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Monday, July 19, 1999 Published at 14:46 GMT 15:46 UK


AOL's free ISP targets 'lads'

Lads' mag Maxim sums up Netscape Online's target audience

By Internet Correspondent Chris Nuttall

America Online, the world's largest online service, has finally joined the subscription-free Internet access revolution, announcing Netscape Online, a new "laddish" Internet Service Provider (ISP) for the UK.

AOL's David Phillips: "Aiming at Internet DIYer"
AOL Europe, AOL's partnership with the Bertelsmann media group, has been slow to respond to the free ISP challenge led by the Dixons group's freeserve, which now has 1.3 million members and is due to float on the stock exchange next month.

AOL UK lost its Number One ISP spot to freeserve and was forced to slash its unlimited-net-access subscription rate from £16.95 to £9.99 in May.

AOL's multi-brand strategy

But AOL UK still has 600,000 subscribers, its sister service Compuserve has 400,000 and the introduction of Netscape Online suggests it at last has a strategy in place to take on its free ISP competitors:

  • AOL UK will remain the flagship subscription service, aimed at the mainstream consumer market. AOL says 33p a day is still good value for a family wanting free technical support and a safe online environment. AOL UK users spend 80% of their time within the proprietary service rather than out on the Net. AOL 5.0 software is due late this year, including AOL Radio.

  • Compuserve UK will stay a subscription service, despite rumours to the contrary, aimed at the professional user. The next, more Web-friendly version of the software, Compuserve 2000, will be released in September. TravelAgent, a business travel service and Portfolio, a poweful online share portfolio, have been announced.

  • Netscape Online will be targeted at what AOL identifies as a particular type of user signing up with free ISPs - young, male and Net-savvy. It will create its own editorial aimed at this "laddish" market and establish content partnerships with the likes of Maxim, Sportsline Europe, Games Domain and Guardian Unlimited.

New slice of Net pie

AOL UK's Managing Director David Phillips says Netscape Online can be the best in its class with its "cool" brand name and services. He feels the content of rivals such as freeserve fails to appreciate the audience they are serving.

[ image: David Phillips: Multi-brand AOL]
David Phillips: Multi-brand AOL
"It's twentysomething, more male, more single. We think there's a gap between their offering and their market audience. Eighty-seven per cent of it is male, earning less than £19,000, we think we can focus on that demographic."

Mr Phillips disputes that AOL has lost market share in the face of the free ISP movement, claiming AOL UK has 1.5m actual users.

"We have taken time to study this, asked whether this is undermining our flagship position or whether it's creating a new segment. We believe this is a separate value segment, a new slice of the Net pie."

Netscape Online will launch in mid-August with local call access, 20Mb of free Webspace, unlimited e-mail addresses and 50p-a-minute technical support for members by telephone.

Analysts gave a lukewarm reception to the announcement:

"Our research shows that rather than there being different users, its users having different needs," said Shobhit Kakkar of Fletcher Research.

"The average Net user has 1.4 ISP accounts and 71% of AOL users have more than one account. Netscape Online is a great Internet brand but will AOL members use AOL UK for its content and then Netscape to surf the Web?

" It's a sensible move and I don't think they're coming too late to the market because the switching barriers between free ISPs are very low."

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