Free to fee e-mail is becoming a reality

Free e-mail services could end up a thing of the past, as the world's e-mail giants move away from advertising dependent business models to embrace more profitable, fee-based e-mail systems.

Representatives from some of Australia's free e-mail providers say the decline of free services in favour of a paying subscriber model is inevitable, and will affect the user's inbox sooner rather than later.

The change from free-to-fee Web mail services in Australia became evident when Optus announced its decision to drop its free Excite e-mail service recently.

The several thousand users of the Excite service were notified of the decision by direct e-mails to their accounts, and told that they had until March 26 to find new e-mail accounts.

Optus spokesperson Melissa Favero said the decision to close down the Excite Web service was a result of integrating the redundant Excite@Home business into the Optus one.

"We had to make a number of business and financial decisions," she said. "Those decisions involved us purchasing some intellectual property and functionality, for example, personalisation and not purchasing some functionality like Excite's e-mail."

Favero said Optus will not be offering any special rates to former Excite users for its own OptusNet e-mail services.

Other Australian e-mail providers are also facing a similar dilemma about the fate of their own free e-mail services.

Start Corporation, which has been providing free e-mail accounts and services to Australian users since 1997, is just one of several providers looking at introducing fees to some, if not all, of its currently free e-mail services. Start has a user base of 163,000 active members.

Start's marketing manager Jane Goron says a lack of advertising support means companies who provide free e-mail services cannot afford to do so for long.

"For the first couple of years it [Start's e-mail service] was enormously successful - advertising was paying the way," she said. The way the economy is sitting now, companies simply can't survive on advertising revenue alone, said Goron.

Rod Williams, CEO of Australian Web mail provider Aussiemail, echoes Goron's sentiment.

Originally, he said, the free Aussiemail service was funded through advertising.

"Now the whole advertising industry has a big hole in it," Williams said.

Williams launched the Aussiemail free e-mail service a little over two years ago. At present, Aussiemail members with a free account can continue to use it free of charge. However, Williams says he is looking at switching these members over to the new fee-based Mail Plus service. This would give users access to extra e-mail services such as a larger storage limit (up from 6MB to 25MB) and POP access without the ads for US$19.99 a year. The Mail Plus service plan, as well as the company's more expensive Group and Business plans were launched six months ago.

Williams says that for the time being at least, he is happy to continue the free e-mail service as long as a proportion of Aussiemail users sign up for the newer paid services.

"Everyone's got to cover their costs. At the end of the day, someone's got to pay for it," he said.

While the trend towards the paying subscriber model in Australia is still in its early stages, some of the world's biggest free e-mail providers have already implemented fee-based, value-added services in an attempt to drive user revenue.

The world's leading free Web mail provider, Hotmail, already made its intention to curb the free benefits of its popular service clear last year. It has introduced fees for additional mail storage over the free 2MB limit. Hotmail also announced it would dump the accounts of its members who don't log on at least once a month. This was a change from its previous 45-day policy.

Hotmail's latest initiative is an e-mail "janitor", which sweeps messages out from folders in its users' accounts after a certain period of time. Many Hotmail subscribers have called the new practice "strong-arming".

Following in Hotmail's footsteps, its US-based rival Yahoo has also introduced a new fee on its POP forwarding service, which it says, is designed to improve the quality of service it provides and cut back the amount of spam being sent to its users.

Yahoo will charge US$29.99 per year for the service. Other Yahoo email services to incur a fee include extra e-mail storage space over 6MB, and some specific features on Yahoo's home-page builder, GeoCities.

Although the US fees do not relate to the Australian Yahoo e-mail service, the company does not rule out the possibility that they may in the future.

Yahoo Australia's senior producer for mail Rachel Watt said she believes Yahoo will always offer a free e-mail service, but that it will also continue to expand the premium services and extras that it charges for.

"People today are more demanding of what they want in their e-mail service," she said.

"Users of the US service are constantly requesting extra storage, and are happy to pay for it," she added.

Start's Goron says the company is currently considering two possible ways of introducing fees; either as a charge for premium services on top of the basic free e-mail account (such as charging for SMS access) or as a general fee for every e-mail account.

The company announced its intention to implement fees on its e-mail services two weeks ago, via an e-mailed survey direct to members. The survey asked users whether they would pay a nominal free for the Start e-mail service or its premium products. Some of the products which may incur a fee include extra mailbox allocation, new chat features, larger attachment limits and e-mail downloads through POP.

Already, 100,000 users have responded to the survey, Goron said, with the majority positive about paying a nominal fee.

"It's nice to know that if we do move for a complete fee (system), we have the support of our members," she said.

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Nadia Cameron

PC World
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