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AOL: No More $14.95 (or $26) a Month? July 6, 2006

Posted by David Card in Media.

The Journal is rumoring that AOL is planning on dumping access fees entirely. I’d be amazed if this is the first time this has been proposed. AOL’s been migrating towards a Yahoo business model for years.

    In what would mark a dramatic shift in strategy, Time Warner Inc.’s AOL unit is considering offering its entire menu of services, including email, free of charge to anyone with a high-speed Internet connection, people familiar with the matter said.

    Under the proposal, which AOL Chief Executive Jonathan Miller presented to top Time Warner executives in New York last week, AOL would stop charging a subscription fee for users who already have a high-speed Internet service or dial-up service from another provider.

If AOL does it, the big question — the only question, really — is would it maintain its traffic without the walled garden? (AOL’s already in the top four in US online advertising revenues.)

AOL execs understand about deconstructing (and re-creating) their network — they redesigned pages and sections a year ago to optimize their presence on search results, and AOL has always linked individual pages to other pages in the network. And they claim that IM is already a leading traffic driver for many of their properties. But what happens when the Welcome Screen is gone? Will people really use AOL.com and AOL Search?

A smart reporter asked me, Would it be a success if AOL holds onto its current traffic rates (about 85 million UV, 35 billion minutes, 15-16 billion page views in recent months, according to comScore Media Metrix) and dumps the access business? Absolutely.

If AOL can keep pace in audience and beef up its ad targeting without the walled garden, it’d be huge. MySpace is the only top 10 property that’s really growing audience right now.

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