AOL Deal Gives Plaxo a Fighting Chance

Good news for Plaxo users: Thanks to the just-announced AOL deal, Plaxo probably wont go broke.

Lacking a means to attract the 10-to-20 million users needed to turn a profit, Plaxo was running out of money. The company had $20 million when it started in 2001 and, by my estimation, is now down to $10 million or less. Yes, it could have cruised on that money for a while, but finding at least 7 million new users would have been much too expensive without big help.

Enter the big helper: AOL will offer Plaxos free contact list management tools to its zillions of members. If a reasonable percentage of AOL members decide to use the service, Plaxo will reach critical mass.

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Plaxo earns money by offering "premium" services to its users, such as one that merges or removes, as appropriate, duplicate entries in an address book. Plaxo also keeps track of birthdays and sends reminders to users to send cards and gifts. The reminder includes links to a free e-card service, a paid service for sending regular cards and an online gift catalog. For each purchase, Plaxo gets a piece of the revenue.

The only problem with the free card service is that there are so few cards that its easy to tell when another Plaxo member is sending you one of the free e-cards. As the sender is only responding to an automatic reminder, Plaxo may reduce the sentimental value of these cards. But, having the service also means I send a lot more birthday cards than I used to, generally followed by a more personal e-mail.

The AOL deal is nonexclusive for Plaxo. It allows AOL to implement contact list synchronization at essentially no cost, as opposed to writing its own software. That, according to AOL, was what made the deal attractive. The companies wont say, but I suspect no money is changing hands in the deal. If any was going to, Id think Plaxo ought to be paying AOL for the chance to grow and survive.

If you havent tried Plaxo, Id encourage you to check it out. The service will keep the address books on multiple computers synchronized and will also, optionally, make a password-protected copy of your address book available online. AOL plans to make Plaxo work with mobile devices as well.

Click here to read David Courseys previous column about Plaxo.

Plaxo will also send update requests to people in your address book and process the responses. Contacts that are already Plaxo members are updated automatically whenever information changes.

My favorite Plaxo features are those that make it easy to add people to my address book. Plaxo adds a button to e-mail viewed in Outlook that, when selected, will add senders to the address book, send them a copy of my information, and request their own information to complete the address book entry.

Another Plaxo feature searches my inbox for senders that arent already in my address book and offers to add those as well. I can set the amount of correspondence necessary for senders to appear in the list of potential additions, thus limiting it to people I have corresponded with at least a few times.

In the past, there have been privacy concerns about how Plaxo handles user data. I was among those concerned about what Plaxo might do with customer data in order to make a buck. These concerns were allayed last September after meeting with most of Plaxos founders. They seemed honest enough to me and, thanks to the AOL deal, ought to make their numbers without being tempted by the dark side.

I am happy to see something good happen to a company Ive come to depend upon.

Contributing editor David Coursey has spent two decades writing about hardware, software and communications for business customers. He can be reached at david_coursey@ziffdavis.com.

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