October 30, 1996 in Nation/World

Aol Woos Customers With Flat Rate On-Line Leader Shifts Tactics In Bid To Reduce Defections

Associated Press
 

Embracing a tactic that has hammered it, America Online Inc. on Tuesday began offering a new flat-rate price in a bid to stem the defection of customers to cheaper providers of access to the Internet.

The new $19.95 monthly fee offers unlimited access to America Online’s electronic services and media as well as the Internet.

It marks a turnaround for America Online, which earlier this month offered the $19.95 rate but for only 20 hours use, tacking on $2.95 for each additional hour users spent on-line.

The pricing shift was part of a broader response by the nation’s largest on-line service to industry criticism that it wasn’t doing enough to protect itself against growing threats from electronic interlopers.

The company had previously stuck to charging per-hour fees on top of a base rate even as it warned it was having trouble keeping subscribers because of rivals offering unlimited use of the Internet for a single fee.

America Online also revamped its corporate structure, creating three separate divisions and hiring Robert Pittman, a former MTV executive who developed the “I want my MTV” slogan, to strengthen the brand identity of the on-line computer service.

The $19.95 monthly fee adopted by America OnLine matches pricing by archrival Microsoft’s Network.

An alternate AOL plan, costing $9.95 per month, offers unlimited access to America Online’s features without the Internet access.

A third plan, costing $4.95 per month, offers three hours of AOL usage per month, with each additional hour at $2.50.

Investors applauded AOL’s forceful moves. After climbing even higher early in the day, America Online stock closed up 4 percent, or $1 per share, at $25.62-1/2 on the New York Stock Exchange.

© Copyright 1996 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.


Thoughts and opinions on this story? Click here to comment >>

Get stories like this in a free daily email