R Nitelight
Her Rock
- Joined
- Sep 10, 2000
- Posts
- 10,003
Free rides skidding to halt on Internet
More companies sticking price tags, limits on their goods, services on Web
05/01/2001
By Saul Hansell / New York Times News Service
There never was such a thing as a free lunch on the Internet. But for a while a determined freeloader could find a Web site that would pick up the tab for all sorts of goods and services, from computer keyboards to photo developing, in return for looking at a few ads.
No more.
You can't get free online service at freeInternet.com any more. Nor can you get a free computer from free-pc.com or make a phone call at callfreeway.com. And the plan to offer stamps at postage4free just didn't stick.
Kmart's Bluelight.com still offers free Internet service – but for only 12 hours a month. What had been free picture developing at Snapfish.com now costs $1.99 a roll. Voicemail from uReach is at least $2.99 a month. And the only thing free at Freemerchant.com, which once gave Internet stores to small business, is a 30-day trial of its $25-a-month service.
"We did what we needed to do to cover our costs and stay in business," said Jennifer Rogers of Network Commerce, the Seattle company that bought Freemerchant.com last year.
At first, she said, advertisers were paying $50 to $75 for every thousand users who saw their ads. Those rates are down to $3 to $5.
Even Yahoo, the big, previously free Web portal, has started imposing fees for many services and promises many more. Auctioning your used skateboard is $1.50. Storing your e-mail costs $20 a year. Receiving live stock quotes $10 a month. And so on.
Most sites offering news and information are still free, but a few have started to impose fees. More are considering doing so.
Salon.com, which happily gave away its coverage of the Clinton White House, is charging $30 a year for its flagship column on the current administration, called "Bushed." That fee also buys a weekly celebrity gossip column, an erotic art gallery and regular reports on the Chains of Love reality TV show. Paying customers can turn off the ads.
Committed to free
"The ad market goes up and down, but we are very committed to the free model," said Mark R. Goldston, the chief executive of NetZero, the largest free Internet service provider, which superimposes advertising on the screen as its users surf.
"Free is one of the greatest catchment mechanisms anyone has heard of for attracting users," he said. The failures of competitors, he argued, means that only the largest and most efficient free providers will survive.
Even so, NetZero has introduced an ad-free, paid Internet service and has limited free customers to 40 hours a month.
". He said 12 percent of Netzero's users accounted for 53 percent of its network costs. Cutting back their use, or getting them to find another service provider altogether, will save the company $20 million to $40 million a year.
Comes at a cost
Of course, arguably the biggest giveaway on the Net, the music on Napster, is also slowly coming to an end. And if the record companies do not kill it entirely, Napster, too, hopes to be reincarnated with a monthly subscription fee.
While Napster was started more as a hobby than as a business with no visible means of support, many of the giveaway sites were designed from the start to be viable as advertising vehicles.
If television situation comedies can sell soap, why can't fax cover sheets? Free-PC.com, perhaps the most audacious effort to use the concept, decided that it could cover the cost of a computer by selling advertising on one-third of the screen.
Similarly, for every two minutes of calling on Mytalk.com from General Magic, a user had to listen to a 15-second advertisement. Both closed last year after it was clear that the ad revenue was not going to be enough.
'Disposable services'
John Ridley, in Chelsea, Mich., is loath to pay the $20-a-year fee just imposed by PhotoPoint, a formerly free site where 1.5 million people share pictures. The site is "way too heavy on banner ads." But moving his photo album does not really bother him.
"I realized at the beginning that these 'free' services wouldn't last more than a couple of years, if that," he said. "I use them as disposable services, and I fully expect a great deal of churn as new ones pop up and then go out of business."
Ed Bernstein, chief executive of PhotoPoint, said he had no choice. "The entire industry will have to move to a paid model or go away," he said.
When the company raised $11 million from the likes of Intel, it predicted that half its revenue would come from advertising. It now calculates that it will be lucky if ads represent 10 percent of revenue. Selling prints and gifts has been its other major revenue source.
Meanwhile, its costs have been higher than anticipated. Sure, it costs only a few pennies a year to store a picture. But with 35 million pictures taking up 10 terabytes of disk space, those pennies add up. So imposing a $20 annual fee not only brings in cash but sharply cuts the company's costs as most of its customers leave.
"It's a terrible thing to say that if I lose 80 percent of my customers it's a good thing," he said, "but they weren't customers really, they were visitors."
More companies sticking price tags, limits on their goods, services on Web
05/01/2001
By Saul Hansell / New York Times News Service
There never was such a thing as a free lunch on the Internet. But for a while a determined freeloader could find a Web site that would pick up the tab for all sorts of goods and services, from computer keyboards to photo developing, in return for looking at a few ads.
No more.
You can't get free online service at freeInternet.com any more. Nor can you get a free computer from free-pc.com or make a phone call at callfreeway.com. And the plan to offer stamps at postage4free just didn't stick.
Kmart's Bluelight.com still offers free Internet service – but for only 12 hours a month. What had been free picture developing at Snapfish.com now costs $1.99 a roll. Voicemail from uReach is at least $2.99 a month. And the only thing free at Freemerchant.com, which once gave Internet stores to small business, is a 30-day trial of its $25-a-month service.
"We did what we needed to do to cover our costs and stay in business," said Jennifer Rogers of Network Commerce, the Seattle company that bought Freemerchant.com last year.
At first, she said, advertisers were paying $50 to $75 for every thousand users who saw their ads. Those rates are down to $3 to $5.
Even Yahoo, the big, previously free Web portal, has started imposing fees for many services and promises many more. Auctioning your used skateboard is $1.50. Storing your e-mail costs $20 a year. Receiving live stock quotes $10 a month. And so on.
Most sites offering news and information are still free, but a few have started to impose fees. More are considering doing so.
Salon.com, which happily gave away its coverage of the Clinton White House, is charging $30 a year for its flagship column on the current administration, called "Bushed." That fee also buys a weekly celebrity gossip column, an erotic art gallery and regular reports on the Chains of Love reality TV show. Paying customers can turn off the ads.
Committed to free
"The ad market goes up and down, but we are very committed to the free model," said Mark R. Goldston, the chief executive of NetZero, the largest free Internet service provider, which superimposes advertising on the screen as its users surf.
"Free is one of the greatest catchment mechanisms anyone has heard of for attracting users," he said. The failures of competitors, he argued, means that only the largest and most efficient free providers will survive.
Even so, NetZero has introduced an ad-free, paid Internet service and has limited free customers to 40 hours a month.
". He said 12 percent of Netzero's users accounted for 53 percent of its network costs. Cutting back their use, or getting them to find another service provider altogether, will save the company $20 million to $40 million a year.
Comes at a cost
Of course, arguably the biggest giveaway on the Net, the music on Napster, is also slowly coming to an end. And if the record companies do not kill it entirely, Napster, too, hopes to be reincarnated with a monthly subscription fee.
While Napster was started more as a hobby than as a business with no visible means of support, many of the giveaway sites were designed from the start to be viable as advertising vehicles.
If television situation comedies can sell soap, why can't fax cover sheets? Free-PC.com, perhaps the most audacious effort to use the concept, decided that it could cover the cost of a computer by selling advertising on one-third of the screen.
Similarly, for every two minutes of calling on Mytalk.com from General Magic, a user had to listen to a 15-second advertisement. Both closed last year after it was clear that the ad revenue was not going to be enough.
'Disposable services'
John Ridley, in Chelsea, Mich., is loath to pay the $20-a-year fee just imposed by PhotoPoint, a formerly free site where 1.5 million people share pictures. The site is "way too heavy on banner ads." But moving his photo album does not really bother him.
"I realized at the beginning that these 'free' services wouldn't last more than a couple of years, if that," he said. "I use them as disposable services, and I fully expect a great deal of churn as new ones pop up and then go out of business."
Ed Bernstein, chief executive of PhotoPoint, said he had no choice. "The entire industry will have to move to a paid model or go away," he said.
When the company raised $11 million from the likes of Intel, it predicted that half its revenue would come from advertising. It now calculates that it will be lucky if ads represent 10 percent of revenue. Selling prints and gifts has been its other major revenue source.
Meanwhile, its costs have been higher than anticipated. Sure, it costs only a few pennies a year to store a picture. But with 35 million pictures taking up 10 terabytes of disk space, those pennies add up. So imposing a $20 annual fee not only brings in cash but sharply cuts the company's costs as most of its customers leave.
"It's a terrible thing to say that if I lose 80 percent of my customers it's a good thing," he said, "but they weren't customers really, they were visitors."
