Time Warner believes AOL’s free service plan has potential despite losses

Time Warner believes that the planned AOL’s free service has a lot of potential for the company. This is despite the fact that they stand to lose almost $1 billion in operating profit through 2009.

This was reported in an article by the Wall Street Journal. They have cited internal company forecasts, which states that AOL expects the online advertisement to compensate for the losses in revenues through subscription services.

The free service plan would reduce the revenues for AOL through their internet services to around half of their current revenues in the next 3 years. And considering the ever dropping number of subscribers AOL has, they might go ahead with this risky approach.

The company expects their advertising business to jump to 42 percent in 2009 from 17 percent in 2006.