The gamble that Time Warner (NYSE:TWX) made with AOL was fairly simple, but risky. Exit the internet service provider business and give up most of that revenue. Offer services like e-mail and access to AOL content for free. Hope that the number of visitors and pageviews grows and that the advertising from these will grow beyond the subscription revenue.
Early numbers from comScore are promising. AOL's unique visitors grew 9% in February to 88.9 million. Visitors to MapQuest grew 12% to 45.1 million. AIM.com visitors were up 7%. Of the major AOL properties, only Netscape was down, by 14%. Netscape moved from being a portal to a user-created content site late last year.
Management at Time Warner has to breathe a sigh of relief. Without a growing audience base, moving advertising revenue up would be nearly impossible. If the future months keep up the trend, the change in model may well pay off.
Douglas A. McIntyre is a partner at 24/7 Wall St.
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