In the mid-1990s, floppy disks, and then CD-ROMs, from an internet company arrived in mailboxes seemingly at random and without consent. Over the course of a decade, more than a billion discs were mailed, stuffed into cereal boxes, and dropped in grocery bags. I love print magazines, and I remember getting so many plastic-wrapped subscriptions with CDs inside. These little plastic coasters were everywhere in American life, and they were synonymous with their sender: America Online (AOL).
For millions of Americans, AOL was the internet. You didn’t go online; you got on AOL. The dial-up screech was the sound of modernity. AOL’s friendly welcome, “You’ve Got Mail,” was so culturally dominant that Nora Ephron named a movie after it in 1998. (Coincidentally, it was the first movie my now-wife and I went to alone, on a date where we held hands for the first time. You’re welcome.)
Although there were other competitors who wanted a piece of the pie, AOL was the 800-pound gorilla you couldn’t ignore. If you wanted to get email, chat with friends, and be a part of this new thing, you used AOL.
The company was successful because it was the default, but nearly all of its value depended on staying that way. As broadband grew, AOL’s dial-up was no longer the default gateway to the internet, and in early 2001, AOL closed its acquisition of Time Warner, the content giant with roots in Time, Inc. (1922) and Warner Brothers (1923). It was the largest merger in American history at the time. But by then, it was too late for AOL to maintain its perch, and its demise was imminent.
By 2002, AOL Time Warner had written off $99 billion, an admission that the company was worth far less than it had paid. By 2009, Time Warner spun AOL off, effectively admitting the merger had been a catastrophe. In 2015, Verizon bought what was left for about $4.4 billion. When broadband arrived, and the open web became vast, free, and easy to access, the reasons to stay with AOL were no more reassuring than the dial tone.
If your product or service is the default way for people to do something, you’ve got a good thing going … until you don’t. Being the default web browser, the only nonstop route from Point A to Point B, or the only utility company providing electricity in your town, means that customers come to you because they have to. Not because they want to.
Being the Default Isn’t the Problem
Being the default is not a sin. It can actually be one of the most powerful positions in business. The search engine, the credit card network, the software your company already pays for—each can print money for decades. Plenty of great businesses are used far more than they are loved.
The danger is when being the default stands in for a reason to choose your specific product or service, because competitors, habits, and preferences eventually change. A new technology arrives. Regulation shifts. A cheaper substitute shows up. When that happens, you learn very quickly whether customers want you, or simply had no other option.
That’s the Antagonist: the pull to treat reach as if it were the same thing as value.
Build the Reason
Built on the momentum and strength of its DVD-by-mail no-late-fee movie rental business, Netflix spent years as the default way to stream other studios’ content: the most convenient, the most obvious, and for a while, nearly the only option. That was a borrowed position: The studios owned the shows, and they could take them back. So Netflix used its reach and revenue to fund originals you could only get on Netflix. When the studios eventually launched their own streaming services and pulled their catalogs, Netflix subscribers already had reasons to stay that didn’t depend on anyone else.
AOL tried to build reasons to stay inside its walled garden by merging with content behemoth Time Warner. But this play to add value after its default status was already slipping, and at the peak of the market, was too little, too late.
Being the default buys you time to build attachment, but don’t ever take that for granted.
Look, er, Listen to Spotify
Spotify is at an interesting juncture because it feels a little like AOL when it started losing its grip. Almost everything you can listen to on Spotify, you can listen to somewhere else. The catalog is a commodity. (Apple Music and Amazon Music feel this less; each is a small piece of a much larger walled-off empire.) By the logic of AOL, Spotify should be vulnerable.
And yet Spotify keeps raising prices and increasing subscriptions. It has finally reached profitability. That suggests people are choosing it more than just being stuck with it. Spotify’s playlists, recommendations, and the annual ritual of Wrapped have become reasons in their own right. Whether those reasons are durable or simply habits that a better or bundled alternative could break is the question Spotify’s push into podcasts and audiobooks is trying to answer.
Value Is Not a Given
I once worked with a clergy association that, for fifty years, filled its ranks almost entirely from one affiliated college. The college offered the only professional credentialing that prepared people for the organization’s work, and the organization placed nearly every graduate. For students who wanted that career, the college was the only door. For the organization, the college was the only supply line. Neither ever had to make a case for itself.
Then the college no longer became the primary way to gain access to the association. Other schools became just as attractive and no less rigorous. Students who once had one path now had several, and many chose schools that were cheaper, closer, or better known. The organization found itself looking for new ways to attract graduates it used to get automatically. The college became just another school, and the organization became just another option to consider. The college places a fraction of the leaders it once did, and the organization is struggling to fill positions it used to have a surplus of candidates to choose from. Both are now scrambling to build a future that doesn’t depend on being each other’s default.
If you keep holding on to your precious default status, deferring the ongoing work of differentiation, your value proposition eventually erodes. You become unremarkable.
Used, but not chosen.
Put This Antagonist to Work
If you’re chasing scale for the quick hit, this isn’t for you. But if you’re going for great over time, here are a few ways to let this Antagonist sharpen you:
Imagine the defaults change tomorrow. If a new technology, a regulation, or a cheaper competitor made your product or service one of many, what would customers still come to you for? If the answer is “not much,” you’re renting your value from being the default.
Know which kind of cheap you are. Low prices can be a reason to choose you (Costco, Southwest) or a sign you have nothing else to offer. If you keep cutting prices because it’s the only lever you have, pay attention.
Ask whether your switching costs are resented or valued. Delta’s loyalty program makes it hard to leave, but members mostly feel rewarded rather than trapped. Your home internet company probably makes it hard to leave, too. Find out which one your customers think you are.
The Antagonist is already at work. Are you?
Does This Content Resonate?
Every organization has an Antagonist. Most leaders can’t name theirs.
After serving as a founder, facilitator, CEO, and chief of staff over the past 30 years, I know it’s not due to a lack of intelligence. It’s due to a lack of visibility.
So I built a short assessment to help you find it. In eight questions and less than five minutes, you’ll get a sense of where the friction in your organization is coming from. After that, if you like, we can jump on a free 30-minute call to discuss more.