AOL lifted by free e-mail addresses

AOL’s new strategy of giving e-mail addresses for free to its 18m dial-up customers is so far leading to a stronger than expected take-up and has given the group confidence that its new plan could lead to a growing online audience this year.

The internet group, owned by Time Warner, is trying to switch its business from one reliant on declining demand for dial-up connections to a key online destination which can capture a slice of the fast-growing web advertising market.

A month ago, AOL started making its e-mail and software available for free, including to customers cancelling their dial-up subscriptions and taking up broadband connections with other providers.

“Customers are using AOL just as they did before,” said Jonathan Miller, chief executive officer at AOL. “The fundamental tenet of our assumptions is holding up and is rock solid.”

Mr Miller said page views on AOL could start to increase in the fourth quarter of this year, although this might not be reported in the company’s financial results until next year.

AOL’s turnaround plan could be important for the performance of Time Warner’s share price, which has lagged those of its competitors.

Until last month, any AOL users who wanted high-speed internet connections had to give up their e-mail addresses and this meant they also stopped viewing as much AOL content on the web.

Mr Miller said those customers who had left the connection service in the last month but retained their e-mail addresses were continuing to view AOL internet pages as before and he expected their use to increase because of their broadband connections.

In addition, he said there was stronger-than-expected demand for AOL e-mail addresses from customers who had given them up in recent years, even though marketing aimed at this segment was only starting this week.

The loss in dialup subscription revenues, which reached $2bn in the last quarter alone, is expected to be compensated for by large cost cuts resulting from thousands of job losses as marketing and other efforts to retain dailup customers are ditched.