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AOL RAISES MONTHLY
SERVICE CHARGE
For The Extra $1.95 A Month, Subscribers Will Receive…Um…Er…Hey, Don’t You Have Mail Or An Instant Message Or Something?
As expected, AOL raised the price of its online service 9% to $23.90 from $21.95 a month.

The company is gambling that it can boost revenue without significantly hurting subscriber growth, according to numerous published reports.

Although AOL has insisted it can meet its goals of generating $40 billion in revenue and $11 billion in cash flow without the price increase, many on Wall Street were skeptical until now, The Wall Street Journal reports. Some investors had been clamoring for the price increase, in hopes AOL would have a better shot of making its aggressive year-end financial targets.

"Without a price increase, it would be more of a stretch," Jamie Kiggen, an analyst at Credit Suisse First Boston told the Journal. "The fact that they are doing the price increase now gives investors a lot more confidence."

Shares of AOL Time Warner, AOL’s parent, were up 64 cents to $54.15 at the close of NYSE trading Tuesday.

No word if the increased fee has anything to do with the upcoming introduction of MusicNet, the company’s planned online music subscription service. MusicNet is AOL Time Warner’s joint venture with BMG, EMI and RealNetworks.

 

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