AOL to go free?

Satdude

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AOL to go free?

Time Warner is said to be favouring a plan to shake up its AOL division by offering its services, including e-mail, free to users who have high-speed internet access. If the proposal was adopted, the company has predicted that more than one-third of its 18m subscribers could drop their $25.90 monthly subscriptions, costing it as much as $2bn in annual revenue. Part of that cost would be offset by job cuts in the group’s sales and marketing departments.

The plan recognises an ongoing defection of the dial-up subscribers who supply 80 per cent of AOL’s revenues to high-speed internet services offered by competitors. Since peaking at more than 26m in late 2002, AOL’s subscriber list has dropped to 18.6m.

At the same time, AOL has begun to experience a surge in online advertising. It grew 26 per cent in the most recent quarter to $392m, although AOL still trails rivals Google and Yahoo by a wide margin. AOL entered into a partnership with Google last year. It has also raised the amount of free content in recent months to draw more traffic.

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