- The Washington Times - Wednesday, August 2, 2006

1:31 p.m.

Stepping up the chase for online advertising dollars, AOL LLC will give away e-mail accounts and software now available only to its paying customers. The strategy shift is likely to accelerate the decline in its core Internet-access business.

The decision, announced today by AOL parent Time Warner Inc., removes the few remaining reasons for AOL subscribers to keep paying when they already have high-speed Internet access through a cable or phone company.

“We’ve listened to our customers, and many of them want to keep using these AOL products when they migrate to broadband — but not pay extra for them,” said Jeff Bewkes, Time Warner’s president and chief operating officer.

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 their first taste of e-mail, the Web and instant messaging through discs that continually arrived unsolicited in mailboxes.

“This is the final goodbye to the days when AOL was the king of the Internet,” said Jeff Lanctot, general manager of AQuantive Inc.’s Avenue A/Razorfish, an agency that places some ads on AOL sites. “They now know they are the underdog.”

AOL hopes that by making services free, it can draw Internet users to its ad-supported Web sites and keep them from defecting to Yahoo Inc., Google Inc. and Microsoft Corp., which have offered free e-mail for years.

Mr. Lanctot said AOL could pull off the strategy shift given its “tremendous potential” to tap video and other resources from other Time Warner units as well as a sizable subscriber base — which, while dwindling, still makes AOL the leading Internet access provider.

AOL still will offer dial-up accounts at $26 a month for unlimited use, but the company no longer will aggressively market the service. That’s likely to mean the end of promotional CDs and the onset of an unspecified number of job cuts in marketing and customer service at the company’s Sterling, Va., headquarters.

Free e-mail accounts are available immediately; some other features, primarily parental controls, won’t become free until early September.

Subscribers who dropped AOL within the past two years will be able to reclaim their old AOL.com e-mail addresses.

The changes were announced as Time Warner reported a profit of $1 billion for the second quarter. Its cable TV business grew thanks to more high-speed Internet and digital phone customers, offsetting weakness at AOL, which saw a 2 percent drop in revenue.

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