AOL Everywhere, Incrementally

America Online is looking to add incremental revenue by extending its membership to a new tier of subscribers: the so-called “un-banked.” The ISP now is offering a pre-paid card to woo users without credit or bank debit cards.

The service is one of a flurry of new incremental revenue and
e-commerce initiatives rolling out as AOL looks for new growth possibilities in a post-Internet bubble era.

An AOL spokesman said the new paid card service is a way for millions of households that may have PCs, but not credit cards, to get online.

The same could be true for households without bank accounts, many of which tend to use Western Union locations to pay bills in cash or send money overseas. The AOL starter kit, which rolled out a couple of weeks ago, is offered in certain Western Union locations, Target retail stores nationwide and will be in Office Depot stores in coming months, an AOL spokesman said.

The $14.99 starter kit includes an AOL CD-ROM that installs the AOL software and e-mail client, and a pre-paid card good for 500 minutes (about eight and a half hours) of online time.

The paid card service is part of new incremental revenue initiatives that AOL is rolling out as its new chief executive, Jonathan Miller, puts a plan in motion to turn the fortunes of the struggling ISP around.

After wrapping up a months-long strategic review of AOL that he started after taking the CEO reins in August, Miller met with corporate parent AOL Time Warner’s board of directors Thursday to discuss AOL’s growth possibilities and plans.

Although a person familiar with the meeting described it as very productive, the source also said “no silver bullets” were offered to AOL Time Warner board members about how to get AOL’s growth engine revved up. The source said the meeting was more about identifying the issues confronting AOL and then mapping out a plan for addressing them. “They were not there to question how AOL is going to execute” on its plan for growth, the source said.

AOL’s problems have been well documented, such as a dramatic drop in advertising revenues after the dot-com bubble burst, the ISP’s drag on its corporate parent’s stock price and enduring questions about its strategy for broadband growth as its mostly narrowband base levels out. Then there are regulatory probes into AOL’s accounting practices regarding advertising deals left over from the dot-com heyday amid a year of senior management shake-ups at the Dulles, Va.-based AOL.

The most recent include the promotion of Lisa Brown as executive vice president of interactive marketing. She is expected to devise new sponsorship packages for advertisers.

Brown’s appointment followed the departure of James de Castro, who resigned as head of interactive services on Nov. 12th. AOL’s second-in-command, Vice Chairman Ted Leonsis, a veteran of the company now oversees the interactive services group.

Richard Parsons, the CEO of AOL Time Warner, has also described the company’s upcoming analyst meeting on Dec. 3rd as a discussion involving a balanced mix of where AOL is today, and “the beginnings of a road map” of where the ISP is going.

And one of those directions is in gleaning incremental revenue by offering sub-tiers of AOL’s services — from extras within the broadband, high-speed service, such as small business services, to different tiers in the low-end “value” category.

AOL already offers a cut-rate ISP plan through its subsidiary CompuServe. It includes a “bring your own access” service of $9.95 a month for unlimited use of CompuServe 2000 when accessing it through another ISP. Users can also sign up for different tiers, such as $9.95 a month for 20 hours, $19.95 a month for unlimited access, or $199 a year, which works out to less than $17 a month.

Now, the latest paid card offers yet another tier of AOL’s service to yet another segment of the consumer base. The idea is that, once the starter kits are installed and new subscribers get a taste of being online, they will want to continue the experience after they’ve surfed through their initial eight hours online.

To that end, AOL is offering different tiers of refill kits, such as $9.99 for 325 minutes, or about five hours of online time, $19.99 for 700 minutes, or close to 12 hours and $29.99 for 1200 minutes (20 hours).

AOL is also offering different tiers of small business services to the estimated three million small office/home office members among its 35 million subscriber base. Geared for broadband subscribers, it offers Web site hosting for two price levels on top of its monthly broadband service, such as $39 a year for special e-mail addresses and $49 a year for hosting and discounts on services from e-commerce partners.

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