Microsoft announced this week that the subscriber base of its MSN online service has grown from 6.5 million users in July to more than 6.9 million users today, an increase of 400,000 new users. In addition, the company says it will spend $100 million during the next year to attract advertisers on its MSN portal sites around the world. This announcement comes after a $250 million investment the company made in the service during the past 18 months.

Microsoft says that more than 80 percent of its new users switched from competing services such as AOL; most of these users were upset with AOL's new fee structure, which raised the service's price to $23.90 a month. MSN is guaranteeing customers a flat fee of $21.95 a month through January 2003. Next month, Microsoft will introduce a new version of its MSN integration software, dubbed MSN 7; previous versions were called MSN Explorer.

Microsoft admits that advertiser revenues for its MSN portal site have fallen in recent months, as they have throughout the online media industry. But the company sees bright spots. "There is a lot of money still being spent by the more traditional advertisers," says Sharon Baylay, who heads MSN marketing efforts for Europe, the Middle East, and Africa. "I'm not seeing as much online as I'd like. Our challenge with this new program is to help show what this new medium can offer." Microsoft has gone beyond the standard banner ad, with new ad formats, including the "scratch-off ad," which you "scratch" with the mouse cursor in a manner similar to lottery scratch tickets, and full-page ads that appear while a page is loading. The company is also attempting to compete with online ad companies such as DoubleClick by providing ads targeted at consumers' specific preferences.

MSN got off to a rough start in August 1995, when it debuted with Windows 95 as a proprietary online service. Since then, the service has undergone many changes. Today, MSN is one of the most popular Internet services and portals in the world, and although it currently trails AOL in overall users by a wide margin, the MSN portal recently surpassed Yahoo! as the largest portal in Europe.