Mickey Mouse marketing for MSN

Microsoft chairman Bill Gates and Disney CEO Michael Eisner announced the co-branded service at an event in New York's Central Park.

Gates said Microsoft had worked to improve the MSN 8 client, rather than the content it delivered. "Boundaries with what you do online and on the PC doesn't exist," he said.

"We understand that we aren't a media company," Gates said.

Unlike earlier versions of MSN, MSN 8 will require subscribers of other ISPs to pay extra if they wish to the MSN access client, paying US$9.95 per month or $79.95 per year.

Microsoft will charge US$21.95 per month access fee for dial-up services and between US$39.95 and US$49.95 per month for broadband.

The co-branded service will be available for the same price as the regular MSN 8, but provide a free to Blast, the Disney's paid service for kids, as well as the Disney Adventure magazine.

Rival AOL released version eight of its access client last week. With more than 35 million subscribers, it remains a tough adversary for MSN 8, which has never made a profit in its seven year history.

To take the battle to AOL, Microsoft has enhanced the MSN 8 client, offering more features to paid subscribers than to users of the free MSN.com product.

The new MSN comes with increased parental controls, email and instant messaging and an online bill-paying service.