AOL joins the party five years late

If nothing else, the much-discussed decision to make America Online’s software and services completely free will result in a great laboratory experiment on a truly grand scale, an experiment that will hopefully answer this compelling question: Can a moribund online service — one whose very name has become synonymous with the word “lame,” one whose services are notoriously difficult to cancel, and one which has remained steadfastly a “walled garden” while all around it the benefits of advertising have become abundantly obvious — suddenly undergo a deathbed conversion and become an ad-driven online colossus after years of appearing to not really give a crap?

Time Warner is obviously hoping the answer is yes. The business case is somewhat easier to make than it appeared at first, since the media and entertainment conglomerate will be giving up a billion dollars or so in revenue from customers who currently pay for the luxury of having an email , but will also save the truckloads of dough it spends on marketing costs, including those billions of sign-up CDs that litter the planet (hint: they make a nice wind-chime style mobile for over the baby’s crib). And online ad revenues are growing strongly at AOL, which no doubt gives TW hope. Staci has a great breakdown of the conference call at PaidContent.

But the bigger question is how many people will decide to use AOL’s services when they are free, and no longer attached to the company’s dial-up software. Is it too late, or can the company make some kind of prodigal son-type comeback?

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