Not unexpectedly, AOL has moved to a free model for web services. From the release:
Time Warner Inc. (NYSE:TWX) today announced that AOL’s software and e-mail as well as various other products will be made available for free to broadband users in a move to enhance the growth of its online advertising business.
…Among the AOL products that will be available for free to anyone with an Internet connection are: AOL’s integrated software; communications features, including AOL e-mail, instant messaging, a local phone number with unlimited incoming calls, and social networking applications; and safety and security features, such as parental controls.
In the weeks ahead, AOL will announce a number of free new products in such areas as safety and security, storage, personalized e-mail domains, video and search, as well as an update of its AOL software. Combined with AOL’s video search, video assets, compelling content, blogging and other existing free applications, these new products will allow AOL to compete across the board for new Internet users, both domestically and abroad.
So AOL, which also reported 40% growth in its advertising business (and TW reported a profit, which has to help) – is joining the Google and Yahoo model. AOL plans to continue to charge for its dial up service, but won’t market it aggressively. In other words, hundreds of millions of dollars in marketing costs will instead fall to the bottom line. That can’t hurt.