TELECOM Digest OnLine - Sorted: AOL Gains More New Customers After Going Free

AOL Gains More New Customers After Going Free

Reuters News Wire (
Tue, 19 Sep 2006 13:21:03 -0500

Time Warner Inc. on Tuesday said a strategy to offer most of online
unit AOL's services for free was making faster-than-expected progress
in attracting new Internet users and cutting costs.

Jeffrey Bewkes, Time Warner's chief operating officer, told investors
at a Goldman Sachs media conference that its strategy had attracted
new users beyond those who were once paying customers of the online

Some 40 percent of new users were not former subscribers, Bewkes said.
"That means there is demand for AOL beyond the existing base," he

In addition, subscribers who formerly paid for AOL services were
moving to its free services at a quicker rate than originally
predicted by AOL management, Bewkes said.

Bewkes said advertising sales at AOL were "very robust," without

Advertising growth would be unlikely to offset a drop in subscription
revenue for another year or two but is a more profitable source of
revenue, he said.

In August, AOL said it aimed to boost its online advertising sales by
attracting more users to its services including e-mail, instant
messaging and online video by offering most of its services at no

It continues to maintain a dial-up Internet access business, but it no
longer plans to market the service.

AOL, once the reigning king of online services, had lost millions of
paying subscribers over the last few years as subscribers defected to
providers that offered faster speeds.

"People weren't leaving AOL because they didn't like it; they were
leaving because they wanted to go to (high-speed) broadband," Bewkes

By offering it for free, former subscribers who had already
relinquished their e-mail accounts are offered an opportunity to come
back and reclaim old e-mail addresses.

Time Warner shares were up 27 cents, or 1.58 percent, to $17.40 on the
New York Stock Exchange in afternoon trading.

Copyright 2006 Reuters Limited.

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