AOL changes business model to ad-supported service

August 7, 2006

America Online (AOL), the once dominant subscription dial-up online service, announced last week that it will reinvent itself as a free, ad-supported online content provider.

With the change, AOL said it expects within six months to lay off as many as 5,000 employees — a quarter of its global work force.

AOL, a unit of Time Warner, will no longer charge high-speed Internet customers for e-mail and other services. Though it will not completely turn off its dial-up services, AOL said it will no longer market them to a dwindling base of users.

The Associated Press reported that an unknown number of European employees will still have jobs as AOL looks to shed its Internet access businesses in France, Germany and the United Kingdom. AOL currently has 3,000 access employees in Europe.

With the change, millions of AOL subscribers are expected to stop paying as much as $26 a month for AOL subscription plans, which include technical support via telephone. The move marked AOL's latest efforts to stop a long, steady decline in Internet subscribers as more Americans get high-speed service through a cable or phone company.

Receive regular news and technology updates. Sign up for our free newsletter here.