AOL considering free e-mail, content for broadband users
By KEVIN MANEY and JEFFERSON GRAHAM
USA Today
AOL wants to drop subscription fees for most of its users, completing its transformation to a free service similar to chief rivals Yahoo and Google, say top executives at AOL and its parent, Time Warner.
Dial-up customers who rely on AOL as their Internet service provider would still have to pay the $25.90 monthly fee. But anyone using AOL on broadband would get the service free, including e-mail and use of the AOL software.
A year ago, AOL put much of its content — including news stories, music videos and travel information — on the AOL.com Web site for free.
AOL and Time Warner executives confirmed AOL's plans, though they asked not to be identified. The switch has not gotten final approval.
The move is in line with strategies stated by AOL CEO Jonathan Miller and other AOL executives in the past year. AOL's subscription business has been waning anyway — about 850,000 users canceled in the first quarter of 2006.
As a result, the company has been trying to flip to a new model based on using free content and services to gather a mass audience, and then selling advertising.
It's a gamble. Only 16 percent of AOL's 2005 revenue came from ads; the rest, from subscriptions and other fees. Still, "Everybody else in the top 10 is free," says John Battelle, who runs Searchblog. "So this sounds like a reasonable move." AOL is No. 3 on the Web in ad revenue.
These are some driving reasons AOL executives want to make the move:
Skeptics say AOL is grasping at ways to keep up with its rivals. Since making its content free last June, AOL's audience growth has been comparatively weak.
Google went up 26 percent to 95.4 million visitors in May 2006, compared with a year earlier. AOL grew 1 percent, to 72 million, according to Nielsen/Net Ratings.