AOL Offering Some Content to Non-Subscribers
Posted on: Friday, 9 April 2004, 06:00 CDT
By BRIAN BERGSTEIN
Associated Press -- A behind-the-scenes technical change at America Online will allow the company to offer some of its content to non-subscribers in an attempt to broaden AOL's audience beyond its members-only "walled garden."
By letting any Web surfer access music, news or other material that was previously available only to members, AOL could attract more advertising revenue and promote its sagging subscription service.
In one early experiment, a concert by the R&B artist Usher aired for free on the public AOL.com Web site last weekend after originally being available only to AOL's broadband members.
But AOL has to be careful not to give too much material away for free and dilute the value of its memberships, which cost $24 a month for dial-up subscribers and $15 for people who get broadband access from a separate provider.
AOL is tinkering with its formula because subscriber numbers continue to drop - 24.3 million members in 2003, down by 2.2 million from the previous year - and the Internet ad market is drastically better than it was a few years ago. That has helped rival Yahoo! Inc. make a stunning comeback.
AOL's revenue dropped 5 percent in 2003 to $8.6 billion, though the unit generated $663 million in operating income for Time Warner Inc.
David Card, an analyst at Jupiter Research, says AOL might sell individual services such as online bill-payment to Web surfers "outside the wall" in addition to trying to expand the audience for its music and news channels.
In fact, Card expects the public AOL.com site to become more of a customizable "portal" like Yahoo or Microsoft Corp. (MSFT)'s MSN.
These changes are possible because AOL is moving away from its proprietary programming language, known as "Rainman," that serves up content on AOL's internal channels. (AOL's popular instant-messaging program is an exception; it is available to anyone.)
The company is instead increasing its use of HTML, or hypertext markup language, the standard that makes Web content viewable in any browser, regardless of operating system.
Doing so will let AOL offer material outside the walled garden, on computers that don't have AOL's client software installed. It also will let AOL support more of the advertising formats used on the Web.
"It provides us strategic and technical flexibility," said Jim Bankoff, AOL's executive vice president for programming.
The shift was first reported Thursday by USA Today.
Time Warner shares were up 18 cents to close at $17.39 on the New York Stock Exchange.
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