New Tollbooths on the Information Superhighway

Members of the ISP-Marketing list sense opportunity in the rising consumer price of the Internet. Surely now that formerly free services now charge money, ISPs can build profits of their own?

[April 18, 2002]

On the ISP-Marketing list in March, EA rejoiced,

"It's fantastic! First everything was 'free' on the Internet. When the advertising market fell into the toilet, everyone went the other way and is now charging for everything. Yahoo! POP3 e-mail is now $30 a year, and videos at CNN.com are $4.95 a month. How can we capitalize on this?"

JS wasn't too optimistic about the prospects for most smaller ISPs:

"I think it has become obvious that the Internet, for most companies, has settled into being just another cost of doing business and almost exclusively a promotional tool. There aren't many online models that can truly make money. Content is king, but charging to get that content won't work for most of us."

A number of others defended the viability of online advertising:

[BH observed] "Advertising is not going in the toilet. Many companies are actually increasing their online advertising. Doritos announced several weeks back that they would be decreasing traditional advertising and increasing online advertising. In 2002, Doritos will be putting at least $5,670,000 into online advertising, up from $1,890,000 in 2001. Online advertising isn't dead or dying, but it certainly is changing."

[CH agreed] "I don't think advertising is dead. Instead, people are getting a handle on what reasonable rates are, checking on the quality of the site displaying the ad, and watching conversion rates carefully. We have clients who are looking to spend big money (six figures monthly) online. It's just a matter of finding them the right ad for the right audience, with a reasonable cost and a conversion rate such that they make a profit. Advertising is still here, and I expect it to continue to come back strong over the next six months."

CW noted that these developments are yet another nail in the coffin for free Internet access:

"The fact that Yahoo! and other online companies are beginning to charge also means goodbye to free Internet access. This, in turn, means that users are going to stop looking for free service, and will start looking at quality and value. I think this is a great step for us: it will bring worlds of opportunities."

CH added that it's important to offer additional services, and to charge for them:

"This shows us that there are opportunities out there. Get the product to market. Let people use it. Let people like it. Then start charging. If a million people are willing to pay $30 for Yahoo! e-mail, and that means an extra $30 million a year for the company, wouldn't they be derelict in their duties to their stockholders if they didn't make the money? So where is the lesson to be learned here? Perhaps in raising rates? Perhaps in adding other services? Find additional services that people want, and supply them!"

—End