The long-awaited decision that AOL will no longer be focusing on its subscription service has finally happened, according to AOL parent Time Warner (TWX).
AOL chairman and CEO Jonathan Miller said in a statement, "We'll now be able to maintain and deepen our relationships with many more members who are likely to migrate to broadband. Providing them with their familiar AOL software and email for free, over any broadband connection, will be critical to our future success."
There was of course no other thing for AOL to do as it has dropped from its peak of 26.7 million U.S. subscribers in September of 2002 to 18.6 million in March of 2006.
Two of the big moves they've made is to begin giving away email accounts and software that only their subscribers have had access to in the past. The AOL services will be free to broadband users starting in September of 2006.
While some have spoken of this as a risk, it's not a risk at all. They are only taking charge of the process that was already happening and instead are beginning to look at the future core of the company will be. Subscription services will have no future for AOL, rather the exploding online advertising market is the future of the business.
With AOL contributing 20% to Time Warner's bottom line, the only question remaining is how long the lost subscription revenue will take to be replaced by advertising revenue. Ad sales have been growing tremendously for AOL as in the second quarter as they rose 40% while subscription revenue plunged 11%.
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