MSN Strikes as AOL Hikes Rates Again

Microsoft's MSN is upping the ante in its fight against America Online for Internet access subscribers, offering a cool $50 to anyone willing to make the switch by the end of May.

by Christopher Saunders of internetnews.com [March 4, 2002]

MSN said it plans to run television, print and online ads promoting the offer, which is valid for both dialup and broadband subscribers.

In addition, U.S. Postal Service trucks in key markets—including San Francisco, Atlanta, New York, Chicago, Boston, and Detroit—will bear versions of the MSN ad from March 15 to May 15.

Those willing to trade ISPs are encouraged in the ads to visit switch.msn.com for details on the offer, which is paid only after subscribers have used MSN's Internet access service for more than three months.

Spending on the campaign was not disclosed.

"MSN delivers the most useful way for consumers to experience the Web, and we are offering this special promotion as an incentive for consumers to try MSN Internet Access," said Yusuf Mehdi, vice president of MSN at Microsoft. "We are confident that once consumers experience MSN Internet Access, they will join the millions who have already switched to the superior technology and high-quality service that MSN delivers."

The promotion is running concurrently with other MSN access deals. For instance, like other ISPs, MSN is looking to woo broadband subscribers with the promise of free activation and a free DSL modem—once users have signed up for a year of MSN Broadband. (Broadband subscribers also have the option of not signing a term commitment contract, but will pay $99 for activation if they do not sign a contract.)

As with previous Microsoft "switcher" campaigns, the new effort comes just weeks after an unpopular rate hike by America Online, the principal online unit of New York media conglomerate AOL Time Warner.

In January, the company raised rates for current users of its "Bring Your Own Access" plan—after promising not to do so four months earlier. The plan, rates for which grew from $9.95 to $14.95, affected users of its AOL service who connected via a local ISP. AOL has said it was unsure how many subscribers were impacted by the change.

Microsoft's campaigns to sway AOL users got their start last May, when MSN took advantage of an earlier America Online rate hike (from $21.95 to $23.90 per month for unlimited Internet access) with a $50 million campaign advertising its own $21.95 per month fee.

The MSN ads, which promised that its rates wouldn't rise until 2003, also advertised three free months of the service for America Online users that switched over.

In October of last year, MSN reprised the "three free months" offer with a print campaign that proclaimed, "There are just some things you grow out of. AOL is one of them." Those ads debuted days in advance of a massive AOL Time Warner marketing push behind version 7.0 of its service.

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