10 July 2000

America Online Latin America, the joint venture between AOL and Venezuelan media group Cisneros lost $53.1 million on revenue of $6.9 million in its first fifteen and a half months of operation, the company revealed this weekend.

The disclosure came as AOLLA filed to sell twenty-five million shares through an initial public offering. The company, which launched in Brazil in November, admitted to “higher-than-expected” subscriber cancellations, apparently because competitors offer free services. In response, AOLLA said, it had lowered its prices and increased adspend.

In addition to expanding its Brazilian operation, the company is to introduce services in Mexico and Argentina, offering 90-day free-trial for six months after the services are launched. It also plans to introduce services in additional countries, “depending on market conditions”.

As at June 25, AOLLA had 129,000 subscribers in Brazil, a "substantial" number of whom are currently in free-trial periods. Subscription income raised $5.5 million – or 81% of total revenue – through March 31.The remaining 19% was earned through advertising and e-commerce.

News source: Advertising Age - International Daily