No free lunches: Paid services are here to stay

NEW DELHI: Email service providers will go ahead and charge their users and contrary to popular perception there will be many takers.

Let's understand the scenario in perspective. The dotcom boom that emphasized on eyeballs had everything going but the revenue models. The big thing dotcoms made of generating business by selling database belied expectation. Similarly e-mail providers also need more than just a subscriber base to sustain business.

Ever since e-mail service providers usa.net and 123india.com announced their intent to charge users there has been a backlash with a significant number of users migrating to other free services. However, it is a reality that e-mail and chat, long taken for granted as free services are not likely to remain so. But hang on, it's not as bad as it sounds.

Not everything on the Internet will be charged except a range of premium services, which could be packaged differently by different providers.

At the same time, it is also a reality that e-mail is the major driver for Internet penetration in India with 95 per cent of the Internet users accessing e-mails. The other two drivers for Internet usage is job-seeking in rural areas and pornography in urban areas. Therefore e-mail service providers were technically sitting on a gold mine.

ISPAI secretary Amitabh Singhal says, "It is an established fact that the Internet industry is not doing well. Everyone is dying to make money in every possible way. It is just a question of waiting for the right time. I see a possibility of even ISPs charging users for using their e-mail accounts." While service providers like usa.net at the global level and 123india in India have taken the initiative, others are sitting on the fence watching the outcome of such initiatives.

For competitors in India like Rediff.com, it has been a windfall gain. Sources at Rediff say, "We have noticed a phenomenal increase of 20-25 per cent in registration at our site and it is just no coincidence. 123India.com and usa.net users have migrated to our site." Analysts believe that Yahoo and Rediff, both with dominant mindshare in India, stand to gain from such migration.

Industry opinion is unanimous that paid services are here to stay. Sure there will still be many free service providers but there will be premium services built around it. While 123india.com has offered paid e-mail service with premium services built around it, Rediff is expected to offer free e-mail service and offer premium services built around it.

Premium services will come in the form of POP downloads; spam filters; higher storage space (123india.com offers 10 MB of space to its premium customers and usa.net offers 25 MB of space) scheduling, select groupings, calendaring, and alerts for mails and schedules. In fact the scope for innovative services in this space is simply unlimited!

But is the Indian user willing to be game? Once again, there is industry unanimity that the Indian user would be willing to pay. For one, e-mail has become a habit and no one would mind paying a little bit for getting quality. Second, despite assurances from service providers, they will focus on premium customers neglecting free users in the process.

Time and again Indian customers have displayed a willingness to pay for quality service.

Cyber Media, BMG group editor Prasonto Kumar Roy says, "PObox.com has been an extremely popular service in India since its launch in 1995. So much so they had a special focus on India and set up an office here while they were operating through partners in other countries." PObox is a service that redirects mails to a single mailbox and was a particularly useful service in the early days in India when email addresses were very lengthy. At $15 per annum, it still has a loyal subscriber base.

Typically premium services have been popular among the urban educated users. Apprehensions abound that paid e-mail service could deter rural and semi-urban users and prove detrimental to Internet penetration. Such fears are pooh-poohed by 123india.com senior manager Sanjeev Swarup, "In fact, we are banking on that profile of users. Typically such a user would be a serious user using it for professional or educational purposes. As such quality of service for such a user would be high and would willingly pay a premium as alternate means of accessing the same amount of information would cost him a packet." And it seems perfectly logical reasoning. Considering that rates are expected to be very marginal there are going to be many takers.