America Online, the Internet service that’s lost 5 million U.S. subscribers to its dial-up Web access in almost three years, is offering free e-mail to attract Internet users and advertisers starting today.
AOL is introducing a trial version of the e-mail service that uses the aim.com domain name and is available to all Internet users, Chamath Palihapitiya, an AOL vice president, said in a phone interview from Dulles, Va.
The service is named after AIM, America Online’s existing instant-messaging service that has 20 million users.
The service is part of AOL Chief Executive Officer Jonathan Miller’s plan to compensate for the fall in subscription revenue with higher online ad sales.
AOL, a unit of Time Warner Inc., next month will unveil a revamped version of its aol.com website, with free services such as news and videos, to take a bigger slice of the $9.6 billion U.S. online ad market dominated by Google Inc.
“As they migrate from a business based on a ‘walled garden’ to one out in the open, they are trying to recreate a network and communications like instant messaging and e-mail will be key,” said David Card, a New York-based analyst for Jupiter Research, a technology research company. E-mail is a “traffic generator” and presents an “interesting opportunity” for AOL, he said.
The aim.com service has 2 gigabytes of e-mail storage, the same as in Google’s gmail.com service.
Users of the AIM e-mail service will be able to search their inbox and retract messages to other AOL or AIM mail users that haven’t been read, said Roy Ben- Yoseph, director of communication and client products at AOL.
The e-mail also will be linked to AIM’s existing “buddy list,” where a user can see whether people on his contact lists are online as well.
“E-mail plays a critical role” in AOL’s strategy to increase traffic on its websites, said Palihapitiya, who is in charge of the company’s AIM and ICQ instant messaging services. “It’s something that people use every day. It generates loyalty.”
The existing e-mail service, aol.com, still will be reserved for members of the AOL service, who generally pay $23.90 a month for their subscriptions.
AOL’s first-quarter revenue dropped 3 percent to $2.1 billion as it lost 549,000 U.S. subscribers, Time Warner said on May 4.
AOL’s ad sales jumped 45 percent to $311 million.
Google, which generates most of its revenue from advertising, last month reported that its first-quarter sales almost doubled to $1.26 billion.
