Russell Siegelman, Microsoft's general manager of online services, told attendees at the Jupiter Communications Co. conference in New York that charging consumers a flat monthly fee will drive online services out of business.
"Add more content, lower the price-that model leads us to death. You might say that's good for consumers but it's not sustainable," he said.
Mr. Siegelman said Microsoft plans a tiered model for its upcoming Microsoft Network, with a "low [monthly] fee and a la carte" charges, calling it a "newsstand" with "one friendly bill," which drew some laughter.
Competitors jabbed back at Microsoft. "I have a prediction-Microsoft will change its pricing model to be more consumer-centric and predictable," said Ted Leonsis, president of America Online Services Co.
Pricing has been a battleground for the online services. Late last year, Prodigy went to a $9.95 monthly package to match AOL, cutting its hourly price to $2.95. AOL soon announced it would match the hourly price, which became effective Jan. 1.