Flat-rate pricing may have helped kill WOW!

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The $17.95 flat monthly price of CompuServe's WOW! could have contributed to its demise. CompuServe said on Thursday that it will fold WOW! as of Jan. 31 in an effort to refocus its business on sophisticated consumers and businesspeople.

"Flat priced offers for unlimited access at this point in time are unprofitable," said Scott Kauffman, VP-online services. "In the short run, we're not going to attempt to match the pricing we've seen today in the consumer space." America Online is the most recent of the online services to announce a switch to flat pricing. It will convert most of its users to a $19.95 monthly fee. Prodigy also markets a flat-rate service.

WOW! has gained only 102,000 subscribers since it launched in March; CompuServe spent $43 million to launch it in the hopes of building a new market of new computer users. WOW! had two interfaces, one for adults and one for kids.

Cancelling WOW! is just the first step in a long hike back to profitability for CompuServe. The company reported a $58 million loss for its fiscal second quarter and will focus its marketing efforts on keeping current subscribers (3.3 million worldwide for the flagship CSi service) and expanding its European base.

Copyright November 1996, Crain Communications Inc.

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