Speaker 1: Get in touch with technology with text Stuff from how
Speaker 1: stuff dot com. Hey there, and welcome to text Stuff.
Speaker 1: I'm Jonathan Strickland and I'm Lauren, and today we're gonna
Speaker 1: talk to you about Prodigy. I don't know why we
Speaker 1: picked this one. I mean, I love the band, I
Speaker 1: don't want to get internet service. Oh do you need
Speaker 1: to do you need to go to some more now
Speaker 1: hang on one second, alright, I'm back. Okay, So Prodigy
Speaker 1: online service provider. Of course, that's what we're talking about now.
Speaker 1: Long time listeners to tech stuff know that ages ago,
Speaker 1: Chris and I did an episode about online service providers,
Speaker 1: but this time we want to specifically look at Prodigy,
Speaker 1: partly because it was one of the earliest, in fact,
Speaker 1: depending upon whom you ask, the earliest online service provider. Now,
Speaker 1: online service providers are different from Internet service providers. So
Speaker 1: I'm gonna blow your minds out there, kids. So you
Speaker 1: young uns out there, there was a time when we
Speaker 1: did not all have access to the internet. It was
Speaker 1: a terrifying time. Dinosaurs roamed the earth. Occasionally you would
Speaker 1: go camping and an enormous guy in a hockey mask
Speaker 1: would chase you around. The eighties were tough, y'all. I
Speaker 1: actually do remember that time dimly. I mean I I was,
Speaker 1: you know, not necessarily eating all solid food yet, and
Speaker 1: I could barely read. But I do, in fact for
Speaker 1: call a time before the Internet. I grew up in
Speaker 1: that time, and uh, I bear the scars to this day. Also,
Speaker 1: I don't read that much currently. But at any rate,
Speaker 1: now we're talking about a time where the computer revolution
Speaker 1: had really taken hold of. The personal computers had already
Speaker 1: become a rising trend. It still was kind of a
Speaker 1: rarity to find someone who owned a personal computer. It
Speaker 1: wasn't like there were PCs everywhere, certainly not no, but
Speaker 1: 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 disks. 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 that
Speaker 1: program anymore. You just had your basic operating system, although
Speaker 1: you might not even call it that um anyway. Eventually
Speaker 1: you started seeing things like modems where you could do
Speaker 1: things like connect to a local bulletin board system or BBS.
Speaker 1: This was usually something that was hyper local, as in
Speaker 1: something that would might be run in the same city
Speaker 1: that you live in, because in order to connect to
Speaker 1: most bbs is, you had to dial a specific number,
Speaker 1: and usually it was a it was a er a
Speaker 1: local number, yeah, because you could dial into a BBS
Speaker 1: that's run in a state, you know, twenty states away.
Speaker 1: But long distance charges at the time were also such
Speaker 1: that that that it would have been incredibly cost prohibited. Yeah, anyone,
Speaker 1: any kid who experimented with connecting to bbs IS might
Speaker 1: find out rapidly from his parents or her parents that, uh,
Speaker 1: it was not the best idea to do that without
Speaker 1: parental agreement beforehand, because you could rack up huge bills.
Speaker 1: I mean, this is the era where long distance charges
Speaker 1: were a real thing. I know that a lot of
Speaker 1: people today aren't even they that's not something they even
Speaker 1: think about because in most cases you don't have a
Speaker 1: long distance charge anymore. About once a month, I marvel
Speaker 1: at the incredible present and the fact that I can
Speaker 1: call people all over the country without having any without
Speaker 1: worrying about, oh, you know, we've taught for five minutes,
Speaker 1: this is gonna cost me twenty bucks or whatever. Uh
Speaker 1: and and they have not said anything of value, so so,
Speaker 1: at any rate, at this time, that was pretty much it.
Speaker 1: And then there became this idea of the online service
Speaker 1: provider away for companies to create services that would open
Speaker 1: up brand new opportunities for consumers. And it was before
Speaker 1: the Internet had rolled out to being something that the
Speaker 1: general public could access, so be sure, but but you know,
Speaker 1: people were looking for a way to provide service to
Speaker 1: you know, to a consumers who wanted to communicate and
Speaker 1: be two companies who wanted to sell more stuff. Give
Speaker 1: give companies an outlet to sell more right, So this
Speaker 1: was this was the idea. Like instead of instead of
Speaker 1: the Internet, think of the Internet. It's it's the network
Speaker 1: of networks, right, It's all these different computers. They're connected together,
Speaker 1: and lots of different types of communication goes across the Internet,
Speaker 1: from email to file transfers to web traffic. All of
Speaker 1: that stuff is going on across the Internet. An online
Speaker 1: service provider is more like a very small network. It's
Speaker 1: not a network of networks. It is a network in
Speaker 1: which 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 texts. 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 yep. Yeah, so you have one of these
Speaker 1: things that connect to a phone line and then can
Speaker 1: can 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 thing that was used in commercial 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 certain 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, so sure, of course. Yeah.
Speaker 1: I do also want to mention this is the same
Speaker 1: year that UM IBM introduced the portable PC weighing a
Speaker 1: mirror thirty pounds or what's that like fourteen kilos, Yeah,
Speaker 1: something like that. So you're talking about portable depending upon
Speaker 1: your upper body stream. Uh uh. So so that was
Speaker 1: that was kind of the life of the times. UM
Speaker 1: the entire video text thing was doing a little bit
Speaker 1: better in Europe. There were a bunch of countries that
Speaker 1: that already had something like this, but it was really
Speaker 1: the first time this whole trend text thing was really
Speaker 1: the first time that it had been rolled out for
Speaker 1: commercial use, for customer use for the United States and
Speaker 1: the US. Yeah. In fact, the the concentration in Europe
Speaker 1: would mean that uh, companies like Prodigy in America Online
Speaker 1: would end up sort of foregoing any kind of penetration
Speaker 1: attempts in Europe because it was already stated UM and
Speaker 1: CBS had did a did a trial of video texts
Speaker 1: in a three with a T and T in about
Speaker 1: two households somewhere in New Jersey, just to see how
Speaker 1: much interest there would be. And there was a lot.
Speaker 1: So that is why CBS was involved. Sears was you know,
Speaker 1: if you're saying why was Sears in Roebuck involved in
Speaker 1: this internet venture, it's because Sears had the complex billing
Speaker 1: system and the customer base like the mail order customer base. Sure. Yeah,
Speaker 1: the Sears catalog is like a legacy, see when it
Speaker 1: comes to retail. Not only that, but Sears itself has
Speaker 1: had a long history in being involved in electronics. In fact,
Speaker 1: for a while, if you wanted to buy a computer
Speaker 1: that you would either go to a very specialized computer
Speaker 1: store or you would go to a Sears buy your
Speaker 1: computer there. Yeah. And IBM actually, in contemporary literature, people
Speaker 1: were talking about IBM being the most surprising company of
Speaker 1: the three, which doesn't make any sense to me. But
Speaker 1: but their reasoning behind calling it that was that they
Speaker 1: had been really only hardware with a tiny bit of
Speaker 1: software involved up until then, and so now they're trying
Speaker 1: to create an infrastructure that would essentially be a lot
Speaker 1: of software. So this partnership is founded, but it wasn't
Speaker 1: all smooth sailing. They did some you know, some pilot
Speaker 1: testing and and in general it just looked like it
Speaker 1: wasn't really catch on. It might have been ahead of
Speaker 1: its time in the United States, or may have just
Speaker 1: been 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 did you say? Yeah?
Speaker 1: And so then an eight um series and IBM decided
Speaker 1: to stick with it. They doubled down. Yeah, they invested
Speaker 1: four and fifty million in startup. Yeah, so that was
Speaker 1: an eight eight. So if we are just for inflation,
Speaker 1: that's what eight hundred and sixty million, that's a lot
Speaker 1: of money. That's so many dollars. Yeah, so huge, huge
Speaker 1: investment here. And uh, that's when they actually created the
Speaker 1: company that's called Prodigy Services Company. Now, don't get too
Speaker 1: used to that name, because one of the things we
Speaker 1: can talk about with Prodigy, and we will talk about,
Speaker 1: is the fact that their name changes every few years. Yeah,
Speaker 1: it usually retains the term Prodigy. That's about it, but
Speaker 1: that's it. Yeah, So Prodigy Services Company is formed to
Speaker 1: oversee the in text uh technology, and by June of
Speaker 1: the entire project changed its name to Prodigy. So that
Speaker 1: means they no longer talked about trin techs. Trent text
Speaker 1: was a thing of the past. It was now rolled
Speaker 1: into Prodigy and that launched in eight and it became
Speaker 1: the world's first consumer based online service provider. Now at
Speaker 1: the time, IBM had made an estimate. They looked at
Speaker 1: all the households in the United States and they estimated
Speaker 1: how many households out there would have computers that would
Speaker 1: actually be sophisticated enough to run the Prodigy software. And
Speaker 1: when I say sophisticated enough, it's not that the project
Speaker 1: software was this mind bending, amazing looking uh software, you
Speaker 1: it was. It was a visual interface, which was which
Speaker 1: was it was a huge improvement over local bbs is
Speaker 1: that we're all text based, right, So there were there
Speaker 1: were graphics involved, but they were very simple graphics. And uh,
Speaker 1: we'll try to infect. Lauren found a great commercial just
Speaker 1: before the podcast that she shared with us, So we'll
Speaker 1: we'll try and put that up on the Facebook page
Speaker 1: and link it to Twitter as well, so that you
Speaker 1: guys can see what Prodigy looked like when it launched,
Speaker 1: because the commercial actually comes from this era. Yeah, but
Speaker 1: you know, six machines were just coming out. They had
Speaker 1: several megs of RAM, which was big and new and
Speaker 1: 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 the for the services of Prodigy.
Speaker 1: But so the startup package for getting this service was
Speaker 1: a little bit complex because, like Jonathan was saying earlier,
Speaker 1: people didn't have modems. They certainly didn't come in computers
Speaker 1: at the time. Um, it was an add on sort
Speaker 1: of thing. So the original kit cost a hundred and
Speaker 1: forty nine dollars and cents to include that that modem,
Speaker 1: the software, and three months of initial service. Three months
Speaker 1: of service yeah. Um, you could also hypothetically if you
Speaker 1: happened to have a modem by just software for right,
Speaker 1: and then how much was service per month with with
Speaker 1: a yearly subscription? It was a month and a month
Speaker 1: to month it was, so there you go nine dollars
Speaker 1: per month if you if you sign up for a
Speaker 1: full year, or twelve per month if you were going
Speaker 1: month to month basis. Uh and uh. And so they
Speaker 1: figured that with that pricing with that subscription model, if
Speaker 1: they got enough people to subscribe, that would be an
Speaker 1: ongoing source of revenue. Right. It's the same sort of
Speaker 1: model that we see with things like pay to play
Speaker 1: um M M O RPGs you know, which you know
Speaker 1: when now we're seeing more and more of those move
Speaker 1: away from that model and go to free to play
Speaker 1: and then pay to access certain types of content. So nonetheless,
Speaker 1: the month to month subscription fee was a change up
Speaker 1: at the time I think that any anyone else who
Speaker 1: was in the business, and maybe because maybe a O
Speaker 1: L was starting at this it was starting around the
Speaker 1: same time. Yet and of most other services that that
Speaker 1: would be beginning around that time, we're using um pay
Speaker 1: per usage like per per the minute or per per
Speaker 1: hour the data. Right. You you didn't have you didn't
Speaker 1: have that many people offering or that many companies I
Speaker 1: should say, offering a a monthly fee for their service.
Speaker 1: It was almost always uh you know, maybe you get
Speaker 1: the first half hour of content at one amount, and
Speaker 1: then above that it would be more because another limitation
Speaker 1: on some of these early online service providers was that
Speaker 1: they only had so many UH connections that they can
Speaker 1: make at a single time. Within a particular region. So
Speaker 1: if you if you have a phone number that you're
Speaker 1: supposed to call with your computer, it may be that
Speaker 1: the computer can handle say one connections, and beyond that
Speaker 1: it can't handle more than that. And so so allowing
Speaker 1: people continual access was potentially dangerous to your customer base
Speaker 1: because because everyone say like, well I got your software,
Speaker 1: but I can never connect. So it's just busy signals
Speaker 1: for years, right right, So but now bigger companies, the
Speaker 1: next generation is never going to have those yeah, sorry,
Speaker 1: okay anyway, but yeah, so the larger companies at this
Speaker 1: time could actually handle lots of phone calls your local
Speaker 1: BBS is. I mean, I remember this era where I
Speaker 1: would call into a local BBS and there would be
Speaker 1: maybe five lines, and if you called when those five
Speaker 1: lines were in operation, you just had to wait and
Speaker 1: try and call again, like in the half hour or
Speaker 1: an hour, or every ten seconds if you were someone
Speaker 1: like me. But at any rate, that's you know, this
Speaker 1: was this was a step up above those local bbs
Speaker 1: is a big step up, not just a tiny little
Speaker 1: incremental step. But but Prodigy was in fact still regionally operated.
Speaker 1: It's I mean, they were advertising in lots of other
Speaker 1: cities that they were planning on expanding out to. Yeah.
Speaker 1: In fact, there was a pretty extensive advertising campaign, including
Speaker 1: that fantastic commercial you showed me before the episode, Lawrence.
Speaker 1: Well that one is from all the way in Wow,
Speaker 1: so we're talking a story is so different. But yeah, no,
Speaker 1: it's they were really trying to drive adoption of this
Speaker 1: because it was a brand new thing. You know. This
Speaker 1: is like I said, this is before people for the
Speaker 1: most part, had any knowledge whatsoever of the Internet. You know,
Speaker 1: anyone who knew about the Internet was working on the Internet,
Speaker 1: like building the Internet, and so yeah, talking to people
Speaker 1: about you know, posting to bbs is or doing online
Speaker 1: shopping or anything like that, or you know, looking at
Speaker 1: stocks or weather online. People were like say, why yeah, yeah,
Speaker 1: this is on my computer, the thing that I used
Speaker 1: to play a game on and occasionally try and and
Speaker 1: create a little program that says hello world. Um. Yeah,
Speaker 1: it's It was a big change, a huge change as
Speaker 1: far as computer use goes. It was really opening up
Speaker 1: the gates to the potential for computers. And then on
Speaker 1: top of that we then saw by the end of
Speaker 1: eight so all of this is happening in eight eight,
Speaker 1: This is a huge year for Prodigy, right, it's their
Speaker 1: launch year. By the end of eighty eight, they have
Speaker 1: extended their service to three more cities. Particularly actually I
Speaker 1: think it's for cities. I just wrote down three, but
Speaker 1: their cities 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
Speaker 1: Online on American but America Online, but also compu Serve,
Speaker 1: mind Spring, earth Link. These are all they came on
Speaker 1: the scene 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 regional 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 podcast 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 of customers at the time
Speaker 1: was Yeah. So they remember, they're aiming for a and
Speaker 1: customer base that they have estimated to be nine million people,
Speaker 1: and there they land sixty thousand. That is brutal. I mean,
Speaker 1: that's such a tiny percentage um. And then Prodigy launched
Speaker 1: in New York City, but it only had partial coverage
Speaker 1: in in the city. They had the thirteen markets in
Speaker 1: New York City, but that meant that they had left
Speaker 1: out about the population of New York City who had
Speaker 1: the who had the technology to connect? Right, They had
Speaker 1: the ability, but they didn't have the actual support, so
Speaker 1: they could not be members of Prodigy at that time,
Speaker 1: so they weren't able to capitalize on that very at
Speaker 1: least not efficiently. However, by Prodigy did become available across
Speaker 1: the United States, I believe when I got Prodigy up
Speaker 1: near Cleveland, Dish. Yeah, see, I was already living not
Speaker 1: in Atlanta, but close enough to Atlanta where I got
Speaker 1: the support, And by the end of that year, their
Speaker 1: numbers had spluted almost tenfold. Really, we're talking from six
Speaker 1: thousand to six hundred thirty five thousand. So but now
Speaker 1: granted they managed to go nationwide. Now, so now you're
Speaker 1: talking about the entire US, not just these little regions
Speaker 1: that they had been hitting previously, but still only six thousand,
Speaker 1: and that put them in second place. The first place
Speaker 1: provider was compu serve Um, which we could also do
Speaker 1: an episode about copy serve at some point. But compu
Speaker 1: Serve would eventually be acquired from H and R Block,
Speaker 1: which they were they were the owners at the time.
Speaker 1: The new owners would be America Online, and of course
Speaker 1: America Online UH ends up being the big daddy of
Speaker 1: the online service providers and probably made I would say,
Speaker 1: I would argue that it made the most effective transition
Speaker 1: from online service provider to internet service provider. The two
Speaker 1: things are different yeah, I have seen estimates, by the way,
Speaker 1: 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 million, so and you might be wondering, like, how
Speaker 1: how is this even happening? This is Moore's law in play, right.
Speaker 1: Moore's law is not just about how computers get twice
Speaker 1: as powerful every two years or so. It's also about how,
Speaker 1: because the processes get more sophisticate over time, the technology
Speaker 1: itself decreases in price and cost, so more people can
Speaker 1: afford it. So not only are they becoming more powerful,
Speaker 1: they're becoming more affordable, so you're seeing higher adoption rates.
Speaker 1: This in particular was it was a giant boom time. Yeah, yeah,
Speaker 1: this is and and you know this is also ten
Speaker 1: years before we see the the dot com bubble, and
Speaker 1: uh so this is right when the just the promise
Speaker 1: of the computer age was really becoming realized. And still
Speaker 1: before the Internet is a common household term. We don't
Speaker 1: see the World Wide Web even start to emerge until
Speaker 1: two and we're just in right now. Yeah, I mean,
Speaker 1: big big news for Prodigy that year was they added
Speaker 1: an encyclopedia and zach It's guide. Yeah. Yeah. And it's
Speaker 1: interesting also that even though we're seeing this explosion at
Speaker 1: this time of adoption uh the analysts were looking at
Speaker 1: it and saying, well, you know, you've got more subscribers,
Speaker 1: but you spent so much money setting up this this company,
Speaker 1: perhaps as much as a billion dollars by this time,
Speaker 1: that it's going to take you years for you to
Speaker 1: become profitable. And I love I love how in my notes.
Speaker 1: I don't know what I was thinking in my notes
Speaker 1: by side dramatic increase in survivors, Apparently I had some
Speaker 1: sort of horror movie going on in my brain. I meant, customers,
Speaker 1: you are you are going to go be a zombie
Speaker 1: on stage? That is true, That's true that I do have.
Speaker 1: I do have to be a zombie in uh AN
Speaker 1: approximately four hour So are you allowed to be a
Speaker 1: zombie on Talk Like a Pirate Day? Is that? I mean?
Speaker 1: We're only recording on Talk Like a Pirate Day? And
Speaker 1: I promised Lauren that I was not going to torture
Speaker 1: her on Talk Like a Pirate Day, particularly since by
Speaker 1: the time this publishes, Talk Like a Day will be
Speaker 1: long in the past. So you guys are going to
Speaker 1: be spared both the zombie and the pirate. Uh. At
Speaker 1: any rate, Uh, the survivors would be would still not
Speaker 1: end up giving enough money, generating enough revenue for the
Speaker 1: company to be profitable. For several years, in did something
Speaker 1: that was incredibly controversial within the Prodigy community. Yeah, they
Speaker 1: started introducing these censorship rules. Yeah, so which I mean,
Speaker 1: I mean, I guess it's not censorship if it's not
Speaker 1: on a government. Yeah, we we use censorship as a
Speaker 1: sort of the kind of shorthand way of saying. Essentially,
Speaker 1: what they were saying was that they didn't want to
Speaker 1: have any sort of profanity or objectionable material on the
Speaker 1: Prodigy service because they wanted it to be family friend. So,
Speaker 1: now keep in mind, some of the stuff that was
Speaker 1: going on on Prodigy included these bulletin board systems where
Speaker 1: you could create messages, leave messages, respond to messages. They
Speaker 1: almost became like a message board. And I don't know
Speaker 1: if you guys have ever been on the Internet, but
Speaker 1: sometimes people on this sort of thing can get a
Speaker 1: little bit profane. Flame wars can break out, Yeah, they can.
Speaker 1: They can start throwing in some personal attacks they can
Speaker 1: use some language that is, as the pirates would say, salty.
Speaker 1: Uh so so yeah, so for first profanity was outlawed,
Speaker 1: then flame wars were outlawed, then the mention of another
Speaker 1: users handle, Yeah, you weren't supposed to use any sort
Speaker 1: of member names. In fact, I read one report that
Speaker 1: said that one group got very much frustrated because it
Speaker 1: was a group of coin collectors and they had a
Speaker 1: a thread about the Roosevelt dime then and because they
Speaker 1: were collectors who were interested in Roosevelt dimes. But but
Speaker 1: one member had to handle Roosevelt dime, which meant that
Speaker 1: they could not actually write about it because it was
Speaker 1: a member handle. Yeah, so these were these relations got started. Yeah,
Speaker 1: well I handle certainly had played a role in it.
Speaker 1: But yeah, you see at this time that the users
Speaker 1: were really starting to get aggravated by these policies. They
Speaker 1: felt that it was unnecessary and that it was hampering
Speaker 1: their ability to communicate. It was taking functionality away from
Speaker 1: the service that they were paying for, right and uh
Speaker 1: and however it was only on those those bulletin boards,
Speaker 1: so a lot of traffic started shifting to email, right,
Speaker 1: So people were using the email service on Prodigy, which
Speaker 1: at this time was still uh still very much restricted
Speaker 1: to Prodigy. It's not like you were emailing outside. So
Speaker 1: imagine that your school or your business you work at
Speaker 1: that you have email, but you are only able to
Speaker 1: email anyone else who is also on that particular server, right,
Speaker 1: So you could not email someone who works for another
Speaker 1: company or goes to another school. You could only only
Speaker 1: other people who were there are the ones that you
Speaker 1: could send messages to. That's kind of what we're talking
Speaker 1: about at this time. I mean, however, it wasn't like
Speaker 1: there were other services that had had it much better, right, right,
Speaker 1: you know, until we see the inter connectivity to the Internet,
Speaker 1: it 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 where you could send it
Speaker 1: to people other than the ones that were on your
Speaker 1: email server. Consumer levels still pretty much a novelty UM. Now.
Speaker 1: I will also say that this is when Prodigy changed
Speaker 1: one of its other email um policies, but I'll talk
Speaker 1: about that when we get into the services that they provide.
Speaker 1: It was it was in response to the fact that
Speaker 1: everyone started using more email uh see. You also have
Speaker 1: to keep in mind that the data that is being
Speaker 1: sent back and forth, while it's it tends to be
Speaker 1: in small packets. Once you get up, you know, you
Speaker 1: have those numbers increase. Data transfer wasn't free, you know,
Speaker 1: sending information across telephone company lines cost money, and it
Speaker 1: cost Prodigy money. And in fact, that was one of
Speaker 1: the biggest problems that Prodigy had was that their their
Speaker 1: costs were much greater than the revenue they were bringing in.
Speaker 1: So if they were to offer up something that originally
Speaker 1: was free, as in it was part of what your
Speaker 1: paid service already covered, and everyone started using it, then
Speaker 1: they would start incurring greater costs as a result. So
Speaker 1: that would end up giving them the incentive to make
Speaker 1: it less free. In other words, you would have to
Speaker 1: pay an extra surcharge on top of your monthly feet
Speaker 1: in order to use certain services, because that's the only
Speaker 1: way that Prodigy could either put a little bit of
Speaker 1: a 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 to
Speaker 1: four and they also response to that they also had
Speaker 1: more subscribers by then too, right, yeah, one point seven
Speaker 1: five million. Yeah, so that's you know, they're they're on
Speaker 1: the on the rise. And I'll keep in mind that
Speaker 1: by now we're talking about millions and millions of computers
Speaker 1: capable of running Prodigy. But Prodigy was still losing money
Speaker 1: at this time. Yeah, they still were not making a profit.
Speaker 1: In fact, Walter Mossberg and anyone who has followed technology
Speaker 1: for any length of time has heard that name. Walter
Speaker 1: Mossberg has written extensively about technology companies over the past
Speaker 1: couple of decades, criticized Prodigy, saying it lacked many features
Speaker 1: and then it was really kind of difficult to use.
Speaker 1: It was slow, and it wasn't necessarily intuitive that you know,
Speaker 1: while it might be easier to use than say an
Speaker 1: old Bolton board system where you had to you know,
Speaker 1: tip through text commands to to navigate through it, it
Speaker 1: still didn't make a whole lot of intuitive sense, according
Speaker 1: to Mossburg, and that didn't new Prodigy very many fingures.
Speaker 1: Moving on to ninety three, that's when Prodigy incorporated a
Speaker 1: new feature and its software, which was Internet connectivity. Now,
Speaker 1: they weren't giving you the next necessarily giving you the
Speaker 1: access to a web browser. You could get a web
Speaker 1: browser and use Prodigy to connect to the Internet, but
Speaker 1: there wasn't one incorporated directly into Prodigy at that time,
Speaker 1: so they're really still just an online service provider. However,
Speaker 1: what it did allow you to do is use email
Speaker 1: to send messages to people people who were not on
Speaker 1: the Prodigy island. And that year the company we actually
Speaker 1: start having figures now for how much money the company
Speaker 1: was losing. Keep in mind during this time, Prodigy is
Speaker 1: a privately run business. It's not it's not its own
Speaker 1: publicly traded company. It's a partnership between IBM and Sears,
Speaker 1: but it's not itself a publicly trade company. So it
Speaker 1: doesn't have to uh file all of its corporate finances
Speaker 1: with the government, or well it does, but not with
Speaker 1: the public like we don't have access to it. The
Speaker 1: government certainly did because otherwise the gets a little ansy.
Speaker 1: But the company that year, according to some sources, lost
Speaker 1: about sixty million dollars. So a sixty million dollar loss
Speaker 1: is not only not profitable, but ouch. Yeah. This this
Speaker 1: figure comes from funding Universe, and I got to give
Speaker 1: them a shout out because they have a great uh
Speaker 1: summary of prodigies history and I managed to find a
Speaker 1: lot of my research from funding Universe. Uh. So that's
Speaker 1: when Prodigy hits its customer base peak about two million. Yeah,
Speaker 1: now that's that's its peak based upon its own customers
Speaker 1: during the heyday of Prodigy. There is something that will
Speaker 1: change dramatically change Prodigy late in its life that that
Speaker 1: blows that number all the water. But but you can't
Speaker 1: really count it because it's because it's not customers that
Speaker 1: Prodigy themselves gained, right, right. It was almost like Prodigy
Speaker 1: was thrust upon them as opposed to as opposed that
Speaker 1: they came to Prodigy, right, But we'll talk about that
Speaker 1: when we get there. So two million customers, so obviously
Speaker 1: they never really hit that. That promised five million that
Speaker 1: they really wanted to get. Uh. And they also expanded
Speaker 1: UM in October. I think you're about to say they
Speaker 1: they expanded UM to let users use us net using usenet.
Speaker 1: That was a great phraseology that it's almost impossible to avoid.
Speaker 1: I mean that when you're services name is used net
Speaker 1: it's going to happen. But yeah, use net is another
Speaker 1: bolton board message board kind of system where anyone who's
Speaker 1: used us net knows that this was c I told
Speaker 1: you it's you can't get around it. Anyone who has
Speaker 1: taken advantage of use net services knows that this is
Speaker 1: someplace where people where it would share lots of different things, files, pictures,
Speaker 1: information about different topics. A lot of message boards that
Speaker 1: you will find on the Internet really had their origin
Speaker 1: back in the use net days, and you could find
Speaker 1: pretty much any interest you can imagine. There was a
Speaker 1: use net dedicated to it. There was a moore a
Speaker 1: thread dedicated to you. Thinking back, it reminds me a
Speaker 1: little bit of like Reddit these days. Yeah, right right, Yeah,
Speaker 1: it's just or just like the idea that somewhere someone
Speaker 1: has made a web page about the thing you're thinking of.
Speaker 1: The example I will give is I remember when I
Speaker 1: was working for a consulting firm years ago. I decided
Speaker 1: to or one of the consultants I was working with
Speaker 1: wanted in a particular presentation to have a picture of
Speaker 1: a wammy. You know what a wammy is, No more wammy's,
Speaker 1: no more wammies. So there's a game show in the
Speaker 1: eighties called Press Your Luck, maybe early nineties called Press
Speaker 1: Your Luck, and uh, the way the game show worked
Speaker 1: was this little board would light up and uh at
Speaker 1: the light would move from one block to the next,
Speaker 1: and you would press a button and that would stop
Speaker 1: the light and it would either land on a great
Speaker 1: prize or something called a amy. And you've got too
Speaker 1: many whammy's, you were out of the game. So she
Speaker 1: wanted a picture of a whammy and I thought, surely
Speaker 1: someone this. Keep in mind, this is in the nineties
Speaker 1: when I'm saying this, So surely someone's made a web
Speaker 1: page about whammys. And I did the search and sure
Speaker 1: enough I found five now, which just goes to show
Speaker 1: that if you could think about it, someone's made a
Speaker 1: web page about it. So this was for an additional
Speaker 1: fee that was for three dollars and sixty cents per
Speaker 1: hour because it was so information so data intensive. Well, yeah,
Speaker 1: it took up telephone lines again, so you know the
Speaker 1: fact that it was requiring Prodigy to have these lines
Speaker 1: open and thus they had to pay for them. They
Speaker 1: ended up putting three dollars and sixty cents per hour
Speaker 1: as the surcharge. They also introduced chat rooms that year,
Speaker 1: and they introduced them free of charge, which, as it
Speaker 1: turns out, was a terrible idea. Yeah, from a business perspective,
Speaker 1: it was a terrible idea, because every from a customer perspective,
Speaker 1: it was a brilliant idea. And now I can communicate
Speaker 1: with people in real time and chat rooms with lots
Speaker 1: of other people all the same time. But 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 actually dropped them before but the company claimed
Speaker 1: that it was on track to becoming profitable, which it
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 than the previous two years, I
Speaker 1: mean half of half, like two years ago. Yeah, so
Speaker 1: so they're losing less money year over year, which means that,
Speaker 1: in a way, you could say they're on the road
Speaker 1: to being profitable, assuming they can continue that trend. However,
Speaker 1: IBM 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 Pridecy Services Company to to a
Speaker 1: company called International Wireless Incorporated. That the new management team
Speaker 1: was still led by Edward Bennett. But but yeah, they
Speaker 1: they had some they cleared some house yeah. Yeah. In
Speaker 1: order to get it ready for the sale, I think
Speaker 1: that they dropped seventeen percent of their workforce. Yeah. Yeah.
Speaker 1: It was one of those strategies that companies sometimes use
Speaker 1: in order to make them look better than than how
Speaker 1: they're operating. They lower operating costs. One way to lower
Speaker 1: operating costs get rid of some of those pesky salaries. Yeah,
Speaker 1: I mean that, you know. Either way, the 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 needed to
Speaker 1: keep the company afloat. Selling it for seventy 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 Project Classic, and then the Internet service
Speaker 1: provider branch was called Prodigy Internet. Okay, really really creative
Speaker 1: marketing forces here. The company that year had also changed
Speaker 1: its name to Prodigy Incorporated. Yep, yep, So now it's
Speaker 1: Prodigy Inc. And uh, they changed the subscription package. Now
Speaker 1: it was no longer for either service. It was now
Speaker 1: you had to spend whether it was Prodigy Classic or
Speaker 1: Prodigy Internet didn't matter which. Uh. And that year the
Speaker 1: company lost ninety point eight million dollars. Yeah, and so
Speaker 1: I mean you keep in mind that the overall market
Speaker 1: AOL had been adding some three thousand subscribers per month
Speaker 1: um and had in fact declined to take over Prodigy. Yeah,
Speaker 1: they they supposedly visited the premises at some point and went,
Speaker 1: you know, we're doing okay, they went, they went to
Speaker 1: White Plains, New York, which is where Prodigy was headquartered,
Speaker 1: and Microsoft Network, which had been online for less than
Speaker 1: a year, had already surpassed Prodigy and subscribers. Yeah, so
Speaker 1: this is one of the things where uh, and we'll
Speaker 1: talk a little bit, I guess towards the end about
Speaker 1: what we think kind of went wrong with Prodigy. I
Speaker 1: I can at least speak to that a little bit,
Speaker 1: but it became pretty clear in hindsight that Prodigy made
Speaker 1: some poor choices. We got more poor choices to talk about.
Speaker 1: Before we get into that, though, we want to take
Speaker 1: a quick break and thank our sponsor. Alright, So we
Speaker 1: left off in nineteen six, so logically we should then
Speaker 1: move on to crazy talk. That was when Prodigy split
Speaker 1: into three divisions. Ye. So you had two divisions that
Speaker 1: looked at the core services. One of them were was
Speaker 1: specifically focused on domestic and one on international. But you
Speaker 1: had a third division as well, right, That one was
Speaker 1: all about software development. So 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 done, 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 the horizon yet for
Speaker 1: most people. So it was certainly something that was still
Speaker 1: seen as very much innovative. UM. As for the international
Speaker 1: UH efforts on part of Prodigy, we mentioned earlier that
Speaker 1: Europe was very much saturated with online service providers and
Speaker 1: internet service providers of their own, so Prodigy really didn't
Speaker 1: see like there was a great in road and basically
Speaker 1: never even went there. They were just like, you know,
Speaker 1: so they started looking at other markets UH, and mainly
Speaker 1: at that time it was Africa and China. They also
Speaker 1: started to make some impact in Mexico and in fact
Speaker 1: that would become more important, very important. UM They had
Speaker 1: around well in ninety seven, they estimated that they needed
Speaker 1: about one point five million customers in order to break even. Uh,
Speaker 1: they did not have one point five million customers in
Speaker 1: ninety seven, they had about six d and thirteen thousand. Yeah,
Speaker 1: compared to A O L's like eight million, right, and
Speaker 1: and that sixteen thousand. They actually had more customers than that,
Speaker 1: but six and thirteen thousand were the billable customers because
Speaker 1: because you know, they might have joined the service, but
Speaker 1: they were in that free free period, so they weren't
Speaker 1: being build for that. Actually, that was the year that
Speaker 1: FTC that the the Federal Trade Commission charged Prodigy, compu Serve,
Speaker 1: and a o L with all having made unclear free
Speaker 1: trial offers that didn't sufficiently warn their customers about being
Speaker 1: automatically built at the end of the trial period. Excellent.
Speaker 1: I actually saw that lawsuit, like I had the information
Speaker 1: up on my page. I felt like I didn't have
Speaker 1: enough time to read it. So I'm glad you did
Speaker 1: because I was like, there's something legal happened in nine seven.
Speaker 1: Moving on, Uh, so, how much money did the company
Speaker 1: lose in nineteen seven and thirty two point seventy eight million? Wow? Wow,
Speaker 1: So 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, Grantly, 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 in the company decides to do
Speaker 1: something really dramatic, something that they had only done a
Speaker 1: couple of times before. They were their their their name changed, Yeah,
Speaker 1: they changed to Prodigy Communications Corporation. Right. So, then they
Speaker 1: also decided to lower the monthly fee so back to
Speaker 1: about fifteen fifteen bucks, and they promised a new digital
Speaker 1: service that would be specifically geared for the brand new,
Speaker 1: blisteringly fast fifty six K modems. Yeah, I remember having
Speaker 1: a twenty four hundred, yeah, mottem. I think in that
Speaker 1: time I actually did think that K was blistering lee fast.
Speaker 1: I think I still had a fourteen four at the time,
Speaker 1: So I had 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. I can
Speaker 1: tell you my x files fan pages loaded very slowly.
Speaker 1: Um well, the truth was out there. Uh So the
Speaker 1: news service was supposed to be much faster. The fifty
Speaker 1: six K optimized service is supposed to be faster and
Speaker 1: have more rich content than the older services. Now remember
Speaker 1: we said that the older services services had graphics, but
Speaker 1: these graphics were akin to what you might see in
Speaker 1: an old clip art, uh folder, Right, they weren't. They
Speaker 1: weren't like photo realistic pictures or anything along those lines.
Speaker 1: And when you see the commercial, you'll understand what I
Speaker 1: what I mean, because that be feater. It's pretty gorgeous.
Speaker 1: It's it's it's. My My favorite thing is the reaction
Speaker 1: of the old man when he sees the page load
Speaker 1: up about England and it's a little cartoon of a
Speaker 1: b feeder and he's like, wow, how easily we were
Speaker 1: impressed back in those days, Like you know, yeah, like
Speaker 1: like pixel art on the level of that, like Diesel
Speaker 1: Sweeties makes fun of these days, right. Yeah. So at
Speaker 1: 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 millions. Yeah, it's tiny compared
Speaker 1: to the two so yeah, good, at least at least
Speaker 1: it was a reverse in the trend because they had
Speaker 1: 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 You've been losing money year over year,
Speaker 1: And I think I think that was one of those
Speaker 1: desperate bids to avoid bankruptcy kind of kind of I
Speaker 1: p O s. Because there's two kinds of IPOs. There's
Speaker 1: the kind that we're like, Wow, we're so excited and
Speaker 1: we think that everyone's going to give us even more
Speaker 1: money to do these wonderful things, and there's oh, crap,
Speaker 1: oh crap, my car, don't take my car. Please please
Speaker 1: put money in us, because we promise we are going
Speaker 1: to be much more profitable very very soon. We promised
Speaker 1: we're going to sell it to a sucker. Right, that
Speaker 1: may also be the case, like, well, 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: will 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, ac Corey 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 another Yeah,
Speaker 1: this is the cusp. This is before. This is while
Speaker 1: the dot com bubble is inflating. Right, So this is
Speaker 1: when we were all believing that the Internet was going
Speaker 1: to be the way everyone was going to do business
Speaker 1: from that point forward, that that the brick and mortar
Speaker 1: stores were going to die out almost immediately. This is
Speaker 1: how everything's gonna work. We just have to make sure
Speaker 1: that we've got the business plan in place that makes
Speaker 1: it 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 millions.
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 with this I p O it allowed a company
Speaker 1: called Carso Global Telecom Essay de c V. It's a
Speaker 1: Mexican company, to end up with sixty percent ownership of Prodigy.
Speaker 1: Uh so, this was one of those companies that ended
Speaker 1: up investing in Prodigy. When they started making those in
Speaker 1: roads into Mexico, and in fact, Prodigy to this day
Speaker 1: is very important in Mexico. But we'll get into that.
Speaker 1: So Prodigy launched a bilingual I SP service in the
Speaker 1: United States and also entered a joint venture into Mexico's
Speaker 1: largest I s P, which was called telmex Ye. And
Speaker 1: at that time the company also went ahead sold off
Speaker 1: its African assets, those those regional areas in Africa that
Speaker 1: had been supporting for only two point eight one million dollars.
Speaker 1: But later in Prodigy acquired a company called flash Net Communications,
Speaker 1: which was a rival I s P and OSP for
Speaker 1: a hundred thirteen million dollars. That did add two hundred
Speaker 1: and fifty thousand customers to their base. Yep. So now
Speaker 1: they've they've almost artificially added more customers in a way,
Speaker 1: because they ended up acquiring all the ones that had
Speaker 1: belonged to flash Net. And then Prodigy and SBC Communications Incorporated,
Speaker 1: which is a telephone company, announced plans for a limited partnership,
Speaker 1: and that partnership would make Prodigy the exclusive I s
Speaker 1: P for SBC consumers. So you know when I said
Speaker 1: earlier about how two million was kind of the peak
Speaker 1: for Prodigy, This is where the caveat comes in because
Speaker 1: because SPC had something like seventy millions, seventy seven million
Speaker 1: high speed Internet customers, which meant that because this agreement
Speaker 1: made Prodigy the the exclusive provider, it it boosted Prodigies
Speaker 1: numbers to an insane amount. But that's the thing is
Speaker 1: that these were not people who were subscribing directly to Prodigy.
Speaker 1: Well they you know, it's they were because they had to,
Speaker 1: but they were subscribing to SPC R and so it
Speaker 1: wasn't generating the revenue directly through Prodigy the way. The way,
Speaker 1: because Prodigy 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. Internally,
Speaker 1: 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. The whole two k things. Yeah, back
Speaker 1: when we thought the world was gonna end, because all
Speaker 1: computers had only been programmed to run up through through through,
Speaker 1: no one had bothered too well they had used they
Speaker 1: had only programmed the date for the year as two digits, right,
Speaker 1: so computers would read ninety nine as nine. And then
Speaker 1: everyone thought, wait a minute, what happens when they hit
Speaker 1: zero zero for two thousand? Uh? Does that mean the
Speaker 1: computers are just going to assume it's nineteen hundred because
Speaker 1: it's going to reset to that value. It doesn't understand
Speaker 1: that there is another year here, and if that happens,
Speaker 1: how is this going to affect everything else? And so
Speaker 1: you had people saying, well, you're probably gonna have some
Speaker 1: interruptions and services, but that's about as bad as it's
Speaker 1: going to be. And then you had the other side
Speaker 1: of the spectrum where they said all of the world
Speaker 1: shall end, the financial markets shall crash. Basically, be I
Speaker 1: know that fight Club hasn't did fight Club come out
Speaker 1: that year? I know that fight Club wasn't a big
Speaker 1: thing at that point, but but but like basically the
Speaker 1: end of fight Club, I would just say, like dogs
Speaker 1: and cats living together, mass hysteria. Yeah, so that that's
Speaker 1: essentially what we're looking at in fact, and and it
Speaker 1: was one of those things where even I at the time,
Speaker 1: I was not working at how stuff works at the time,
Speaker 1: but even at the time, I was thinking, where do
Speaker 1: I want to be when becomes two thousand and I
Speaker 1: decided to go to a very flamboyant club in Athens
Speaker 1: and it was fabulous because I figured, if if the
Speaker 1: world is going to end, I wanted to end with
Speaker 1: some amazing music. That's that's entirely fair. Um. Why two
Speaker 1: K was also the they retired Prodigy Classic that year
Speaker 1: and they started why twok is one of the reasons,
Speaker 1: along with other architecture problems that you know, it was
Speaker 1: not really a system that was intended to go along
Speaker 1: with all of these new crazy innovations, right, so they
Speaker 1: were really taking taking a similar model to America Online,
Speaker 1: where where the Prodigy service would launch you into a
Speaker 1: portal page where there then you could go and do
Speaker 1: 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 assets, I
Speaker 1: should say, right, sure, it's still affected some two hundred
Speaker 1: and eight thousand subscribers which Prodigy tried to move to
Speaker 1: 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 transitioning. I think about every time anyone
Speaker 1: upgrades their operating system, or even when Facebook changes, I mean,
Speaker 1: you know the Internet riots. Yeah, no, not my favorite
Speaker 1: thing to post at that is uh, the new Facebook
Speaker 1: changes are the worst thing to happen since the last
Speaker 1: Facebook changes, because that's how it always seems like. At
Speaker 1: any rate. Getting back onto Prodigy. In 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 mind Spring, which would
Speaker 1: have been a very interesting outcome because all of these
Speaker 1: companies had sort of been suffering 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, SBC formed another strategic alliance, this time with
Speaker 1: a little company called Yahoo. Yahoo. Yeah, so two thousand two,
Speaker 1: this is this is back when Yahoo was was doing
Speaker 1: some serious business, right, I mean, this was not the
Speaker 1: era where we all were wondering what Yahoo was going
Speaker 1: to be able to do to turn things around. This
Speaker 1: is when Yah who is really on the rise and uh.
Speaker 1: The 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 a concert
Speaker 1: t shirt? Yeah yeah, yeah. But eventually it would get
Speaker 1: to a point where if you were to try to
Speaker 1: go to prodg dot net, it would lead to uh
Speaker 1: my A T A T T dot net page until
Speaker 1: around two thousand nine, and after that you'd just get
Speaker 1: an error. Yeah. So now these days, if you go
Speaker 1: to project dotnet, at least as of the recording of
Speaker 1: this podcast, if you go to prodect dot net, you
Speaker 1: get an error message. By the time this comes out,
Speaker 1: maybe they've actually figured out some way of resuscitating the brand.
Speaker 1: So really a few years later it becomes rumor, uh
Speaker 1: that that SPC was looking at actually selling the brand
Speaker 1: name Prodigy to someone else who would want to whoever
Speaker 1: would want to use it. Right around two thousand five,
Speaker 1: there is a big push um they were. There were
Speaker 1: a lot of rumors floating around that they were trying. Yeah,
Speaker 1: but no one. No one's purchased it. Now we will
Speaker 1: say that prod Internet still is a thing. There is
Speaker 1: a prod Internet. It is in Mexico, and it's the
Speaker 1: largest I s P in Mexico. So it's not that
Speaker 1: Prodigy has completely disappeared. But in the United States it's
Speaker 1: pretty much a non factor these days. UM. So let's
Speaker 1: talk a little bit about some of the services they
Speaker 1: would provide. We've mentioned a few of them already in
Speaker 1: that this this idea of curated content, we talked about
Speaker 1: the bulletin boards. Um. Also, early on they did not
Speaker 1: allow ful downloads. It was really the idea was that
Speaker 1: you were consuming content but not producing it or sharing it. Yeah,
Speaker 1: but but later they would allow file downloads, although they
Speaker 1: would look at those as well to make sure that
Speaker 1: they've met the standards that they had set for everywhere
Speaker 1: else on Prodigy. Uh An electronic mail. Back in ninety one,
Speaker 1: we talked about how UH they ended up seeing a
Speaker 1: big surge in electronic mail use because the censorship boards,
Speaker 1: and so in response, what did they do? They decided
Speaker 1: that well, you know this huge amount of electronic mail
Speaker 1: is putting a taxation upon our our transaction fees with
Speaker 1: the telephone company. So let's pass that along to the consumer.
Speaker 1: Every month, you'll get thirty messages for free, and if
Speaker 1: you want to send more than that, you need to
Speaker 1: spend money. It costs money to have more than thirty
Speaker 1: messages in a month. And so that was sort of
Speaker 1: the response to this surge and email use. And again
Speaker 1: that did not make users happy because first they since
Speaker 1: censored the bulletin boards and other messaging systems, and then
Speaker 1: they made it harder to send email. Yes, that that
Speaker 1: some people would argue. That ended up being a major
Speaker 1: reason why Prodigy ended up failing was because they had
Speaker 1: a lot of consumer unfriendly practices. Even though their original model,
Speaker 1: this idea of a flat fee and you get access
Speaker 1: to almost everything was very attractive, the way that they
Speaker 1: were creating policies was so against what the average consumer
Speaker 1: wanted that it ended up making it ended up alienating
Speaker 1: their their customer base. So then you get to UH
Speaker 1: the news again, the curated news. You get to travel.
Speaker 1: You can make travel arrangements on Prodigy UH. They had
Speaker 1: specific partnership with American Airlines so you could make a
Speaker 1: reservation on American Airlines through Prodigy. This again before the Internet,
Speaker 1: this or before we had access to the internet. This
Speaker 1: online service provider stuff. That's not like you could just
Speaker 1: go to American Airlines dot com and do whatever you
Speaker 1: want to do. This this precedes that Trivelocity did not exist.
Speaker 1: They could also you could also make hotel and car
Speaker 1: rental reservations through that same system. Although keep in mind
Speaker 1: again this is through partnerships that they Prodigy had made
Speaker 1: with specific companies. It's not like you had access to everybody,
Speaker 1: all right, right, you wrote in your in your notes
Speaker 1: that it was like going to a mall, Like, not
Speaker 1: every mall is going to have the stories that you want.
Speaker 1: It's going to be you know whatever, Yeah, exactly, Yeah,
Speaker 1: so you knows just what you deal with exactly right.
Speaker 1: If if that store wasn't in that mall, you had
Speaker 1: to go to a different mall, well, the same sort
Speaker 1: of thing. If if you could not get access to
Speaker 1: a particular vendor through Prodigy, then that meant that, well,
Speaker 1: you have the wrong online service provider for your needs.
Speaker 1: The same same thing applies to the shopping obvious Sears
Speaker 1: clearly being a founding partner Sears Merchandise had heavy representation
Speaker 1: in online shopping on Prodigy and around were more than
Speaker 1: forty other direct mail marketing kind of vendors, like any
Speaker 1: company that would there are other places that had large catalog. Yeah,
Speaker 1: that whole, the whole, like we will mail you our stuff.
Speaker 1: Because this is still you know, this isn't a time
Speaker 1: where this that was not the most common method of
Speaker 1: delivering stuff, right, Usually you would have this retail experience
Speaker 1: where we go into a store, so direct to customer
Speaker 1: was something that only a few vendors offered at that point.
Speaker 1: You could also do banking. The banking was through New
Speaker 1: York's manufacturers Hanover Trust Bank, so if you weren't with
Speaker 1: that one too bad. And stocks yep yep. That was
Speaker 1: through Donaldson, Lufkin Engine Rhett, which is a Wall Street
Speaker 1: company that would handle the stock purchases, so you could
Speaker 1: become a day trader if you wanted to. Early early on,
Speaker 1: they did groceries, They did online groceries, but I think
Speaker 1: that the price and availability of service was just so yeah,
Speaker 1: there was very low adoption and also it just costs
Speaker 1: a lot of money to run that kind of operation. Now,
Speaker 1: I will say I never used Prodigies grocery shopping service,
Speaker 1: but I've used other online grocery shopping services back when
Speaker 1: they were more common, like web van would be the
Speaker 1: I think that's even Webvan was the one I used,
Speaker 1: and I loved it, but it again was one of
Speaker 1: those things where I just could imagine exactly it had
Speaker 1: to be phenomenally expensive to operate, and unless you have
Speaker 1: a huge customer base right out of the gate, you're
Speaker 1: going to be operating at a loss for several years,
Speaker 1: kind of like Prodigy. And then later on when it
Speaker 1: became when it started to do the prodec internet services,
Speaker 1: it began to offer things like curated content online, so
Speaker 1: you would go to your little online portal and that's
Speaker 1: where you'd see things like sports, business news, world news,
Speaker 1: that kind of stuff, kind of like, yeah, who does um.
Speaker 1: They also did have have news writers. They have they
Speaker 1: had an editorial team, the dedicated editorial staff that worked
Speaker 1: out a White Plains, New York. So they had editors
Speaker 1: and writers working specifically to write content just for Prodigy users.
Speaker 1: So it's the same sort of stories you would see
Speaker 1: in other sources, like if you were to get a newspaper,
Speaker 1: but it was written specifically for the prog Yeah. And
Speaker 1: then they also had instant messaging, like they said, they
Speaker 1: had chat rooms for a little while, and then they
Speaker 1: had things like financial tools like portfolio management and personal
Speaker 1: finance tracking, so you could follow how your your finances
Speaker 1: were doing over time. Like when you see all your
Speaker 1: dot com stocks on like a meteoric rise and you think,
Speaker 1: I am going to be in the world's next multi
Speaker 1: billionaire and two thousand one, when you think where where's
Speaker 1: my change? Jar? I want to go to McDonald's. Yeah, yeah,
Speaker 1: they I you know, I do think that in a
Speaker 1: lot of ways it was ahead of its time. I
Speaker 1: think that if Prodigy had come out in that wave
Speaker 1: that A. O. L did just a couple of years later, um,
Speaker 1: that the technology would have been such that they would
Speaker 1: have 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 made 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 subscrib and some of them you would
Speaker 1: have to pay on top of your subscription fee. And
Speaker 1: these were things where people were saying, well, yeah, you
Speaker 1: you build this as I pay one monthly fee and
Speaker 1: then I have access to all these amazing things. But
Speaker 1: in truth, I pay one monthly fee and then I
Speaker 1: have the opportunity to buy more stuff all of these
Speaker 1: services that I kind of want to use. And so
Speaker 1: it may very well be that their business plan, perhaps
Speaker 1: they had just priced themselves too low at the very beginning,
Speaker 1: and they maybe if they had gone with a slightly
Speaker 1: higher subscription fee at the very beginning. Uh, it could
Speaker 1: have offset some of the costs they incurred when they
Speaker 1: started offering up these services. And maybe then they could
Speaker 1: have kept those services free with the subscription, and then
Speaker 1: they might it might be a totally different story today.
Speaker 1: Maybe today we wouldn't be talking about A O. L.
Speaker 1: You know, like we wouldn't say that A O. L
Speaker 1: was had become the you know this this name that
Speaker 1: we still know. Maybe we'd be talking about Prodigy. Maybe
Speaker 1: all of us would be talking about how many c
Speaker 1: D s we have that we accumulated over the years
Speaker 1: as Prodigy, c D after c D after CE of
Speaker 1: of the basic kits so as you can install it. Yeah.
Speaker 1: An analysts named Richard Adler I found this quote and
Speaker 1: I believe in New York Times piece from said, somebody
Speaker 1: is going to make a lot of money in this
Speaker 1: business someday. I just don't know if it's going to
Speaker 1: be Prodigy. Yeah, and he was right. Some lots of
Speaker 1: people made lots of money in this It's just that
Speaker 1: this was this was unfortunately not the story for that,
Speaker 1: but I thought was an interesting one. Lauren and I
Speaker 1: both used Prodigy, so we're both Prodigy kids. Uh, we're
Speaker 1: both Prodigies. Really we don't want to tut our own
Speaker 1: horn or anything. It's just true. Uh. So you know,
Speaker 1: no false modesty on this show at any rate. Uh.
Speaker 1: It's an interesting story. And like I said, we'll probably
Speaker 1: talk about other ones in the future. Maybe we'll have
Speaker 1: an episode where we talk about copy Server, or maybe
Speaker 1: one about mind Spring. U. These are other interesting internet
Speaker 1: companies and kind of see what formed the basis of
Speaker 1: how we think of the Internet today and which ones
Speaker 1: are still around and which ones are just a name
Speaker 1: that we associate with in history. Yeah, Times gun By
Speaker 1: Stuff you missed in history class would probably cover these
Speaker 1: two if they looked at more recent history. There's not
Speaker 1: a whole lot of online service providers in the days
Speaker 1: of the Vikings. All right, guys, So that wraps up
Speaker 1: this discussion. If you would like to chime in, maybe
Speaker 1: tell us about your experiences if you were someone who
Speaker 1: used online service providers, let's know whether it was Prodigy
Speaker 1: or something else. UM, if you have your own like Prodigy,
Speaker 1: horror story or success story, want to hear that too,
Speaker 1: like Vikings. If you like Vikings, Stuff you Missed in
Speaker 1: History class is a great podcast you should listen to.
Speaker 1: UM Also, I've got a great Viking story. I'll tell
Speaker 1: it to you sometime. If you have any suggestions for
Speaker 1: future episode, let's know, you can drop us an email,
Speaker 1: our addresses tech stuff at Discovery dot com, or let's
Speaker 1: know on Facebook, Board, Twitter or Tumbler. You can find
Speaker 1: or handle it all three of those text stuff hs
Speaker 1: W and Lauren and I will talk to you again. Really,
Speaker 1: sim for more on this and thousands of other topics.
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