Business in Vancouver: News that works for you

Fee pushes aside free in the Web world

by Alan Zisman (c) 2002 First published in Business in Vancouver ,  Issue #672  10-16 September, 2002 High Tech Office  column
During the years of the Internet hysteria in the late 1990s, many dot-com startups had a business model that assumed getting large numbers of users somehow would translate into eventual profitability. The easiest way to build a large user-base was to offer something compelling, for free.

Businesses offered free content, free software, free e-mail accounts, free Internet service providers, even free computers, with tortured explanations of how these services would evolve into profitable businesses.

Even now, "free" isn't dead. The open-source movement, for example, survives and continues to develop and upgrade outstanding software such as the Linux operating system, the Apache web server, the Mozilla browser, and the OpenOffice suite. Making freely available open-source software the basis for a profitable business isn't easy, however.

Free e-mail is still available, but at many free services, the pressure is on users to convert that free account to a paid subscription. At Microsoft-owned Hotmail, for example, free accounts have a limited amount of storage, which can quickly fill up with unrequested junk mail. And the useful POP mail retrieval service, which allows Hotmail users to retrieve e-mail from other addresses into their Hotmail mailbox, is no longer included with free accounts. In both cases, Hotmail suggests users sign on for MSN Extra Storage costing US$19.95 per year.

At the summer MacWorld conference, Apple CEO Steve Jobs announced the end of that company's free iTools online services. They had provided Mac users with free e-mail and home pages, Web-based disk storage and more. Instead, the company hopes to migrate customers to .Mac, an enhanced version costing US$99.95 per year (US$49.95 for the first year for current iTools subscribers).

Like Hotmail, Yahoo has offered a popular free e-mail service. That service is continuing, but as with Microsoft's Hotmail, Yahoo has begun to charge users for mail forwarding and collection options.

In its search for profitability, Yahoo, which lost almost US$100 million last year, is not just turning to its e-mail users. Best known as a search-engine, Yahoo earlier this year announced it would begin charging commercial Web sites US$299 for placement in its search results. This announcement does not mean, however, that businesses that haven't paid will no longer have their Web sites show up in response to searches on Yahoo.

Fee payment gets your Web site (or your competitors') placed near the top of the page of hits, under a category labelled "Sponsor Matches." Searching Yahoo, for example, for "Internet Service Provider Vancouver" got me one sponsor match, followed by 24 Web site matches, businesses that have not paid Yahoo for special placement.

Yahoo has joined other Web sites in starting to charge users for at least some content. Yahoo-users can now search the New York Times archives back to January 1, 2000 for US$2.50 per article.

Similarly,, initially a free online magazine, now offers a US$30 per year subscription fee. Subscribers get additional content without the ads that overlay the free articles. CNN recently eliminated all free video content from its site. Would-be viewers now need to subscribe to the Real Networks SuperPass service offering a variety of video content for US$9.95 a month. RealNetworks claims to have signed up more than 500,000 subscribers, splitting fees with content providers such as CNN and ABC.

Patrick Keane, an analyst with Jupiter Media Metrix, suggests paid content "needs to be very proprietary and original to succeed." Many porn sites, for example, have created successful online business models based on charging for content. And Business in Vancouver has its weekly and archived content, including this column, available only to subscribers of the print edition at

Still free, however:, chronicling the evolution of the Net from free to fee.

Search WWW Search

Alan Zisman is a Vancouver educator, writer, and computer specialist. He can be reached at E-mail Alan