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Case Title:

AOL: The Shift Towards Free Services

Publication Year : 2006

Authors: Chinmoy Kumar, Prof. Ranjit Goswami

Industry: Internet and e-commerce

Region:US

Case Code: COT0011K

Teaching Note: Not Available

Structured Assignment: Not Available

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Abstract:
In a conference call held in August, 2006, America Online (AOL) announced that it would make most of its premium services available free of cost. The company had lost 2.8 million subscribers in US in 2005, while its revenue in the same year had declined by 5% from that of 2004. This case looks into the difficulties that AOL faced due to its primarily subscription-based revenue model, and the reasons for this shift in strategy.

Pedagogical Objectives:

  • To discuss the subscription based business model of AOL
  • The reasons behind declining revenues
  • Whether free services model can help the company revive

Keywords : America On-line (AOL); Corporate Transformation Case Study; On-line advertising; Subscription; Internet service provider (ISP); Broadband; Dial-up; Media

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