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Technology Stocks : America On-Line: will it survive ...?
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To: Eric Jorgenson who wrote (311)10/16/1996 7:13:00 PM
From: Eric Jorgenson   of 13594
 
Bear in mind that AOL enjoys at least two revenue streams
in addition subsriber fees: advertising
and commissions on the various financial
transactions that take place on the service
(e.g. electronic shopping, banking). I think
one can safely say that such streams can only
improve if AOL members can take the more leisurely pace
that an unlimited service affords.

With respect to fixed fees, AOL may arguably
increase revenue if such
fees can boost subsribership:

1. For one, AOL may gain back former
members who left previously because of
the time limits. One might try to argue
that ISPs provide better service and so such customers
wouldn't return. I personally don't see
much merit in that argument.
AOL's investments in its infrastructure (AOLnet)
have produced fast, reliable connections
at speeds currently up to 38 Kbps. My typical
connection to AOL is at 28 Kbps and by using
Netscape's browser, I notice no difference in
speed with the ISP connection I have at work.
Also, there are few busy signals (I've personally
not had one in the past 6 months)
and no premature disconnects.

2. With unlimited usage, AOL would also
be more likely to retain current customers--
those who would leave due to hourly fees
incurred for use over 20 hours.

3. For people new to the net, AOL makes a
great starting point, and I think AOL has a pretty good
handle on what will keep the majority of Internet
users happy. I pointed out in an earlier
post that a study quoted in USA today (Oct 9)
found that the majority of people who sign up with
AOL, stay. To keep their subsribership at 6+ million,
this certainly must be true.

4. AOL will also be entering Japan in '97. In my estimation,
AOL will be well received there as well.
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