Former AOL CEO Steve Case answered a question on Q&A website Quora about how much those promotional CDs that the company sent out costed. Case said that each AOL CD costed “about $35 per user.” Below is the Q&A between the Quora user and Steve Case:
How much did it cost AOL to distribute all those CDs back in the 1990′s?
A lot! I don’t remember the total spending but do recall in the early 1990s our target was to spend 10% of lifetime revenue to get a new subscriber. At that time I believe the average subscriber life was about 25 months and revenue was about $350 so we spent about $35 to acquire [subscribers].
It turns out that all of these marketing costs worked because:
When [AOL] went public in 1992 we had less than 200,000 subscribers; a decade later the number was in the 25 million range.
[TechCrunch via Gizmodo]