tech Stuff. Hope you guys enjoyed it.
Speaker 1: If you have any suggestions for future topics that I
Speaker 1: should cover on the show, reach out to me on
Speaker 1: Twitter or Facebook. The handle at both of those is
Speaker 1: tech Stuff hs W and I'll talk to you again
Speaker 1: really soon. Text Stuff is an I Heart Radio production.
Speaker 1: For more podcasts from my Heart Radio, visit the I
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