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Come August, AOL may fully embrace that strategy. To compete more aggressively for the expanding pool of Web advertising revenue, AOL is expected to throw the gates open to its previously private Web. "We'll be behaving more like a portal than ever before," says a company executive, who requested anonymity because he wasn't authorized to talk about the plans. (The company declined TIME's repeated requests for an interview.) As part of the switch, analysts expect AOL to stop charging a subscription fee to anyone who gets high-speed service from another provider and to offer free access...
Yahoo! and Google continue to give away most of their new products, banking on the robust growth of the ad market, which last year yielded $12.5 billion, up 30% from 2004, which was up 33% from 2003. By redeploying its resources toward broadening its audience, the rationale goes, AOL will be able to compete more efficiently, dropping, among other costs, the hundreds of millions it has been spending to attract new subscribers. The risk is that advertising sales won't grow quickly enough to offset the loss of subscription dollars...
...AOL has been building up to this moment since last July, when it made the AOL.com site free. Since then, it has begun offering several new services to attract more nonsubscribing visitors, launching TMZ.com an entertainment site, and buying Weblogs, a blog network. The new In2TV service offers hundreds of free episodes of old TV shows like Wonder Woman and Growing Pains. All that free content helped lead to a 26% growth in AOL's advertising revenue for the first quarter of 2006, which totaled $392 million. During the same period, Google's ad revenue grew 79%, to $2.25 billion...
...AOL is trying to rationalize its existence," says Drew Neisser, CEO of Renegade Marketing Group, a new media advertising firm in New York City. "If it weren't for IM-ing and inertia, it would probably be in even deeper trouble." The question facing AOL, he says, is whether the Web needs another general aggregator or whether the market is moving toward more specialized sites like YouTube and MySpace...
...Rosen, a former AOL executive who is now a senior vice president of Autobytel, a car site, says there's wisdom in AOL's portal plan--if executed properly. "If you get more unique users, that translates to more page views, which translates into more advertising," he says. It might be the right approach; it also might be too late...