AOL to end with more users in 2006

NEW YORK - Time Warner Inc.'s AOL Internet division is expected to end 2006 with more users than 2005, after it decided to offer most of its services for free, according to an internal memorandum.

It's the first time in four years the company, which restructured its operations this summer to boost usage of its free site in a bid to improve online advertising sales, will have ended a year on an upswing in users.

"As we reach the end of the year we have even more evidence that those efforts are working," AOL Chief Executive Randy Falco wrote in a note to employees.

AOL ended 2005 with 19.5 million paid subscribers, down from a high of about 26.5 million paying subscribers in 2002.

The 2006 tally is boosted by a surge in those signing up for the free service and is a combination of a declining paid membership and an influx of free users.

"The numbers we've been tracking show that total paid and free memberships are on track to exceed the paid memberships we had recorded last year at this time," Randy wrote.

An AOL spokesman confirmed the note had been sent to employees, but declined to comment further. The note did not specify the number of members for 2006.

Falco, a 30-year television industry executive left his post as president of NBC Universal Television Group in November to join AOL.