AOL to drop subscription fees

TEXT OF STORY

SCOTT JAGOW: If there's one Internet company that just can't seem to get it right, it's AOL. The company is losing customers by the thousands. So today, AOL announces its fourth turnaround plan in five years. This time, the company wants to scrap its subscription-based model and give people stuff for free. More now from Amy Scott.


AMY SCOTT: The plan to offer free service seems counterintuitive. Subscriptions drive 80 percent of AOL's revenue.

But AOL is losing that revenue anyway, as customers flock to free services like Yahoo, Google, and MSN.

AOL plans to make up the lost revenue by selling more advertising. Media analyst Porter Bibb says the company still boasts more than 18 million subscribers.

PORTER BIBB: That is a critical mass of eyeballs. But for the last five years or so they have not demonstrated any great ability to crack Madison Avenue.

Reports say AOL will still charge for dial-up Internet access, but won't advertise the service.

Which means your mailbox may have seen the last of those promotional CDs.

In New York, I'm Amy Scott for Marketplace.

About the author

Amy Scott is Marketplace’s education correspondent covering the K-12 and higher education beats, as well as general business and economic stories.

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