AOL UK, formerly the UK’s most popular online service provider, is to slash its subscription charges for unlimited online access from 16.95 to 9.99 a month from June, in response to growing competition from free Internet service providers.
AOL UK president and managing director David Phillips conceded that the 16.95 price point for unlimited online access was making it difficult to recruit new members.
But AOL hopes the price cut will help boost subscription revenues among AOL’s 600,000 UK subscribers, who pay 4.95 for three free hours access, and then 2.35 for each additional hour online.
Phillips hopes to transfer a large number of its 4.95 subscribers to the unlimited access service, and thereby boost AOL’s advertising and e-commerce revenues by persuading customers to spend longer online. Subscribers will be allowed to stick with the cheaper limited access pricing plan.
“We have to turn off the meter for customers using out services, and encourage them to experiment with using different elements of our service,” says Phillips.
Phillips also confirms that AOL is testing a number of other pricing packages, including one that allows customers free telephony while online.
“We are always testing different price points, because we want to see how people react,” he says.
The price cut for unlimited use will still leave AOL as one of the UK’s most expensive online service providers. But Phillips insists that it is a price point the market will bear. “We are about convenience. We believe we are hitting the ‘sweet spot’ in the market, not Freeserve.”
AOL Europe has announced the roll out of marketing deals with online auction service eBay and domain name registrar Verio, which will result in both services extensively promoted on AOL’s UK, French and German services.