AOL takes bold step: Content's now free; Non-subscribers can access features in test
Copyright 2005 Gannett Company, Inc.
June 23, 2005, Thursday, FIRST EDITION
The walls guarding America Online's proprietary content quietly started to crumble this week as the company placed most of its news, sports, chats and other features on the open Internet.
That's the culmination of AOL's 18-month-old plan to vie head-on with Google, Yahoo and Microsoft as an advertising-driven Web portal. The new strategy is a bid to offset the loss of millions of subscribers.
As part of a test, online users now can access a Web version of AOL's trademark welcome screen and menu of content channels by going to AOL.com and clicking on a link called "AOL.com Beta Test." Over the summer, AOL plans to move the programming directly to AOL.com. "Very quietly, the walled-garden era has ended," AOL Chief Jonathan Miller said after meeting with USA TODAY's editorial board.
AOL is still the No.1 Internet service, but its subscriber base has fallen to 22 million from 26 million two years ago as customers continue to defect to cable and DSL broadband providers or discount dial-up services. To stem the bleeding, the Time Warner unit has remade itself as a top broadband content company by offering exclusive music concerts and videos, movie trailers, news clips and sports highlights. But just 5 million subscribers shell out $14.95 a month for AOL's content in addition to a separate cable or DSL broadband fee.
So Miller decided to unleash AOL's morsels to the world and try to reap the benefits of an ad boom that has buoyed Google, Yahoo and Microsoft. "It stares you in the face," Miller says. "Our competitors are doing great on the Web."
AOL's flagship service and top websites such as Moviefone, Mapquest and Netscape reached the $1 billion ad-revenue milestone last year, placing AOL behind only Yahoo, Google and Microsoft. But without its new Web strategy, AOL would continue to lose market share to those portals, Miller says.
AOL, he contends, can stand out with its music and video offerings. Since AOL put its music content on the Web in November, monthly visitor totals have jumped from about 15 million to 24 million.
To drive traffic to AOL.com, the company will place links on its popular AIM instant-messaging service, Moviefone and other sites. It also has replaced its proprietary programming language with the Web language HTML and embedded computer code on its pages so they will be called up by search engines.
Miller concedes that the change could accelerate subscriber losses. But he says few members cite content as a drawing card. And key features, such as AOL e-mail addresses and parental controls, will still be available to subscribers only.
"It's not going to be easy for AOL to keep up with Yahoo and MSN," says Jupiter Research analyst David Card. But, "It's a smart strategy."