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AOL considers more free services to lift ad revenues

NEW YORK -- AOL LLC may give away even more of its services, including its vaunted AOL.com e-mail accounts now limited to paying subscribers, to boost ad revenues and offset declines in subscriptions, a person familiar with the talks said yesterday.

One proposal under consideration among top AOL executives calls for Time Warner Inc.'s online unit to stop charging subscription fees to users who have high-speed Internet access or even dial-up service from a rival provider.

The person familiar with the talks said a major strategic review over the past several months sought to identify additional ways to keep users within the AOL family regardless of whether they want to keep paying monthly fees of as much as $25.90 a month.

Under the plan, first reported by The Wall Street Journal, the company would continue to charge the fees for those needing dial-up access through AOL.

Over the past year and a half, AOL has been making more of its articles, video, and other services available for free on its ad-supported websites. But some features, including AOL.com e-mail, remained available only to paying subscribers.

AOL offers free e-mail services, but only through its website and with an AIM.com address. AOL offered to forward former subscribers' AOL.com e-mail to AIM accounts, but many didn't bother because they had to give friends new e-mail addresses anyway.

AOL had 18.6 million US subscribers as of March 31, a drop of 835,000 from the previous quarter and down from a peak of 26.7 million in September 2002.

Rob Enderle, an industry analyst with the Enderle Group, said AOL needs to avoid becoming a company trying to juggle both a paying subscriber base and a free, ad-based model without doing either well.

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