Thursday, August 9, 2007

AOL: A Mistake to Go Free? (NYT and DJ Take Note)

From Internet Outsider - With everyone speculating about what will happen when TimesSelect (NYT) and Wall Street Journal Online (DJ) go free, it makes sense to check in on the last major wall-removal story: Time Warner's (TWX) AOL. Was AOL's move a good one? Or should it have hung on and watched its subscriber base slowly dribble away?

Answer: It was a good move. AOL certainly sacrificed some near-term cash flow, but, critically, it has retained (or replaced) the lost subscribers in the form of unique users. If AOL hadn't made it's email available for free, meanwhile, it likely would have lost most of these subs forever. Also, even as AOL's subscription revenue plummeted, the company has preserved its cash flow, which is far more important.

What hasn't happened, which would have been nice, is that unique users and pageviews haven't swelled as the rest of the world learned that AOL is now free. This said, they also haven't collapsed, which was a distinct possibility. | Read full article

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