Growth in online subscriptions

Led by America Online's strong growth, online subscription-based services grew by more than 5 percent in the third quarter, according to a study released today.

The study, published by Cowles/Simba Information's Electronic Information Reports, included all paid subscription services, but not free services that require subscriptions such as the online version of the New York Times.

According to Ben de la Cruz, managing editor of Electronic Information Reports, the trend seems to be that as AOL goes, so goes the rest of consumer subscription services. AOL's steady growth is the major force behind the 5 percent gain, and offsets flat and declining numbers from the Microsoft Network and the struggling CompuServe.

"CompuServe probably doesn't have that much to worry about" because of its buyout deal with AOL, de la Cruz said. However, he said, "Microsoft Network is probably resigned to the fact that they can't take the lead from AOL at this point."

AOL, the largest online service, grew to 9.4 million subscribers, a jump of more than 9 percent, last quarter. The company announced last week that its subscriber base reached the 10 million mark more than a month before the company's target date. AOL's growth, coupled with business-based services posing a 7 percent gain in subscribers, led the industry to grab 25.3 million new subscribers for the period ending September 30.

"It's not record growth," de la Cruz said. "But it is sizable."

In the business arena, what de la Cruz calls "current awareness news services," such as WavePhore's Newscast, outperformed archival research services such as Lexis-Nexis. De la Cruz predicted that aggressive pricing by news aggregators and market saturation in some of the niche professional markets will bolster current awareness news services as the answer to professional online needs.

"In the research market, there's a saturation on the high end," de la Cruz said. Current awareness news services are "a way to offer services to a broader spectrum of users."

The survey included subscription numbers from 53 companies, representing more than 90 online services. The conclusions were based, for the most part, on numbers supplied by the services in their quarterly earnings reports. Approximately seven companies did not report numbers, or reported on a biquarterly basis, and in these cases Electronic Information Reports used estimates based on past performance and revenue predictions.