AOL has just announced that it will give a free domain name to anyone who asks for one.
There's a catch. You don't own the domain name; AOL does. What you can do is use is use that domain as your e-mail address and your home page starting in September. So can your friends, family, and members of the same club, organization, sports team, and so on.
It's an intriguing idea, and one that's likely to gain some attention from folks who always thought of buying a domain name and never quite got around to it. It also solves the problem of what to do with a domain name once you purchase it: instead of paying a hosting company a few dollars a month, AOL takes care of everything at no additional cost.
The service, by the way, is called AOL My eAddress. AOL says it supports .com or .net domains, up to 100 e-mail identities per domain, 2 GB of storage, spam filtering, and open mail clients such as Outlook and Thunderbird through the IMAP protocol.
It's part of the company's recent strategy to stem the flood of defections (nearly 1 million in the second quarter) from dialup users who are switching to broadband and leaving AOL far behind. AOL already has lost more than a third of its subscribers since its peak in 2002.
From a financial perspective, the My eAddress service seems to make sense for AOL. The current wholesale price of .com domains is around $6 each, and because AOL is an accredited registrar it gets the best deal possible. That means AOL needs to generate at least $6 a year in advertising revenue (or upselling some users to premium services) per domain to make it worthwhile.
There's also a second way that AOL benefits. Good domain names are hard to find nowadays. AOL is enlisting its vast member base in a quest to locate the good ones, which it henceforth owns. If some fall into disuse, AOL should be able to sell them at a tidy profit.