AOL Launches New Channel with Homestore Content

  |  June 4, 2003   |  Comments

AOL launches a Home & Real Estate Channel to appeal to consumers asreports emerge that the firm is losing customers to less expensive Internet service providers.

America Online Wednesday launched a new channel site for real estate and home improvement, competing with the likes of Amazon an Realtor.com in its quest to find new revenue streams through e-commerce.

The news comes at a time when AOL is working to turn around a slide in dial-up subscribers, build its broadband base, and drive revenues in the face of a sharp drop in advertising dollars this year.

Today's Washington Post, for example, reports that AOL has lost more than one million dial-up customers since last year when erosion in its subscriber base began adding up, largely due to customers switching to other broadband providers. The report cited anonymous souces familiar with AOL's internal numbers.

The AOL Home & Real Estate Channel is geared to meet what AOL said is growth in online searches for houses and apartments, as well as advice on decorating and gardening. The Dulles, Va. subsidiary will also feature home and apartment listings from Homestore.

The Home & Real Estate Channel features information for all phases of home ownership, including buying, selling, moving, decorating, renovating, gardening and even entertaining. AOL believes its Real Estate Center will be the most complete source available to the public for property search and tools to make real estate transactions easier for consumers. It includes searches of more than 2.1 million home listings on Realtor.com; more than 6.5 million apartment properties from Homestore Apartments & Rentals; and more than 100,000 new home listings on HomeBuilder.com.

The AOL Home & Garden Area offers such perks as tips, tools and techniques for major remodeling projects or home decorating projects and a resource directory for finding products, supplies and services used for various projects.

Statistics from research firms bear out AOL's claim that online trolling for homes, apartments and domestic upkeep advice is rising. Nielsen/NetRatings said more than 12 million online consumers accessed real estate and rental sites in March 2003. Online sales of home and garden items in the U.S. are on the rise, according to Jupiter Research, which said sales reached $3 billion in 2002. Jupiter expects that number to balloon to nearly $10 billion in 2005 and more than $15 billion by 2007.

The launch is part of AOL's plan to build new additional revenue streams as advertising streams from the dot-com heyday unwind, which AOL has explained in past public meetings and statements. It is also part of the company's ongoing upgrades and offers to keep its user base of more than 26 million customers in the U.S. from defecting -- either to higher-speed connections from other broadband providers, or, reportedly in the case of AOL, to cheaper dial-up companies.

The Washington Post report said customers were swapping the AOL service, which costs $23.90 per month, for providers of Internet access that charge $9.95 per month. These include United Online subsidiaries NetZero and Juno. Moreover, many consumers are buying fast Internet connections directly from cable and telephone companies, such as Cablevision's Optimum Online. According to AOL Time Warner public filings, the company has lost more than 700,000 dial-up subscribers over the last two quarters.

To compensate, AOL has launched new promotions offering add-on broadband service on top of their dial-up for an extra $9.95 a month, which is roughly $10 below what many high-speed providers charge per month. Still, in a sign of just how badly the industry wants to dethrone AOL as ISP king, Microsoft Wednesday updated its MSN Internet service, which improves upon software to block spam and adds new parental controls.

AOL Time Warner CFO Wayne Pace told a media conference this week that the fall-off in subscribers was much steeper than AOL had projected, but said the company hopes premium services such as voicemail, music and virus protection will improve its sales.

But on a positive note, the use of Homestore for its new channel is evidence of the firms' claim that their relationship has not completely soured despite tumultuous peaks and valleys. Homestore was investigated in 2002 for improper accounting practices. Those improprieties led back to some of Homestore's dealings with AOL, which has enjoyed a business relationship with Homestore since 2000.

Homestore eventually ironed out its differences with AOL. However, the media subsidiary is still being investigated by the Security and Exchange Commission for its so-called round-trip advertising deals with Homestore despite the three guilty pleas the government secured last September from the online real estate outfit.

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ABOUT THE AUTHOR

Laura Marriott Laura Marriott is executive director of the Mobile Marketing Association (MMA), which works to clear obstacles to market development, to establish standards and best practices for sustainable growth, and to evangelize the mobile channel for use by brands and third-party content providers. The MMA has over 250 members worldwide, representing over 16 countries. Laura has over 14 years' experience in the high-tech industry. Prior to joining the MMA, she served as Intrado's director of marketing, where she was responsible for the development and delivery of Intrado's mobility products and service. Laura previously served as director of business development at Cyneta Networks and Cell-Loc Inc.

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