Yahoo! Tests Pay Services Package

The Yahoo! Plus service will cost $9.95 per month and incorporate security products from Computer Associates and Zone Labs, although the company is experimenting with a variety of pricing plans and features.

by Brian Morrissey of internetnews.com [November 4, 2002]

As perhaps its first step toward converting its millions of users into paying customers, Yahoo! quietly launched a pilot subscription plan Thursday aimed at encouraging its users to pay for a set of buffed-up personalized features, as well as a chance to try Yahoo!'s premium services, like gaming and auctions.

Called Yahoo! Plus, the $9.95 per month plan gives users a choice of a variety of services, such as a customized toolbar that travels with users, allowing them to choose from 60 buttons to directly hit favorite destinations on the Web. Yahoo! Plus also comes with anti-virus software via Computer Associates' eTrust EZ Antivirus, as well as spam control and Zone Labs' ZoneAlarm firewall protection. Users get 25 MB of e-mail storage and 50 MB data storage in addition to parental controls. According to a Yahoo! spokesperson, pricing and features can vary.

"Because Yahoo!'s first priority has always been to develop products and services that consumers value, we are dedicated to maintaining a thorough understanding of their needs based on real-time feedback and product testing," the spokesperson said. "Yesterday we began in-market testing for a premium services bundle that offers a variety of services from Yahoo!. Like many companies who utilize extensive marketing and research techniques, we will use this test in order to collect feedback and improve the bundle prior to any launch."

In addition to the core features of the service, users can choose to dabble in two of Yahoo!'s growing stable of paid services. Among the services on offer: games, auctions, bill-paying, encyclopedia, and financial reports. In addition, Yahoo! will offer Plus members discounts and special offers on other premium services, including a one-month trial of its personals section and a 20 percent discount on classifieds and extra e-mail storage.

The Yahoo! spokeperson said "only a small percentage" of Yahoo users have been offered the program, declining to detail how users were targeted for the promotion.

The pilot comes as Yahoo! seems to have righted its ship on chief executive Terry Semel's watch, showing surprisingly strong growth in its core advertising business. In October, the company reported quarterly sales were up 50 percent from a year ago, thanks to stronger-than-expected advertising performance, particularly through a paid search agreement with Overture.

Despite the bright spot on the advertising front, Yahoo! has continued its push to diversify its revenue streams away from an over-reliance on traditional online advertising, in favor of paid search, premium services, and B2B offerings.

Yahoo has used its technology infrastructure to roll out a number of paid services for companies, including Webcasting and a portal business. Yahoo! also struck a high-profile dialup and DSL agreement with SBC Communications.

The moves appear to be paying dividends. In the third quarter, marketing services accounted for 59 percent of the company's revenue, down from 76 percent a year earlier. Yahoo! reported revenue from listings was up 104 percent to $83 million. The category includes revenue generated from Yahoo!'s HotJobs unit and Internet access deal with SBC.

To further sweeten the pot for users to give Plus a try, Yahoo! is offering the first month free until November 15, 2002.

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