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Technology Stocks : America On-Line (AOL) -- Ignore unavailable to you. Want to Upgrade?

To: Thai Chung who wrote (16455)	5/11/1999 7:50:00 AM
From: John Carragher	Respond to of 41369

AOL Europe Slashes U.K. Rates Amid Boom in Free Net Services By KIMBERLEY A. STRASSEL Staff Reporter of THE WALL STREET JOURNAL LONDON -- Reacting to the recent popularity of free United Kingdom Internet services, online titan AOL Europe said it will significantly reduce its monthly subscription rate in the U.K. AOL Europe, a joint venture between America Online Inc. and Bertelsmann AG, said it would start offering its U.K. service for 9.99 pounds a month ($16.29), about 45% cheaper than its current rate. The new plan, which will go into effect June 1, aims to both increase overall subscriptions and encourage users to stay online longer, said AOL Europe. The new pricing plan is somewhat of a reversal for AOL Europe, which throughout the arrival of an estimated 70 free U.K. Internet services over the past eight months has continued to claim that users would pay a premium for tailored content and services. However, free Internet services have exploded, with Dixons Group PLC's Freeserve service attracting more than 1.4 million subscribers in its first six months, double that of one-time U.K. market leader AOL. Still, the company is holding true to its basic business model, said Andreas Schmidt, president and chief executive officer of AOL Europe. "It would be a real change if we said we were going free, but we aren't -- we're changing our prices," he said. Mr. Schmidt said the company has been conducting in-depth research and believes the new pricing plan makes AOL the competitive option for Internet subscribers that want to balance price with quality, content and customer service. Mr. Schmidt was direct about the need to give AOL UK a jump-start. He said that despite the launch of free U.K. Internet services, AOL UK has continued to add subscribers, growing to 600,000 users from 500,000 in the past months. But he admitted that free services have taken their toll, noting that such services are eating away at AOL UK's growth. AOL Europe hopes the lower monthly fee will also encourage customers to stay online longer, browsing and buying more, which will in turn benefit AOL UK's electronic commerce and Internet advertising revenues. Mr. Schmidt said that U.S. users of AOL stay online an average of 55 minutes a day, while the average European AOL user stays on about 17 minutes a day. AOL Europe has seen a 50% increase in the average amount of time spent online over the past six to eight months, however, and Mr. Schmidt said continued lower telephone and Internet costs should help to further bump up this figure. Adding to its roster of exclusive content, AOL Europe also announced new marketing deals with eBay Inc., the U.S. online auction company, and Verio Inc., a U.S. company that hosts Web sites and registers domain names. Part of a $75 million global agreement, eBay promotions and services will appear on the AOL service in the U.K., France and Germany. Both AOL UK and CompuServe UK will work to market Verio services in Britain.