AOL in October announced a new flat-rate pricing scheme that went into effect Dec. 1. Most users will pay $19.95 per month for unlimited access to AOL content and services. Previously, AOL charged hourly fees.
TIME TO RENEGOTIATE
Now, content providers, some worried about decreased revenue from the new flat-rate plan, are renegotiating their contracts. AOL will pay flat monthly fees for larger providers such as The New York Times rather than its current commission-type fee based on traffic to a content provider's AOL area.
"Just about every partner at AOL has a really different content deal," said one executive in a venture with AOL. "But every partner has usage fees as a part of their revenue plans. AOL says this [revenue stream] isn't going away under the new price structure, but [for us] it sure is getting smaller."
AOL pays most content providers about 10% to 20% of hourly usage fees, but some partners claim to have deals worth as much as 30% to 40% of usage fees.
WILL AOL HELP ITS PARTNERS?
Danny Krifcher, VP-original programming of the Greenhouse division of AOL Studios, said that the younger brands working with AOL are less vulnerable to the impact of a change in usage fees.
"The changes in pricing impact Greenhouse less," he said. "You shouldn't assume usage fees will go down."
As for rumors of a Greenhouse spinoff, Mr. Krifcher said, "I wouldn't rule out anything in the future, but those aren't our plans right now."
"The big question is whether or not AOL will help the partners who need help, or if they'll say `figure it out."' said Rob Fassino, director of marketing at New York-based Element Studios, which produces the Knot on AOL.
Contributing: Debra Aho Williamson.