According to the New
York Times
and the AOL website, AOL
has made
the move
they’ve been discussing for weeks now. 

From the New
York Times
: “AOL will stop marketing its highly profitable Internet access
service and offer most of its main features free. As a result, it expects to
lose more than half of its 17.7 million subscribers over the next three years.” 

But – AOL was losing them
anyway. According to the Times, “In the
second quarter [this year] it lost nearly one million subscribers, and it has
lost three million over the last year.”

AOL is now offering
two services
on their website – totally free, and $9.95/month for unlimited
dial-up access. They plan to use their
free services to generate ad revenue (which, the Times notes, has increased 40%
from a year ago to $449M).

The New
York Times
and Reuters
detail the financial and restructuring specifics. Parts of the plan seem like a
logical result of changing strategy (cutting expensive marketing efforts to
attract and retain customers). Others,
while perhaps understandable, will be significantly more painful (cutting
thousands of jobs). 

Time will tell if this is
the right move, but I must say that I’m impressed to see a leadership team
admit where they are and commit to doing something substantial to fix it.

To quote Jonathan Miller,
AOL CEO: “There are many businesses that need to confront legacy issues. We put
a stake in the ground with our legacy issues and we’re moving on.”

Do you suppose Yahoo,
and eBay
would do the same? 

The only constant …

The Economist’s take