America Online Inc’s European arm is to kick off a comeback this week, with the launch of Netscape Online, its first subscription-free service in the UK, and a competitive new pricing strategy in Germany. AOL Europe, jointly owned by AOL and German media firm Bertelsmann AG, has suffered in Europe, particularly in the UK, since the subscription-free internet service provider wave began last September.
AOL makes no secret of the fact that Netscape Online is designed to blow Freeserve Plc, the free ISP which is now the UK’s biggest, clean out of the water. AOL Europe CEO Andreas Schmidt told Reuters Friday that Netscape Online, which launches tomorrow, already has more revenue lined up than Freeserve generated in its first year. Freeserve posted revenue of 2.73m pounds ($4.4m) in its first nine months of operation, from a combination of interconnection revenues and advertising.
Netscape Online will offer a stripped-down AOL, and hopes to leverage Netscape as a ‘cooler’ brand among its target user base of net-savvy cost-conscious young men. If successful, it could have the added effect of increasing Navigator market share in a country where almost all subscription-free ISPs use Microsoft’s Internet Explorer.
AOL is also due to reveal a new pricing structure for its German operation. Subscribers will be offered a flat-rate access plan which means users will not have to pay AOL according to the amount of time they spend online, a system in place in the US and UK already. After a one-off payment, likely to be around 20 marks ($11) users only pay the per-minute local-rate charge for dialing. The company still hasn’t figured out a way to bring a truly flat-rate access plan – including service charge and calls – to Europe, although it has been piloting a number of schemes in the UK for several months.
