The last half of the article I posted earlier was cut off.
With PC demand slowing, there should be a slowing in the growth of first time Internet users. This coupled with AOL losing subscribers to competitors should at the very least substantially slow there subscriber growth.
Does Anyone know how often AOL announces it's number of subscribers. The last one I noticed was Jan. 20, when they hit the 11 million mark. For a company with daily press releases it seems like a long time.
By Johanna Bennett
NEW YORK (Dow Jones)--When America Online Inc. (AOL) unveiled plans last month for a 10% fee hike, US Internet saw a golden opportunity.
About a week later, the Minnesota-based Internet service provider had a World Wide Web page up and running that promised to waive sign-up fees for AOL customers and offered a new toll-free telephone number, 1-888-LEAVE-AOL.
Since then, Internet service providers have raced to kick off advertising campaigns designed to lure disgruntled customers away from the on-line giant.
Using slogans like "Get Out Of AOL Free" and "1-888-QUIT-AOL," companies like Prodigy, Mindspring Enterprise Inc. (MSPG) and Earthlink Network Inc. (ELNK) are offering AOL users incentive packages that promise cheaper rates, free sign-up and even automatic change of e-mail notification if they switch carriers.
"We are going to take it for what it's worth," said Joe Caldwell, vice president of sales and marketing for US Internet.
As the nation's largest Internet provider, with 11 million customers, America Online is frequently the target of marketing campaigns by competitors trying to break its stranglehold on market share.
Last month, AOL rivals found a chisel when the company announced that a massive restructuring plan would include hiking the monthly fee for unlimited access this spring from $19.95 to $21.95. The additional money was needed for networking costs, company officials said.
Within a few weeks, companies like Earthlink, Mindspring and US Internet, to name a few, moved up planned advertising campiagns and redesigned them to capitalize on the brouhaha surrounding AOL's announcement.
"We were planning to do a campaign anyway. But AOL managed to provide us with a better opportunity to launch ours," said Howard Lefkowitz, vice president of business development for Earthlink, among the largest ISPs, with 500,000 subscribers.
AOL consistently has defended the quality of the service provided to customers.
"Our goal is to provide our customers with the best value in cyberspace," said Wendy Goldberg, an AOL spokeswoman.
AOL's detractors said the fee hike will drive away customers who already are unhappy with AOL's service, e-mail and the constant use of "pop-up" ads on its site. And it is those customers Internet service providers are targeting in their advertisements.
"Those customers loyal to AOL will solidify their position. And there are a certain number loyal to AOL. But there is a sizable number of people who are waiting for someone to push them off the fence to consider another ISP," said Scott May, vice president of marketing for Mindsping.
How many AOL subscribers have defected to other service providers is unclear. Mindspring, Earthlink and US Internet declined to reveal figures showing how many AOL customers had taken up their offers, although all three companies said the numbers were "significant."
But Wall Street and industry analysts say the flashy slogans and incentive packages won't hurt AOL's market share much.
"I am not surprised to see it happening. But at the end of the day, it won't make much of a dent," said Robert Seidman, creator of Online Insider.
While some subscribers probably will defect, many will remain with AOL, either to avoid having to change their e-mail address or because they like the exclusive content offered on AOL's network, such as the chat rooms and message boards, analysts said.
Many ISPs lack the financial resources to pay for an advertising campaign like the one that made AOL a household name.
"AOL offers what an ISP offers, plus it offers a lot more," said Henry Blodget, an analyst for Oppenheimer & Co. "The difference between $19.95 and $21.95 is not so great. You may see very tech-savvy people leave. But AOL will still own the consumer mainstream market,"
Not everyone agreed.
Caldwell said his office received 3,000 to 4,000 inquiries from AOL subscribers in the campaign's first five days.
David Simons, managing director of Digital Video Investments, says it is still too early to decide the effect of AOL's fee hike, insisting that much will depend on AOL's ability to continue attracting subscriptions from first-time Internet users.
"The key is really the bottom line," Simons said. "I think it is to early to really tell now." |
