AOL Considers Offering Services for Free

AOL, Time Warner’s Internet division, is thinking over the possibility of offering its full catalog of services free of charge—including its popular e-mail service—to any person with a high-speed Web connection, The Wall Street Journal reports.

The news comes from sources close to AOL who spoke with the Journal.

AOL Chief Executive Jonathan Miller addressed a gathering of Time Warner executives in New York last week and told them of his proposal, under which AOL would cease to charge users subscription fees if they have existing broadband or dial-up Internet access via another company, according to the Journal. AOL customers who currently pay for traditional dial-up Web access would continue to pay as much as $25.90 monthly, the Journal reports.

AOL could be giving up $2 billion in subscriber revenue should it go ahead with the plan, which would further its transition from a simple ISP to a business supported by Web advertising, according to the Journal. A portion of the lost revenue could be made up for by a drop in operating expenses, but the plan would likely cause significant job cuts within AOL’s marketing and customer service departments, the Journal reports.

AOL has rapidly lost subscribers in recent days, due in large part to the increasing number of tech-savvy Web surfers who no longer need the simplicity of AOL’s basic, user-friendly Internet tools, which made the company popular in the mid- to late-1990s.  In the first quarter of 2006 alone, AOL said goodbye to some 835,000 subscribers, and its operating revenue dropped roughly 17 percent.

The ISP is now attempting to build itself into a Web portal like Yahoo or Google, which bring in cash based on advertisements placed on their sites. In 2005, only 16 percent of AOL’s $8.3 billion revenue came from advertising, compared with $7 billion from subscribers, the Journal reports.

AOL already offers many of its services for free to Web surfers at AOL.com, but subscribers get additional perks like an aol.com e-mail address and various security software.

The company hopes that dissolving the current subscription fee for users of other firms’ high-speed Web access will keep them employing AOL services, instead of requiring them to pay and risking losing them as users.

The potential move is still in its preliminary stages—AOL’s board of directors has yet to voice its opinion–and it will be at least a few weeks before a final decision is reached, the Journal reports.

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