CompuServe Corp, in the process of being subsumed into America Online Inc, has announced a strategy that stands its traditional business model on its head. Gone is the model of signing up subscribers on trial who then leave after a few months of paying full price. In its place, the company hopes, is a tempting amount of free content available to guests at the web site, which will lure users into becoming subscribers, having already seen much of what is on offer. CompuServe is splitting its services into three distinct areas: content only, access and content and access only. The new part is the content-only service, called C, which will be launched in the US and Canada in December. The company says it is targeting the upper echelons of the demographic scale, in other words business users with above average earnings, which its research tells it amounts to 10 million, or 36% of the estimated internet users, according to its figures. C, which stands, we are told, for Community, Content, Convenience, Communications and, of course, CompuServe, will apparently deliver the best of what the existing CompuServe service CSI offers, and more. It will have three levels of entry to attract new users. The guest level will enable anyone to come in via the web site, or via CompuServe partners’ pages through a series of reciprocal links, and have read-only access to all the CompuServe forums and communities. The forums, 500 when the service first launches, will be grouped into about 50 topic-centric communities with links to external sites covering the forum interest areas. CompuServe will sell advertising to fund this free entry, and hopes to attract a large audience in order to in turn attract the advertisers. The member level entry is still free, but members sign up and give details including credit cards. They then have access to transaction services already provided within the traditional CompuServe offering, for which they can pay as they go, for example $0.95 for access to the used car guide. All these services will be consolidated onto one CompuServe bill. The company anticipates around $50m revenues from these services, and will also be pushing advertising. To fully participate in the forums and communities, users will then have to subscribe, at which point they will have a service similar to the traditional offering. The company has not given prices, but suggest this will cost south of $10 a month. On top of this are its ComputerPro service at around $5 a month, and the Communications service which offers consolidated voice, email, fax and pager services. The Columbus, Ohio company plans to change its advertising strategy with a heavy emphasis on web-based advertising, with only air cover in the traditional newspaper, magazine and billboard media. In fact it rates its reciprocal deals with other web sites as more important than traditional media. CompuServe has recognized that most of its target audience already has internet access and a preferred browser, so it is now offering a ‘bring your own access’ (BYOA) strategy, where users can come in through their existing internet service provider and with their preferred browser as a front end. The company will work with ISPs and OEMs to encourage them to ‘send’ users to the CompuServe guest area. It will offer a wholesale price for ISPs so that they can sell on C subscriptions to users and its own internet access service, SpryNet will play an important role in this. CompuServe says its new service will see it create one of the largest web sites, and capitalizes on its existing strengths of communities, content and communications infrastructure. The company stresses this is not a migration strategy for existing users, rather a play at the 10 million top internet users. The service will launch before the end of the year. The strategy seems to be based on the premise that CompuServe will remain a separate brand when the WorldCom Inc/AOL deal (CI No 3,242) closes, although the company could not comment as this deal is in the quiet period. The WorldCom deal was due to complete by the end of the year, but CompuServe yesterday said this would be the eager date. Realistically, it looks like it will not now complete until early next year. Also, look fort a separate marketing strategy for CSi in the coming months and the company’s second quarter numbers on November 20.
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