The Secret To AOL's Surprisingly Good Earnings: Paying Subscribers (AOL)

One big reason for the slower revenue declines is that AOL's most profitable business – it's dial-up and subscriber business – shrank less during Q2 than it did during any preceding quarter.

That's important because subscription revenues still account for 33% of AOL's revenues and a vast majority of AOL's very slim profits.

In fact, the best way to think about AOL as a company is that current management is a VC firm/holding company investing in startups and businesses like Patch and Huffington Post, and it has limited partner, the subscriptions business.

So, how did AOL reduce this "churn"?

One part of the answer is that, eventually, AOL's subscription customer base will shrink to a point where the remaining customers are people who will never switch. They aren't paying attention or just don't care.

But AOL COO (and still acting CFO) Artie Minson gave two others reasons during a conference call this morning:

AOL has improved the subscription product.