Time Warner Decides To Let AOL Be Free

In what amounts to a hairpin turn in strategy, Time Warner announced late today that America Online will offer software, e-mail and other products free to broadband users as it attempts to carve out its share of the surging online advertising market. The company reported a 40% increase in ad revenue during the second quarter.

The move comes during a week when AOL-owned gossip site TMZ.com, which is already free, is being hailed for its breaking news coverage of the Mel Gibson scandal.

Cue the corporate soundbytes:

  • Time Warner president and COO Jeff Bewkes: “So now we can tell them: ‘You’ve Got Mail — for Free.'”
  • AOL chairman and CEO Jonathan Miller: “For members who’ve left us over the past two years, we’ve kept your e-mail address. When this effort is fully operational in early September, you’ll be able to come home again — for free.”

    Or have they left for good?

    The full release:

    Time Warner Announces that AOL Will Offer Its Software, E-mail and Many Other Products for Free to Broadband Users
    August 02, 2006

    Will Enhance Growth of AOL’s Advertising Business

    NEW YORK — Time Warner Inc. (NYSE:TWX) today announced that AOL’s software and e-mail as well as various other products will be made available for free to broadband users in a move to enhance the growth of its online advertising business.

    Time Warner President and Chief Operating Officer Jeff Bewkes said: “For the first time in AOL’s history, we’re offering many of AOL’s most compelling products, such as its integrated software and e-mail as well as applications for safety and security including parental controls, to broadband users free of charge. 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. So now we can tell them: ‘You’ve Got Mail — for Free.’ This is the next logical step for AOL to capitalize further on the explosive rise in broadband usage and online advertising. With its robust and rapidly expanding advertising operation, we expect to put AOL back on a growth path.”

    AOL Chairman and Chief Executive Officer Jonathan Miller said: “We’ll now be able to maintain and deepen our relationship with many more members who are likely to migrate to broadband. Providing them with their familiar AOL software and e-mail for free, over any broadband connection, will be critical to our future success. For members who’ve left us over the past two years, we’ve kept your e-mail address. When this effort is fully operational in early September, you’ll be able to come home again — for free. For those who have never tried the AOL software, e-mail or our other products, we invite you to do so at no charge. The AOL Network has over 100 million unique visitors per month, and we’ll work hard to engage Internet users with new products that will be available for free on the Web.”

    Among the AOL products that will be available for free to anyone with an Internet connection are: AOL’s integrated software; communications features, including AOL e-mail, instant messaging, a local phone number with unlimited incoming calls, and social networking applications; and safety and security features, such as parental controls. To encourage former members to return to using the AOL software, e-mail, instant messaging and other AOL products, they will be able to reactivate their screen names, if given up within the last two years.

    In the weeks ahead, AOL will announce a number of free new products in such areas as safety and security, storage, personalized e-mail domains, video and search, as well as an update of its AOL software. Combined with AOL’s video search, video assets, compelling content, blogging and other existing free applications, these new products will allow AOL to compete across the board for new Internet users, both domestically and abroad.

    Through growing AOL’s already substantial audience — as well as its advertising inventory — AOL will continue to build its extensive advertising capabilities. The AOL Network has the second-largest domestic online audience and is now the third-largest online advertising network in the U.S. In the second quarter, AOL’s advertising revenue grew 40% year over year.

    AOL will continue to offer its dial-up access subscription service, but will no longer aggressively market it. Members may continue to subscribe to AOL’s unlimited premium dial-up plan with a monthly price of $25.90 (including such additional features as 50 gigabytes of storage and unlimited premium customer care) or choose from two lower-cost access plans.