By now most of you must have seen the NetZero advertisements that spoof AOL, and say that “members are all leaving for NetZero.” Well not exactly – if you read the most recent quarterly data from NetZero, you will find that the company added new pay 43,000 new subscribers taking the total to 3.2 million and the active accounts totaled 6.6 million at September 30, 2004. Okay now read the fine print, aka the footnotes.

Total pay subscribers includes Internet access subscribers, Web-hosting subscribers, non-access premium email subscribers, domain name registration subscribers and, going forward, other pay subscription services that the company may introduce or acquire. Active accounts are defined as all free access and email users that logged on to our services at least once during the preceding 31 days, together with all subscribers to a pay service.

Mark Goldston, NetZero’s chairman and CEO told the New York Post recently, “In the spirit of comparative advertising, I thought it was a lot of fun and highly competitive.” But not true. Sure AOL is losing dial-up subscribers, but they are not defecting to NetZero, but instead to broadband, as this report shows. I always wondered who the hell would switch from one dial-up to another, when there is broadband available for a few dollars more. Its sort of like switching from VHS to Betamax when the world has moved on the DVRs.