The other shoe has dropped: AOL is considering offering its entire menu of services — including e-mail, virus protection and other security software — free to anyone who has a competing Internet connection, WSJ reports. Under this proposal, which AOL CEO Jonathan Miller presented to top Time Warner executives in NYC last week, AOL would stop charging a subscription fee for outside users, but subscribers who have traditional dial-up through AOL would still have to pay their monthly fee of as much as $25.90.
The company expects that 8 million of its existing dial-up customers would cancel their subscription to take advantage of the new offer…it could be giving up as much as $2 billion in subscription revenue in a gamble aimed at boosting ad revenues. The lost revenue would be partly offset by lower expenses, however, as implementation of the plan would likely lead to thousands of job cuts in marketing and customer service.
A final decision is at least weeks off. Time Warner’s board has yet to consider the plan and company insiders caution that it carries considerable risks, the story says.
IP Democracy: In what is probably a bit of corporate delusion, AOL is hoping to double its ad revenues to compensate for the loss of the premium subscription revenues…ad growth is unlikely to cover even a fraction of this revenue loss…ad revenues for the online unit inched up by only 3%, or $13 million, in the most recent quarter. That’s down from a 16% or $51 million rise in ad revenue during the preceding quarter.
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