AOL launches free Netscape online service in U.K.

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LONDON--Nearly a year after the big U.K. electronics retailer Dixons Group changed the online landscape here with the launch of its free Internet access service, Freeserve, AOL Europe on August 24 launched its own subscription-free service in the U.K. called Netscape Online.

AOL Europe, the largest Internet online service in Europe (and in the U.K., until Freeserve burst onto the scene), also announced that for the first time it has access to where the British shop via a retail agreement with Kingfisher, which is giving away Netscape Online software in 800 Woolworths stores.

In Europe, telephone companies charge consumers for every minute they are online. In the U.K., some Internet Service Providers have been able to drop monthly subscription charges because the government currently forces telephone companies to split revenue from local phone calls with ISPs. Advertising and e-commerce are other revenue streams.

AOL Europe, a joint venture of U.S .-based America Online and German publisher Bertelsmann, already operates the online subscription services AOL Europe and CompuServe. AOL executives say the company will weather the proliferation of free U.K. online services by offering multiple brands and by sharing an infrastructure for technology, marketing and e-commerce. Also, the parent company's multinational presence -- available in four languages across nine countries -- gives it an advantage over other free U.K. ISPs. AOL Europe can negotiate with adver-tisers on a global scale to enhance revenue streams of its na-tional operations, says AOL Europe President-CEO Andreas Schmidt.

AOL Europe has already packaged deals for advertisers that extend across AOL, CompuServe and Netscape Online, he says. In the 12 months to June 30, 1999, AOL Europe's advertising hit $16.5 million. In the first two months of the new fiscal year, ad revenues have reached $32 million, according to Mr. Schmidt.

Netscape Online already has more advertising booked than Freeserve did for the whole of its first year, says Karen Thomson, managing director of AOL U.K.

"What makes us different," says Mr. Schmidt, "is that we have multiple brands for multiple market segments.''

AOL has aimed Netscape Online, which already has high name awareness because of its ubiquitous browser, at young, mainly single consumers that are cost conscious. The flagship AOL brand is targeted at the families and mainstream consumer market, while CompuServe is designed for busy professionals.

By having strong advertising revenue, Netscape Online won't have to rely solely on payments from telephone companies -- an income that could decrease once the government conducts its planned review.

The Netscape Online launch is backed by a TV, print and online campaign created by London-based ad agency MWO. BBJ handles media buying.

The ads poke fun at the various retailers and media companies that have recently launched free ISPs. The headline for the print ad includes the well-known N from the Netscape browser and reads: "Beware part-time internet providers the N is nigh.'' Body copy ads: "At last, a free Internet service from the company that made the Internet what it is today. Netscape Online. Free Internet access has finally got all professional.'' Netscape Online software disks will be given away with a number of computer and lifestyle magazines produced by Dennis Publishing.

As of June 30, three years after AOL Europe launched, 2,671,000 households subscribe to the service. Across both AOL and CompuServe, the group handles 1.25 billion e-mails a month, and the service is accessed 200 million times a month.

Copyright August 1999, Crain Communications Inc.

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