In a bold move that will cost $18 million over the next three years, Time Warner announced this week it will make most of its currently profitable AOL services free.

Despite the cost, the New York Times is reporting that Time Warner is actually promising investors AOL's profit will increase as they plan to cut $1 billion in costs per year from AOL's previous expenses.

Time Warner is clearly trying to save the AOL brand with this move. The former dialup powerhouse has lost nearly three million subscribers in the last year, and was the subject of a massive blog-inspired rampage when one subscriber tried to cancel his account and was harassed by the AOL operator.

So, why offer AOL for free and basically surrender billions of dollars in lost subscriber revenue? Advertising.

The headline of Time Warner's press release today proclaimed the move "Will Enhance Growth of AOL’s Advertising Business."

And this makes sense. AOL will, indeed, lose millions of paying subscribers, but these millions will remain a part of the free AOL program. With AOL's content rich services available to the broadband-using public for free, anyone can register an AOL account and, in all likelihood, port over their existing AOL Instant Messenger accounts at no cost. This will actually lead to an increase in AOL's subscriber base if all goes well.

Advertising revenue is the "it" of the Internet economy. In an age where free Wi-Fi hotspots are becoming free Wi-Fi cities, charging money for this same service is a slowly dying practice. Of course, nothing in the free market is free, and as long as there is a service, someone will find a way to make money from providing it.

The solution is to get the user on the back end. We're not talking about pop-up ads anymore. You can't view a weather report anymore without seeing an advertisement for a credit card smear the content of the article until it slowly fades away. Flash and other streaming media formats enable advertisers to reach their base with "commercials," the same price we pay for 500 television channels.

Free AOL is slated to start in September. According to the press release, dialup pay subscription service will continue, but marketing efforts will be curtailed.