You’ve got “free” mail.
That’s the new message from AOL, as the company said Wednesday that it will offer its e-mail accounts and content services to subscribers with high- speed Internet access for no charge.
It’s a survival tactic for the Dulles, Va.-based company that is rapidly losing subscribers who are abandoning dial-up Internet service for broadband access through DSL and cable modems.
AOL lost 1 million subscribers in the second quarter and now has 17.7 million subscribers nationwide. In 2002, the company had 27 million paying customers.
Under its new strategy, AOL plans to profit from online advertising dollars instead of subscriber fees.
And it’s a long time coming for many subscribers paying two sets of monthly fees: one for AOL service and another for DSL or cable Internet access.
“I’m glad I won’t have to pay $25 a month for that AOL service anymore,” said Dave Minshall, founder of Minshmedia, a Denver public-relations firm. “I have high-speed Internet access through Comcast, and it’s another $21.95 for the AOL address. The only reason I keep AOL is because of the e-mail address, and I’m anxious to change that.”
Encouraged by such trends as its 40 percent jump in ad revenue in the second quarter, AOL figures that by making services free, it can prevent users from defecting to Yahoo Inc., Google Inc. and Microsoft Corp., which have offered free, ad-supported e-mail for years.
“Providing them with their familiar AOL software and e-mail for free, over any broadband connection, will be critical to our future success,” said AOL chief executive Jonathan Miller. “Before, when someone left us, that was not good for our company. They probably went to one of our competitors. Now they can stay with AOL for free and view its ads.”
DSL in 40% of U.S. homes
Those who want to stop paying will have to contact AOL.
In 2000, fewer than 5 percent of American households had broadband service. Today, more than 40 percent do, according to the Pew Internet and American Life report.
AOL offers its own broadband service through various DSL providers. More than 6 million AOL subscribers take advantage of that service, for which they pay an additional $15 a month on average. AOL would lose about $1 billion if those customers stop paying for the broadband service.
Maggie Chamberlin Holben of Lakewood said she pays about $53 a month for AOL’s broadband service, which includes high-speed access to AOL’s e-mail and content.
“I’ve been with AOL for 10 years,” she said. “I got the broadband service about six years ago. This is good news. I’m going to call them.”
The move marks the end of an era for a company that grew rapidly in the 1990s by making it easy to connect online, giving millions of Americans a slow- moving onramp to the information superhighway. America Online, as it was then known, became the undisputed leader of dial-up Internet access.
AOL will still offer dial-up accounts at $26 a month for unlimited use. To compete with cheaper dial-up services from companies such as SurfBest, AOL is creating a new $10 monthly plan with unlimited access but fewer features than the $26 plan.
Besides AOL.com e-mail, AOL is giving away its proprietary software for accessing the once-premium offerings, as well as safety and security features such as parental controls. Most features become free immediately, though parental controls and services targeted at kids and teens won’t be free until early September.
“It’s a natural trend in the market, as there are so many competitors,” said Steven Berens, president and CEO of Privacy Networks, a Fort Collins provider of e-mail security and management software. “The only surprising thing is that it took them this long to do it.”
Subscribers who dropped AOL within the past two years – about 6 million households, some with multiple e-mail addresses – will be able to reclaim their old AOL.com addresses simply by logging on with their old passwords.
The Associated Press contributed to this story.
Staff writer Kimberly S. Johnson can be reached at 303-820-1088 or kjohnson@denverpost.com.
