What did $9.95 a month buy in 1990?
Prodigy started in 1984 as Trintex, a joint venture between CBS, IBM and Sears, Roebuck and Company. CBS sold out in 1986, which left IBM and Sears building a consumer online service for households that had never touched a modem.
The venture took the Prodigy name in 1988. Pricing was the whole pitch: a flat $9.95 a month plus a $49.95 start-up kit, at a time when CompuServe billed subscribers by the hour. For that money a family got news, stock quotes, sports scores, weather and encyclopedia entries on screen, and could order from Sears, J.C. Penney and roughly 45 other direct-shipping merchants without leaving the keyboard.
The national launch came on September 6, 1990, behind a campaign from the ad agency J. Walter Thompson, with the software bundled into IBM home computers and the modems sold alongside them. Prodigy claimed 635,000 customers by the end of that year, second in the United States only to CompuServe, and by 1993 it had taken first place. For three years it was the biggest online service in the country.
Why did Prodigy charge 25 cents to send an email?
The business model assumed subscribers would read what Prodigy curated and then buy something. They did something else. They went to the bulletin boards and wrote to each other, in volumes nobody at IBM or Sears had modeled, and email traffic went with them.
The fix leaked before it shipped, and the protest started first. On November 3, 1990, The Washington Post reported that Prodigy had cut off about a dozen outspoken critics of a planned mail price increase, saying they had been pestering other members with "the electronic equivalent of junk mail." Three weeks later the Baltimore Sun ran the policy itself under the headline "Prodigy sets limit on free E-mail."
From the start of 1991, each household got 30 free email messages a month and paid 25 cents for every message after that. Subscribers who had signed up for a flat fee called it a violation of the deal, urged a boycott of the merchants advertising on the service, and watched Prodigy's editors return those messages to the senders. The company eventually dropped the per-message charge. The story that stuck was that Prodigy charged you to use your own mailbox.
How did a Prodigy lawsuit help create Section 230?
Prodigy moderated hard and advertised the fact. It published content guidelines, paid Board Leaders to enforce them, and ran screening software that stripped offensive language before a message reached the boards. Parents were the target market, and control was the product.
It was also a legal trap. The brokerage Stratton Oakmont sued over defamatory messages a user posted on one of Prodigy's bulletin boards, and in 1995 the New York Supreme Court held that Prodigy was liable as a publisher rather than a mere distributor, precisely because it chose to edit. "Prodigy's conscious choice, to gain the benefits of editorial control, has opened it up to a greater liability than CompuServe," the court wrote in its 1995 decision.
Congress read that as a penalty on cleaning up. Section 230 of the Communications Decency Act, passed in 1996, reversed the logic and protected services that remove content in good faith. Prodigy lost the case and got absorbed into a phone company. The rule its loss provoked still underwrites every comment section on the internet.
Did Prodigy run the first banner ads?
Advertising was designed into Prodigy from the beginning rather than bolted on later. A promotional strip sat along the bottom of the screen on most pages, and by the early 1990s those strips responded to a keypress and took the subscriber to a full screen about the offer.
That puts Prodigy years ahead of the AT&T banner that ran on HotWired in October 1994, which is why histories of online advertising name Prodigy, not the web, as the format's origin. Sears and J.C. Penney bought the space first, and outside advertisers followed.
None of it saved the business. The ads mostly sold Sears merchandise to an audience that had come for the message boards, click-through was not yet a number anyone billed against, and the revenue never covered what the boards cost in network time and storage. Prodigy invented the format about four years early and never found the market for it. Being first and getting paid turned out to be separate achievements.
What did IBM and Sears get for their billion dollars?
Prodigy peaked at roughly 2 million subscribers in 1994 and then went backwards. By 1996 it had slipped to third place behind AOL and CompuServe, at about 1.3 million, while AOL flooded the country with trial disks. Business Week put what IBM and Sears had sunk into the venture at $1.2 billion.
In May 1996 the two parents sold Prodigy Services Co. to International Wireless Inc. and about 40 Prodigy executives for $78.12 million in cash and notes, as The Washington Post reported that month. Carlos Slim's Telmex came in on the buyer's side and carried the brand into Mexico. The new owners rebuilt the company as a plain internet provider and took it public on the Nasdaq in February 1999 at $15 a share.
The walled garden itself did not survive the rebuild. Prodigy Classic, the proprietary service with the ads along the bottom, was switched off on October 1, 1999 because its code was not ready for the year 2000 and fixing it cost more than it earned. About 200,000 subscribers were still on it, and roughly 150,000 moved to Prodigy Internet.
Who owns the Prodigy name today?
Two phone companies hold the pieces. SBC Communications, the carrier that trades as AT&T today, bought all of Prodigy Communications on November 6, 2001 and took it private. It stopped selling Prodigy accounts, moved the customers onto its own Yahoo-branded internet service, and let them keep their prodigy.net email addresses.
That decision is why prodigy.net still resolves in 2026. AT&T holds the domain and runs the mail on the same Yahoo-operated platform as att.net, sbcglobal.net and bellsouth.net. Nobody can open a new prodigy.net account; the existing ones were grandfathered and never turned off.
In Mexico the name went further and lasted longer. Telmex sold DSL as Prodigy Infinitum for years, dropped the Prodigy half in favor of plain Infinitum in 2009, and still publishes a support page for prodigy.net.mx mailboxes, which it treats as the same service as Infinitum Mail. So there is no Prodigy to subscribe to in either country. There are only mailboxes nobody has got around to closing.
Frequently Asked Questions
Is Prodigy still around in 2026?
No. Prodigy stopped being an online service when Prodigy Classic was switched off on October 1, 1999, and the company disappeared into SBC Communications in 2001. The only piece still running in 2026 is email: prodigy.net addresses in the United States, kept alive by AT&T, and prodigy.net.mx addresses in Mexico, kept alive by Telmex. Neither one accepts new sign-ups.
Who owns Prodigy now?
AT&T owns what is left of Prodigy in the United States. SBC Communications, which renamed itself AT&T, bought all of Prodigy Communications on November 6, 2001 and retired the brand from its consumer lineup. In Mexico, Telmex, the Carlos Slim carrier that joined the 1996 buyout, still holds the prodigy.net.mx mail domain and sold broadband under the Prodigy Infinitum name until 2009.
Why did Prodigy fail?
Prodigy failed because the service IBM and Sears launched nationally in 1990 was built to sell curated content and Sears merchandise, while the subscribers wanted to talk to each other. Capping free email at 30 messages a month and charging 25 cents a message from January 1991 cost Prodigy its most active users, and the open web then made a walled garden pointless. Prodigy peaked near 2 million subscribers in 1994 and sold for $78.12 million in 1996.