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New CompuServe launched
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February 22, 1999: 2:11 p.m. ET
AOL's revamped online service available for $9.95 a month
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NEW YORK (CNNfn) - America Online Inc. Monday launched the upgraded version of its CompuServe online service with an introductory price of $9.95 a month.
AOL (AOL) said CompuServe 2000 charter members will be able to take advantage of the low price for 20 hours of access. Each additional hour will cost $2.95.
The company is also charging $19.95 a month for unlimited access.
Though analysts generally agree it's hard for an online service to make a profit by charging customers less than $19.95 a month, AOL is clearly looking to boost CompuServe's subscriber base, which could bring in other revenue.
When AOL acquired CompuServe in 1997, the online service had approximately 5 million subscribers. CompuServe now reports about 2 million customers.
"CompuServe hasn't been in a huge growth mode since AOL acquired it," said Mark Cavallone, Internet analyst at S&P Equity Group. "AOL is looking for more advertising and trying to bring in more customers."
If CompuServe can attract more advertisers with an improved customer base, Cavallone said the unit could be profitable even with a $9.95-a-month subscription plan.
Multibrand strategy
CompuServe 2000 will include new e-mail and Instant Message features, support five member names per account and an integrated version of Microsoft Corp. 's (MSFT) Internet Explorer Web browser. The company will also launch an advertising campaign to boost awareness of the service.
In light of AOL's $4.2-billion acquisition of Netscape Communications Corp. (NSCP), Cavallone said the new CompuServe push is a smart move for AOL.
"CompuServe has been an underutilized asset," he said. "It's part of AOL's multibrand strategy, under which AOL is the service for computer novices and CompuServe is more professional. It definitely makes sense to leverage that asset more."
AOL shares jumped 8-7/16 to 168-13/16 in midday trade. 
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