AOL a 'cyber sweatshop?'


— 2:18 AM on February 7, 2001

AOL is about to be embroiled in a potential landmark labor law case. Forbes presents its three month investigation in a reprint of an article in the February 19, 2001 issue of the magazine.

For the past 10 years, AOL has used volunteers, as many as 16,000 annually, some as young as 12 years old. These volunteers have provided the very foundation of one of AOL's chief revenue producers-its online communities that attract eyeballs and keep people connected-a component that one former executive estimates to be worth as much as 30% of the company's annual revenue, which was $6.9 billion last year alone. Volunteers host chat rooms, discard offensive or inappropriate bulletin board postings, check postings for viruses, and otherwise act as AOL police to ensure that people adhere to the company's terms of service. In return, they are given free usage, which prior to 1996 amounted to the equivalent of hundreds, even thousands of dollars for some, but which amounts to $19.95 a month under current subscription rates.

Greenberg says that under federal labor guidelines, AOL volunteers should be paid at least minimum wage and should be paid in cash. If he is right, the economic implications are staggering. Using the most conservative figures, if America Online had been forced to pay these volunteers in cash, it would not have shown a profit until fiscal year 1999-seven years later than it actually did. In all, since 1992, it would have had to spend nearly $1 billion in wages, or $166 million (see table) in the recently concluded fiscal year, an analysis of AOL's own financial records shows.

The outcome of this case will have repercussions beyond just AOL.
 
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