Time Warner's board will decide the future of AOL on Thursday. Will the company that brought Web access to millions remain tied down by its prehistoric dial-up past? Or will it finally give (most of)
it away for free and become like Yahoo? The Associated Press reports that "AOL has little choice." If it stayed in the dinosaur days, "its subscription business [would] keep eroding regardless."
eMarketer analyst David Hallerman thinks an overhaul is likely. "It's a risky game they're playing, but it would be riskier not to play," he says. Why? AOL will lose millions of customers, which means
around $1 billion dollars per year--all for the promise of online advertising. Of course, the company would have to attract more traffic with compelling content, but the sale of online ads would
become its main revenue stream and growth area. And the timing may be right. Ad-supported online video is just starting to hit its stride--and AOL Video is a strong video property. Last year, AOL's ad
revenues grew 33 percent, while its subscription revenue declined 10 percent. Both trends would continue; after all, everything AOL offers you can get free from Google, Yahoo, or elsewhere. Hopefully,
giving away its services gratis would cause AOL to cut back on those aggressive customer retention reps, too.
Read the whole story at Associated Press »
