7/10/2000 08:50
AM
Yahoo is turning to
free Internet access as a way to grab new Net users.
The Web portal said today
it will bundle its services with Spinway, a free ISP, to sell packages to
companies hungering to offer Internet access. Through those others
companies' sites, Yahoo expects to increase its own traffic.
Yahoo will provide its
content and Web services, including its My Yahoo personalization feature,
free email, instant messaging, and video and audio streaming. Combined
with Spinway's free ISP, the partnership will enable Yahoo's marketing
partners and other companies to offer their own online services.
Together, Yahoo and
Spinway have been eyeing deals with offline retail chains for some time.
The companies last December partnered with Kmart's Bluelight.com
e-commerce site to offer free
Internet access and content and has since signed up 2.5 million users.
And, as previously
reported by CNET News.com, Yahoo and Spinway may be close to striking
a deal to offer a free ISP service for toy retailer Toys "R" Us.
The deal underscores
Yahoo's desire to tap a large reserve of potential new customers:
mainstream Americans. The idea behind offering an ISP service is to not
only to attract more eyeballs, but also to develop a closer relationship
with them. When people sign up for the service, their start page will
include Yahoo content. The portal giant hopes this will turn them into
repeat, daily users.
Unlike its rival America
Online, which has 23 million paying members, Yahoo depends heavily on
branding and marketing to lure Web users to its site. Although Yahoo
continues to be one of the most popular destinations on the Web, its
competitors are just one click away.
According to Media Metrix,
Yahoo was the No. 3 Internet destination in May with nearly 48.9 million
unique visitors. It trails only behind AOL and Microsoft sites, with 59.2
million and 49.3 unique visitors, respectively. "Yahoo can definitely
create an advantage by becoming more closely tied to its users'
experience," said Jordan Rohan, an analyst at Wit
Soundview.
Like other free ISPs such
as NetZero and CMGI's 1stup.com, people who sign up for Spinway are
required to view and click on advertisements. Spinway relies not only on
banner ads but also feeds video-streaming ads. It also touts it ability to
let advertisers target their messages to consumers.
But the free ISP model
remains in question. The cost for managing an ISP network are high, and
many question whether advertising can generate enough revenue to wow
investors. Added to the scrutiny is the business of online advertising in
general, which some financial analysts are beginning to poke at to see if
it's working.
"The economics of
the free ISP business are bleak," Wit Soundview's Rohan added.
"It's very difficult to develop an advertising and commerce-based
model which supports the cost of access that the free ISP bears."
Yahoo is not the only
company that has set its sights on retail chains for growth. AOL and
Microsoft have both struck deals with retailers such as Circuit City and
Radio Shack to market their online services to shoppers.
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CNet.com. All rights reserved. This material may not be published,
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