September 2, 1997 2:20 PM PDT

AOL counts 9 million members

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America Online (AOL) announced today that it now has more than 9 million members, less than 1 million shy of its year-end goal of having 10 million members worldwide.

The announcement comes at a time when growth to subscription services such as AOL is starting to slow, according to at least one industry analyst.

But the news is all good for the largest online service, which is doing its best to overcome recent pitfalls with network access and its terms of customer service. Its stock seemed to be responding well to the news today: AOL's stock price was at 68-13/16, up 4-5/16 in afternoon trading. More than 1.5 million shares in the company changed hands.

In addition, Cowles/Simba today released a report today showing that AOL led growth in online subscriptions again this year. All told, subscriptions for services that offer exclusive content grew 12.9 percent during the second quarter this year.

While most Net businesses would covet that kind of growth rate, the high rates of the mid-1990s are starting to slow, said Karen Burka, editorial director for the new media and marketing group at Cowles/Simba.

Fifty-three online services reported an aggregate 24.7 million subscribers as of June 30, compared with 21.9 million at the end of 1996, according to the report. But the growth rate itself has slowed; last year's rate during the same period was 22.9 percent, Burka added.

This year's results "jibe with everything that we've predicted in terms of slowing growth," she said. "We're still seeing growth, but it's not at the phenomenal levels."

Numbers showing a breakdown in AOL's growth were not immediately available, but AOL as well as other online services have seen most of their growth coming from non-U.S. sources.

America Online has had strong growth in both Asia and Europe. CompuServe (CSRV), Microsoft Network, and other services also have garnered members from outside the United States.

Analysts generally agree that the so-called "early adopters" in the United States compose the bulk of the online market today. Now, online services as well as pure Internet access companies are concentrating on trying to lure users who are less likely to try out new and sometimes tricky technology. But in Europe, the early adopter market is not yet tapped out, so new customers are easier to find.

Meanwhile, companies offering content as well as connectivity, or just content alone, are having to convince users that they have information that they can't get for free on the Internet, sometimes a difficult sell.

AOL has been doing its best to provide its members with content that they can't get easily or at all through other sources. "Growth in the consumer category, the largest sector in the survey, continues to ride on the coattails of the renewed strong showing of America Online," said Tony Jaros, managing editor in the new media and marketing group at Cowles/Simba.

While AOL has some trouble with access problems, service has improved dramatically and that has helped, according to Jaros. "The AOL marketing machine is back in gear after solving most of its widely reported problems."

 

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