Summary:

Casing America Online’s Faltering Flat-Price Model: A story on why pricing will be the make-or-break issue for AOL. Flat pricing schemes wer…

Casing America Online’s Faltering Flat-Price Model: A story on why pricing will be the make-or-break issue for AOL. Flat pricing schemes were enormously successful for a while, but now “AOL needs a grasp of price elasticities for various product options and for different customer segments.”

“it is not a given that all of the in-house content needs to be exclusive and that AOL Time Warner abandons the loss-leader model on its Web sites. The optimal mix of free and for-fee content does not automatically lie at an all-or-nothing end point. The problem is, each little bit that AOL is off the mark costs the company millions of dollars in profits.”

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