INTERNET Basic AOL service to include KOL, aimed at 6- to 12-year-olds

AOL aims to stop defections by offering more for children.
WASHINGTON POST
WASHINGTON -- Too busy to read your child a bedtime story?
Not to worry. America Online Inc. wants to come to your rescue, with a new online service for kids to be launched at the end of the month that will, among other things, allow your little one to choose a wholesome bedtime story to be read aloud by the computer.
It is part of a new business strategy at struggling Dulles, Va.-based America Online, which has been losing subscribers who are switching to high-speed Internet connections offered by cable television and telephone companies. The fresh approach is a bid to hold onto more of its existing subscribers by appealing to their 6- to 12-year-old children with new online games and programming, called "KOL," which will be packaged as part of the basic AOL service.
The kids being targeted by AOL are part of the fastest growing group of Internet users, according to survey research. Children in this age group, or "tweens," as marketers refer to 8- to 12-year-olds, are spending more than twice as much time online as they did just a year ago, according to a recent poll by Harris Interactive.
Lots of competition
The online competition for those kids is fierce, as online portals such as Yahoo and MSN vie with online gaming sites and the Internet offerings of television channels such as Nickelodeon, Disney, PBS and Cartoon Network.
America Online is clinging to the largest online audience of children, with about 3.3 million regular users of AOL for Kids, which KOL will replace. AOL built that following largely by giving parents the ability to restrict where their children could venture on the Internet. Microsoft's MSN Internet service offers similar parental controls.
Most kids surveyed say their parents continue to care about where they go online, and often limit how much time they spend on their computers. But increasingly, online is the place kids want to go.
"We asked kids if they would rather be online than watching TV. The answer is yes," said John Geraci, vice president of youth research at Harris Interactive Inc. "The Internet is going to be the central media they use. Advertisers are going to have to be there if they want to reach people."
But Geraci said computer users are far less tolerant of ads than television watchers. As a result, rather than selling banner ads or pop-up ads on its new service, AOL is attempting to generate revenue by signing up corporate sponsors that will have their names associated with different areas on KOL.
Very different content
Analysts describe KOL's programming as very different from America Online's current offering. It includes a live, interactive four-hour, daily Internet radio show by Britain's hottest DJ for kids. There are more online games and a special instant-messaging service that includes parental controls. The new service also draws more extensively on the resources of parent AOL Time Warner Inc., using animation from its DC Comics Inc. subsidiary and content from magazines including Time for Kids and Sports Illustrated for Kids.
Still, no one knows if those offerings will attract a sufficient following and help the bottom line at AOL, which has lost more than 1 million users in the United States over the past year.
"It is an appealing package," said David Card, a senior analyst at Jupiter Research. "It is good stuff. It looks pretty cool. The question is: Is this going to be appealing enough to stem the tide of defections?"
Important segment
What is clearer, according to experts, is just how much this young age group matters in the marketplace. Marketers are focusing on reaching tweens online because they influence spending decisions by their parents, and because they are cementing views about brands and competing products themselves.
"It is an interesting segment. That is a time when kids get more independent, and lifelong brand decisions get made," Geraci said. "Marketers have been treating that as a key segment."
AOL has spent millions of dollars on KOL's programming and security, and the new KOL unit is headed by a veteran of children's television programming, Malcolm Bird, whose office is adorned with gadgets and toys.
Though he has fun in his job, Bird said he will regard KOL as a success only if it helps AOL keep subscribers or win new ones. That's a tall challenge.
"I got broadband and got rid of AOL," said Geraci, the Harris Interactive researcher, who has a 6-year-old and an 8-year-old. "As my kids age, I might bring it back, and if I did, it would be because of parental controls."