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February 22, 1999


By CBR Staff Writer

America Online Inc is giving its CompuServe Corp unit a helping hand to enable it to get over the two million subscriber plateau it has been stuck on for some time, with a rejuvenated content offering and lower-priced plans. CompuServe launched version 4.0 of its software just last June, but has seen fit to update it again and lower the pricing of what it now calls CompuServe 2000. The customers the online service is after, as ever are grown- ups. The company’s current demographic comprises mainly 35 to 54 year-olds – spiky-haired kids who want to chat online should continue to look elsewhere, says the Columbus, Ohio-based company. CompuServe says around 80% of its current subscribers choose the hourly rate option over its flat rate plan and the company has cut the price on both. Users now get 20 hours for $9.95 (they got five before), with each additional hour still costing $2.95. The flat rate option has been cut from $24.95 per month to $19.95. CompuServe also has an annual billing option of $199 for unlimited access. To put CompuServe’s inertia into perspective, the company hiked its flat rate plan to $25 per month from $20 back in August 1997, saying it could not make money at $20 – AOL did not acquire it until the following month. Back then it had 2.6 million subscribers to its flagship service, (08/21/97). Overall, the company says it has made its service simpler to use and install. Version 4.0 was the first to have all its content in HTML, but it obviously wasn’t enough to convince floods of more mature users to sign up. CompuServe quotes Jupiter research suggesting that 17 million people in the US will get online this year, 73 percent of them describing themselves as novices or intermediate users – those being the ones who presumably use the net at work but have yet to take the plunge at home. CompuServe reckons a fair proportion of those are adults and it believes that by cleaning up its main menu, offering the simpler domain name, the ability to switch between five member names without logging off from the service and other improvements, it will start growing its subscriber base. Half of the two million subscribers are outside the US. CompuServe 2000 is available now and CD-ROMs will be appearing in Barnes & Noble’s bookstores in a special promotion from April through to the end of June.

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