AOL Could Become Free To Broadband Users

Time Warner will unveil its new strategy for AOL next month, with reports indicating the company is considering making its service available free to broadband users, according to analysts Merrill Lynch.

The declining nature of the company’s subscription business and the need to grow page views are the principal reasons cited for taking such a drastic step, which the analysts predict could cost AOL over US $2 billion a year in lost revenue.

Merrill Lynch say that it appears AOL has realised it will be difficult to charge broadband customers for its service. Yet, maintaining customers who shift to broadband is essential to driving growth in its advertising business.

If the company is unable to maintain customers who shift to broadband on its website then it may be unsuccessful in driving page view growth, which has fallen over 25% year to date through June.

The analysts believe the problem is that AOL currently has millions of broadband users who pay for their service and if the company was to start giving the service away for free, then this revenue stream would disappear.

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