Prodigy (online Service) - Price Increases

Price Increases

Two of Prodigy's most popular services turned out to be its message boards and email. Because Prodigy's business model depended on rapidly growing advertising and online shopping revenue, email was developed primarily to aid shopping, not for general communication between users, which in practice is what it became. The message boards resulted in users being connected to the service far longer than projected. This resulted in higher than expected expenses, adversely affecting the service's cash flow and profitability.

To control costs and raise revenue, Prodigy took two separate actions. First, in January 1991, Prodigy modified their basic subscriber plans by allowing only thirty e-mail messages free each month, while charging 25 cents for each additional e-mail message—a policy that was later rescinded. Then, in the summer of 1993, it began charging hourly rates for several of its most popular features, including its most popular feature, the message boards—another policy that was later rescinded, but not before tens of thousands of members left the service.

Prodigy was slow to adopt features that made its rival AOL appealing, such as anonymous handles, and real-time chat

Eventually, the emergence of the Internet and the World Wide Web threatened to leave Prodigy behind.