AOL claims its subscriber base totals around 25 million. But the AOL Time Warner division has a very high annual turnover of subscribers – in the region of 40%, according to the Washington Post. And it seems that the figure quoted by AOL includes subscribers who join AOL on a trial basis, but then do not commit to the service or pay any money.
Another difficulty stems from the bulk subscription programme run by AOL in partnership with companies like United Airlines and Sears. In terms of the programme, discounted subscriptions are sold through the companies to their employees, amounting to thousands of trial subscriptions.
Sources have told the Washington Post that the SEC is investigating both the inclusion of trial subscribers and the discounted bulk subscribers within its subscription figures.
According to Reuters, analysts within Wall Street were relatively unconcerned about the latest revelations. Their concern was still with the part of the investigation relating to advertising revenue.
SoundView Technology Group analyst Jordan Rohan told Reuters,
"It's one thing if the company inflates ad revenue. People rely on financial guidance and metrics such as ad revenue. The number of subscribers may be exaggerated in some ways, but there are no allegations that subscriber revenue was inflated".
Neither the SEC nor AOL made any comment.