AOL Shifts Strategy from Subscriptions to Ads
AOL will offer free e-mail — and other services — to broadband customers as it shifts its focus from subscriber revenue to advertising revenue. The changes are part of a strategy announced Wednesday that seeks to increase AOL's shrinking audience.
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But as NPR's Wendy Kaufman reports, the company didn't have much choice.
WENDY KAUFMAN: Meanwhile, online advertising took off. It's now a $10 to $11 billion a year business, and its growing at about 20 to 30 percent a year. But until very recently, says advertising executive Jeff Lanctot, AOL was stuck in the past.
JEFF LANCTOT: When you looked back at what many view now to be the ill-fated merger with Time Warner, it created a company that was so big that they had a difficult time responding to changes in the marketplace. AOL was a Model T in a Nascar world. They just had a very difficult time keeping up with their nimble competitors.
KAUFMAN: Allen Weiner, research director with the Gartner Group, says that AOL's shifting focus from a subscription company to one centered on content and advertising is five years too late. Among other things, AOL has slipped to fifth place in the number of search queries.
ALLEN WEINER: Despite all of this, the prognosis is good.
KAUFMAN: He says AOL and its corporate parent, Time Warner, have significant resources.
WEINER: AOL wants to become the web portal for broadband media content. And with Warner Brothers content and Time content, they have a lot of weapons in their arsenal.
KAUFMAN: Wendy Kaufman, NPR News.
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