• by July 10, 2006

So, it finally surfaced that Time Warner's AOL unit may eschew subscription revenue derived from paying members to its service in order to focus more aggressively on its ad-supported/free content strategy. The haul from subscription revenues is as much as $2 billion--a nice chunk of change if you can keep getting it.

But subscriptions to AOL, as everyone knows by now, have fallen off. Way off. AOL lost nearly 850,000 subscribers in the first quarter. Back in 2002, the number of total U.S. subscribers stood at 26.5 million. Times have changed. The subscription business is slow-growing at this point, and for-pay membership models run counter to the current ad-supported trends for Web content.

Apparently, AOL is considering offering a cache of services including e-mail, gratis to anyone with a high-speed Internet connection. The plan calls for AOL to suspend subscription fees for users with high-speed Internet access or a dial-up service from another provider. However, subscribers who have dial-up Internet access through AOL would still have to pay their monthly fee, according to a report in The Wall Street Journal.

AOL projects that 8 million of its existing dial-up customers would cancel their subscriptions to take advantage of the new offer. AOL says nearly one-third of its 18.6 million customer base in the first quarter already has high-speed access.

It was only a matter of time before AOL came to the conclusion that it's time to move off the slow-growing cash cow. The company is also having trouble with members--take the most recent case of the guy who wanted to quit the service. The customer service rep gave him such a hard time about quitting, the guy was irate enough to take his case to the media. It amounted to stinky PR for AOL, which actually has so much going for it--really. I've met some of the most creative, media-savvy strategists at AOL. It's true. This is a company with decent content, brilliant talent, high production values, and an inventive promotional machine.

Yeah, OK, if it's all so good, what's the problem? I'm curious to see what you think. Let's not dwell on the past--what will AOL need to do to ever be a big deal again? I hear that "Gold Rush," its new Mark Burnett-backed Web series which is also tied to CBS, will be a blockbuster--a mega-reality hit. Lots of resources being poured into that one. It all gears up in September, but the promotional machine has been whirring for months. Will advertisers line up? We shall see.

P.S.: Don't forget to enter The OMMA Awards (Online Media, Marketing and Advertising)!

The OMMA Awards honor the brand marketers, agencies, and content providers that continue to push the potential of online advertising creative. The Awards honor the year's most innovative and brilliant creative work in 27 categories. Deadline for entries is July 28, and winners will be announced Sept. 26. For more information, go to: https://www.mediapost.com/ommaawards/