NEW YORK (AP) -- Giving high-speed Internet users its services for free may help AOL stop an erosion of customers, but analysts say that alone won't be enough to draw new visitors and break into the Web's top three.

Key to AOL's success will be how well it taps its strengths in video and instant messaging and introduces new services, like this week's offering of a free online storage bin for music, photos and other digital memories.

Not that AOL was wrong in deciding to give away e-mail accounts and software once reserved for paying subscribers, analysts said. The company needed to stop its customer exodus and the defection of potential eyeballs to rivals like Yahoo Inc., Google Inc. and Microsoft Corp.

Now, Time Warner Inc.'s Internet unit needs to shed its image as a has-been dial-up access provider stuck in the '90s. "Are they going to keep that yellow dude, whatever his name is?" asked Gartner research analyst Allen Weiner, referring to AOL's "running man" icon. "It's what people recognize as AOL, but to me it represents all those unwanted discs."

In making the drastic strategy shift Wednesday, AOL executives showed a willingness to let go of the company's legacy access business and accept larger declines in subscribers, who pay as much as $26 a month. AOL expects at least 6 million, or one-third, of its U.S. subscribers to stop paying within the year.

AOL also braced for drastic cuts in payroll — as many as 5,000 jobs — in a quest to find more than $1 billion in savings from marketing, network and other costs, such as the promotional trial CDs that AOL infamously has stuffed into mailboxes. Some were fetching $5 on eBay on Friday.

The changes will "better position AOL to fully take advantage of compelling online trends," namely the boom in Internet advertising, Time Warner's chief executive, Richard Parsons, told analysts Wednesday.

Only time will tell whether he's right.

The numbers do show promise. In the second quarter, AOL saw a 40 percent jump in advertising revenue.

But that's largely because it's making more money per page viewed — an increase of 58 percent from last year. According to comScore Media Metrix, page views — a key figure because it reflects the number of ads displayed — decreased 26 percent in June. Subscriber defection is to blame, because they account for 80 percent of page views.

AOL believes it will stop the declines, essentially by no longer sending its subscribers to rivals with free e-mail.