AOL Latin America has had some embarrassing negative publicity in its initial year. First, there were mislabeled music CDs that were sent out as copies of trial software in Brazil. Such gaffs may have contributed to the reasons why an unexpectedly high percentage of prospective customers canceled their subscriptions before their three-month free trial period was up. Such cancellations make it much less likely that AOL Latin America can capture a growing percentage of market share among new users. Because Latin Americans believe their neighboring countries are of little relevance to their own lives, regional content is of limited appeal.
Local content is key to attracting and retaining readers.
Plenty, says Will Landers, Latin American Internet analyst at Credit Suisse First Boston. Because local, rather than regional players, will continue to attract the most users, and because the size of each individual Latin American market is considerably smaller than the US market, Landers predicts that in each Latin American country, only one dominant player will be able to make enough money to become profitable. While the future growth rate is larger in Latin America than it is in the US, it is significantly smaller than the growth rate the US experienced between 1995 and 1999 when the number of Internet users soared from about 15 million to just over 100 million. A huge income disparity in Latin America will prohibit a large percentage of the population from logging on. Poverty precludes not only computer ownership, but also home telephone service.