You thought the shake-out in multimedia CD-ROMs was dramatic? Just wait for the shake-out in interactive on-line services, says Steve Case, America Online Inc’s chief executive. America Online is one of the last bastions of the proprietary on-line services after the demise of Apple Computer Inc’s eWorld (CI Nos 2,866, 2,883), the uncertain future of Prodigy Services Co now it tries to go it alone, freed from its deep-pocketed parents, and the decision of CompuServe Inc to embrace Internet standard HyperText Mark-up Language as its own destiny (CI No 2,950). But last week, America Online finally declared its intention to broaden its revenue base to a blended model that will include Internet transactions so that it can keep up with the emerging on-line consumer market.
A new model
In a press conference following its move from Nasdaq to the New York Stock Exchange, Case said he intended to shift his company’s revenue model away from a solely subscriber-based system, and into a new model that will include revenues from advertis ing, on-line transactions, and business-to-business on-line services. Advertising has already become a significant source of America Online’s revenues with some $27m in advertising deals inked in the last 45 days. To further encourage on-line transactions, the company will rebuild its MarketPlace area and introduce two new services, AOL Guarantee and AOL Certified Merchants Program, which will provide guarantees of actual products and quality of service. MarketPlace will feature offerings from new merchants like Hickory Farms Inc and the Body Shop Plc and mini-malls will be built within all America Online channels. Also announced was AOL Enterprise, which will hawk America Online technology and services to businesses looking to outsource their private intranets. Case says the move towards diversification is essential because without new advertising streams, there is a strong likelihood that there will be a shake-out in the interactive world that will be significantly greater tha n the shake-out we saw in the past couple of years in multimedia CD-ROMs. Case hinted that new products and services will be announced this month as America Online embarks on the re-launch of a service it is dubbing a march to the mainstream. The company will announce a major marketing and re-engineering campaign designed to make its service more appealing to the 90% of consumers who have not yet logged on to any on-line service. Speaking about his own network, Case admitted the company had not done such a good job in positioning the service, explaining to people why it was different and better.
