One step forward: And a Giant Leap backwards for
Technology Access?
Anyway, while all low-income disabled persons who
desperately need these services are holding their
breath, we all want to thank you Mr. Goldstein and all
other humanitarian minded CEOs for your progressive
outlook on life – by comparing us disabled to “’…The
worst drunk customers’ – ‘That you are going to kick out
of the bar.’”
Rudy
AADAA
.
.
.
---------------------- Forwarded Message: ---------------------
From: Ruth Burchell <[log in to unmask]>
To: [log in to unmask]
Subject: NYTimes.com Article: Days of Plenty Are Over at Free Internet Services
Date: Mon, 1 Jan 2001 13:57:51 -0500
This article from NYTimes.com
has been sent to you by Ruth Burchell [log in to unmask]
EASI SUBSCRIBERS
Happy New Century everyone. Here is an article on development of internet
access.
Ruth Burchell
[log in to unmask]
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Days of Plenty Are Over at Free Internet Services
http://www.nytimes.com/2001/01/01/technology/01FREE.html
January 1, 2001
By LAURIE J. FLYNN
It is official: the era of unlimited free Internet service is over,
an apparent victim of its own popularity.
The announcement last week that Bluelight.com would limit the
number of hours subscribers could spend on its site signaled the
end of an era, albeit a short one even by Internet standards.
Over the last couple of years, dozens of companies announced
unlimited Internet access for no charge, the only catch being the
barrage of advertising that subscribers were forced to endure.
But like Juno Online Services and NetZero before it, Bluelight
announced that it could no longer support the strain that active
users were putting on its network, with a fraction of its
subscribers accounting for the large majority of its traffic. Just
the week before Bluelight.com's move, NetZero, the market leader,
announced that it would start charging subscribers $9.95 after they
reached 40 hours in a given month, saying that 12 percent of its
subscribers were accounting for half of its telecommunications
expenses. And earlier this year, Juno announced a tiered pricing
program, whereby customers who pay $9.95 a month receive better
service, get more reliable connections and view fewer ads.
"The pure free-I.S.P.-for-everyone experiment is over," said Mark
Goldstein, chief executive and president of Bluelight, a privately
held company that is majority-owned by the Kmart Corporation. Mr.
Goldstein said the timing of Bluelight's announcement was not
coincidental: his company was trying to head off a migration of
NetZero's heaviest customers to Bluelight's free service.
Bluelight.com, he said, did not want them; nor did it want the
heavy users it already had.
"It's like having a late-night club with all the drunks they're
the ones you're going to kick out of the bar," Mr. Goldstein said.
"They make the worst customers."
Mr. Goldstein said that some Bluelight subscribers had been using
the service to run their businesses, requiring nearly constant
access. NetZero and Juno have reported the same behavior.
But while disproportionately active users may have struck the
final blow to the free I.S.P. movement, the real culprit was the
dismal climate for online advertising. A year ago, when free
Internet service providers were just beginning their services,
advertising was abundant as was venture financing. Today, there
is relatively little of either one for many dot-coms.
Last month, Spinway, a San Francisco-based company that provided
the underlying technology for Bluelight and free online services
from Barnes & Noble and Costco, announced that it could not raise
any more capital and was going out of business, handing many of its
assets over to Bluelight, its largest customer.
That announcement followed shortly after the demise of 1stUp, a
Spinway competitor owned by CMGI, the Net holding company. 1stUp,
based in San Francisco, was the technology behind free service from
Alta Vista and Excite@Home's FreeLane, along with dozens of smaller
niche services, like Gay .com, Senior.com and Afronet.com. Shortly
after 1stUp's announcement, Alta Vista said that it was canceling
its free service; other 1stUp partners are still hoping to find a
home someplace else.
Back in July, Juno gobbled up two competitors, Freewwweb and
WorldSpy, both of which declared bankruptcy and then began
referring subscribers to Juno's site.
That leaves NetZero and Juno still standing as the industry
leaders, each with 3.7 million active users, along with a handful
of miscellaneous Web retailers still hoping that sales of
merchandise will make up for their free Internet services. But even
the two remaining major free providers are walking on rather thin
ice these days: like many Internet stocks, shares of both Juno and
NetZero, which are embroiled in patent lawsuits against each other
over the way ads are displayed on computer screens, have been
pummeled in recent weeks. Shares of Juno, which traded at $41.63 in
January, closed under a dollar last week. NetZero was also under a
dollar, down from a 52-week high of $36.38.
Yet rather than disappear entirely, analysts predict that free
I.S.P. services are likely to continue in some form, for those
customers who do not overuse them. Many analysts say that tiered
pricing programs like those announced by Juno and NetZero are the
future, and the challenge now is to convert users of the free
service into paying customers.
Not that long ago, Internet customers bought service by the
minute, much like long-distance telephone service for upward of
$100 a month for active users. But by the late 1990's, most
Internet providers in the United States had modified their business
models, switching to flat monthly fees in an effort to gain more
revenue from advertisers and electronic commerce and less from
subscriptions. It appeared for some players that eliminating the
subscription fee altogether was simply the next step. Adding it
back now appears to be yet another one.
But it could be that major fee- based services like America
Online, the Microsoft Network and CompuServe will end up as biggest
beneficiaries of the free-I.S.P. shakeout. All three already offer
tiered service, with limited plans priced as low as at $9.95. As
more active users are removed from free services, analysts say,
they may migrate to those more established names rather than pay
the amount to a relative newcomer who might not offer the same
level of service.
NetZero, however, has considerable brand recognition these days,
the result of an advertising blitz that includes television spots
during N.B.A. games, and the company's chairman and chief
executive, Mark R. Goldston, says the company is signing up new
subscribers at a record pace.
Bluelight, which did not announce tiered pricing but rather that
it would remove heavy users entirely, is in a category of its own.
Nine out of 10 of its subscribers got their free Bluelight.com
CD-ROM starter kit at a Kmart store, meaning that most of its
customers are already Kmart shoppers and thus potential online
customers. "E-tailing is just another way for a retailer like Kmart
to reach its customers," Mr. Goldstein said, rather than a service
intended to exist independently.
In the meantime, those start-ups that have survived this far are
simply relieved to still be standing, amid the rubble of their
competitors. "It started out as a consolidation and evolved into a
shakeout," Mr. Goldston said. "We didn't want to be the last man
standing we wanted to be the victor."
The New York Times on the Web
http://www.nytimes.com
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