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Who Needs An Online Service?

If the best things in life are free, then why is information getting more expensive?

That was the thinking of a number of America Online subscribers who this month watched their rates for all-you-can eat Internet access climb ten percent from the industry standard $19.95 a month.

Steve Case, AOL's chief executive officer, justified the price increase as necessary, since "non-subscription revenues aren't yet keeping pace with the phenomenal increases in usage."

The rate hike arrives at a time in the industry when the price for Internet access has been stabilized at the $19.95 ceiling for more than two years. And, perks traditionally associated with online services – such as additional email accounts, personal Web pages, chat and chatroom services, and newsgroup access – are now widely available on the Internet and easier to use than ever.

So, who needs an online service? Back in the early days of the Internet boom, it was thought most Americans, especially those with little computer experience, would need the easy-to-use onramps of the online service providers.

Garden-variety Internet service providers, which required consumers to select their own email reader, newsgroup client, and browser, were regarded by many in the industry as too hard to use, compared to such consumer-friendly services as Prodigy, America Online, and CompuServe, which offered an integrated package of software and access. To cinch the deal, online services sought to sweeten the consumer deal by offering news, information, and other services Internet users couldn't find "out there" on the Internet.

But that was three years ago, and times change. Since then, millions of Americans have found their way online through one online service, and then left it for another. In addition, many providers of formerly exclusive content have erected their own Web sites to the Internet community.

That has created a climate in which at least 30 percent of subscribers to any online service continue to "churn out," or cancel within a year of signing on, according to Internet industry-watchers. For America Online, that's at least three million Americans in 1997, with many more before, and more on the way.

Written by Sean Wolfe, with graphic design by Jerry Donnelly

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