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AOL hits new membership milestone

Bolstered by strong growth over the Christmas season, America Online says it has signed 21 million members to its online service.

Bolstered by strong growth over the Christmas season, America Online today said it has signed 21 million members to its online service.

The milestone comes just after AOL hit 20 million members in mid-December and 19 million in October.

AOL members average more than one hour each day using the service, according to the company. In addition, nearly 60 percent of all AOL members use the latest version of its proprietary software, AOL 5.0, and 1.6 million members use the flagship service simultaneously during peak periods.

"We could not be more pleased to see that the AOL service continues to set the standard as the premium mass market service," AOL president Bob Pittman said in a statement.

The announcement follows AOL's pending acquisition of Time Warner for more than $160 billion in stock. The combination of the companies would create an online and traditional media giant spanning the Internet, cable-TV, film and music.

Time Warner also has agreed to acquire rival record company EMI Music for $1.3 billion, which would create a music giant poised to tap the growing demand for downloadable music online.

Until now, indications of You've got Time Warnermembership growth and continued leadership in the market have kept AOL's stock valuation flying high. But with Time Warner coming under its wing, investors have been questioning whether AOL will continue to maintain its nimbleness as an Internet company.

As a result, AOL's stock has taken a heavy hit since the merger was announced less than a month ago. On the day of the announcement, AOL opened above $80 a share. Yesterday, the stock closed at $55.25.

Yet at the same time, questions remain whether other big media companies, such as the Walt Disney Co. and the soon-to-be-merged CBS-Viacom, can compete with AOL Time Warner without the help of major Internet players by their sides.