October 29, 1996 3:30 PM PST
AOL shifts prices, execs
The nation's number-one online service also announced that it named Robert Pittman, formerly chief executive of MTV and Century 21 Real Estate, to head AOL Networks, which oversees the branded online service with nearly 7 million members.
"You're seeing a much more aggressive America Online," AOL chief executive Steve Case said today. "AOL in one fell swoop is trying to meet the needs of the mainstream and also address the concerns of Wall Street. We really repriced the service to reach out to the heavy users who really want and need unlimited pricing [and] the light users who want the comfort of a relatively low monthly fee."
Case also added today that Global Network Navigator, AOL's Internet access provider, will be folded into AOL.
Among the slew of major announcements, AOL said it would take $460 million in charges for restructuring and revised pricing plans, including a charge of up to $75 million in the current quarter.
The moves are AOL's response to a rapidly changing market in which online services are quickly shifting from pay-by-the-hour systems to flat-rate pricing with unlimited Net access. The Microsoft Network and Prodigy recently announced their own flat-rate pricing plans and migration to the Web, and CompuServe, the number-two online service, is expected to be next.
AOL confirmed that it will charge a rate of $9.95 per month to sell its proprietary content to Netizens who have other Internet service providers, such as AT&T WorldNet and Netcom. The company also will offer advance-payment rates of $14.95 per month for customers who pay for two years and $17.95 for those who pay in advance for one year.
The company also will offer a light-usage program providing three hours of AOL per month for $4.95; additional time will cost $2.50 per hour.
Finally, AOL announced a reorganization of its corporate structure. Besides AOL Networks, the company formed a group called AOL Studios, which it says will be the largest producer of original content and programming in the multimedia industry. It will be headed by Ted Leonsis, who now runs AOL Services.
ANS Communications, which maintains and develops technologies for Net access, will continue to be run by Bruce Bond.