AOL Signs Deals with MindSpring and EarthLink for Instant Messenger Distribution

Strategic Insights -

AOL, the nation's largest Internet service provider, has reached agreements with MindSpring Enterprises and EarthLink Network to distribute its AOL Instant Messenger software to the combined 2.5 million users of the two services. Starting in late October, MindSpring will offer a co-branded version of AOL's Instant Messenger as the default service, while Excite Pal messaging will remain an option. This move is seen by some as a strategic attempt by AOL to corner the instant-messaging market, but others argue it's simply a smart business decision to partner with large Internet service providers.

Key Takeaways:

  • MindSpring and EarthLink will distribute AOL's AOL Instant Messenger software to their 2.5 million combined users, with a co-branded version as the default service starting in late October.
  • The deal is non-exclusive, allowing MindSpring to offer other instant-messaging products, including Microsoft's MSN Messenger.
  • AOL pioneered the instant-messaging service, and adding the AOL product is part of MindSpring's strategy to make its home page a more compelling destination for users.
  • AOL has 17.6 million members and is currently engaged in a bitter war with Microsoft over instant messaging.
  • Analyst Lucas Graves suggests that AOL's large install base makes it the de facto standard for instant messaging, regardless of its partnerships.

Statistics:

  • AOL has 17.6 million members (Source: AOL).
  • The combined user base of MindSpring and EarthLink is 2.5 million (Source: MindSpring and EarthLink).
  • MindSpring shares closed at $28.81 1/4 on Friday (Source: Bloomberg).
  • AOL shares closed at $84.75 on Friday, up 81 1/4 cents (Source: Bloomberg).
  • EarthLink shares rose $4.50 to $41.56 1/4 (Source: Bloomberg).

Sources:

  • EarthLink Network
  • MindSpring Enterprises
  • AOL
  • Dow Jones News Service
  • PaineWebber
  • Jupiter Communications
  • Bloomberg