AOL drops fees for users with broadband Internet access
As expected, Time Warner Inc. announced today that AOL now will be made available for free to broadband Internet users. The enormous business model change, the company says, is designed to enhance the growth of AOL’s online advertising business—on which it now will be dependent for sales.
Broadband users already can access the Internet sans AOL via their broadband providers. In early September when AOL formally makes the switch, broadband users will access their AOL account, content, instant messaging, phone service, blog, social networking and other features at AOL.com, no longer having to pay monthly access fees. The company, however, will continue to charge subscribers who use dial-up access.
“We’ve listened to our customers and many of them want to keep using AOL products when they migrate to broadband but not pay extra for them,” says Time Warner president and COO Jeff Bewkes. “This is the next logical step for AOL to capitalize further on the explosive rise in broadband usage and online advertising. With its rapidly expanding advertising operation, we expect to put AOL back on a growth path.”
The change comes after AOL has lost almost a third of its subscribers in three years and about $200 billion in market value in five. In a move designed to bring former AOL users back into the fold, the company is offering these users the ability to recreate their account with the same e-mail address they had prior to dropping the service.
AOL soon will announce numerous free new products in such areas as safety and security, storage, personalized e-mail domains, video and search, as well as an update of its overarching AOL software.
The company is pinning its hopes on increased advertising sales based on a hoped-for increased user base resulting from the change to free services.
For analysis of AOL’s switch to a free service, see “In an attempt to reclaim users and revenue, AOL likely to drop fees,” published July 27 on InternetRetailer.com.
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