What has AOL Europe got up its sleeve with the launch of its free ISP brand Netscape Online?

With this new free service AOL will however, have to juggle three ISP brands: Compuserve which it bought back in 1997, its existing £9.99 a month AOL service as well as Netscape Online. This begs the question how will it keep them different enough to avoid internal conflict in the already highly competitive ISP market?

In 1999 AOL netted worldwide profits of $396 million and another 5 million members. However its membership outside of the US was hit, particularly in the UK, by the plethora of free services keeping the number of subscribers static at around three million.

With Freeserve currently claiming 1.32 million accounts, in the UK alone, AOL is clearly loosing market share.

This has put the company under huge pressure to scrap the price of its online service but, unwilling to give up the subscription revenue, it instead introduced a new free service under the guise of Netscape Online. see Newswire 19 July 1999

It is also currently trialling different pricing structures for AOL, including charging £25 a month for unlimited access using a toll free 0800 number.

The AOL service provides some propriety content for its largely family oriented members, while Compuserve has a loyal following of small businesses and serious Internet users, so how will Netscape Online fit in?

AOL is keeping tight lipped over what Netscape Online will offer and to whom prior to the 24 August launch. The new managing director of Compuserve UK David Fischer did however, tell VNUNet that it will be targeted at a younger, predominantly male, cost conscious adults.

Fischer's appointment follows a major reshuffle of key positions at AOL Europe. Last week the company appointed internal candidate Karen Thomson, to take the reins at AOL UK, this raised eyebrows among AOL watchers who expected the company to appoint a big name to match that of the previous managing director Jonathan Bulkeley. See Newswire 11 August 1999

Thomson, who has been in charge of marketing at AOL UK for five years, is now responsible for the company's three UK brands: AOL, Compuserve and Netscape Online.

"Karen's role will be very operational," said spokeswoman Maggie Gallant. "She is an integral figure and is recognised as a marketing pioneer. She knows the brands very well and we wanted someone with strong marketing focus to take AOL through its multi brand strategy."

That move coupled with the appointment of David Fischer, a broadcast executive with over 10 years experience, to managing director for Compuserve UK, leads some to suspect AOL Europe is placing more importance on Compuserve together with the free Netscape Online.

Fischer, who will be reporting to Thomson, told VNUNet there will be a "turnaround" in the amount of promotion and marketing for Compuserve UK as there is a big reserve of marketing and PR funds waiting to be used. This will include offline advertising such as TV, as well as online campaigns.

With Compuserve UK's subscriber base staying at around 400,000 for the last three years, this shows how loyal its members are. With the huge promotion about to take place AOL watchers feel Compuserve has enough clout to become AOL's premier service in the UK, leaving the only viable solution of making AOL a flat rate service to attract time heavy users.

"Compuserve is the flagship product," explained Fischer. "Netscape Online will target young, predominately male, cost conscious adults. While Compuserve has a loyal following among small businesses and serious home users, there is lots of room for AOL in between."

Netscape Online has to offer a wide range of high quality content and features including instant messaging to entice consumers, otherwise there would be not point it launching. AOL must therefore clearly distinguish it from the paid for AOL service.

"AOL can't afford to give mislead customers that in Netscape Online there are getting AOL for free" said James Eibisch, analyst at IDC.

Some company watchers, believe the arrival of Netscape Online and the recent management changes indicate that AOL Europe is gearing up for a major change of strategy and that it clearly intends to cannibalise the existing customer base for AOL, pining all its hopes on Netscape Online and Compuserve UK.

Chris Lewis, director of research company Yankee Group Europe wouldn't go this far, but does believes the launch of Netscape Online could cause problems for AOL.

"It does put AOL in a tricky position," he said. "Despite its European success, AOL has never gained quite the same recognition that it has in the US whereas both Compuserve and Netscape are both strong pan European brands."

AOL's appeal was always that it provided content you couldn't get elsewhere, however with similar services such as Lineone going free, and the constant improving of the likes of Freeserve, the amount of unique content on AOL has been drastically reduced.

"Free access has gained so much ground and appeal that Freeserve, for example, is adding lots more content and services," said Lewis.

Just this week Freeserve added an online share dealing service to join a whole host of others such as online chat, Web email and phone access to email, reducing the noticeable difference to AOL each day.

"The only reason to pay for Internet access today is guaranteed quality of service, which you don't get on Freeserve, and content. If the ISP has both then it's worth paying for," said Lewis.

A spokeswoman for Freeserve declined to comment directly about Netscape Online, but did say: "We were the first UK wide free service. The best compliment is when others follow suit and it can only be good for the customer, but we believe we offer the widest breadth of services among the free providers."