portals and free internet services (1999)
If the thing to have in the TV business is your own TV station, the thing to have on the Internet is a portal. It is a fact you might try to impress on the kids, “Get yourself a portal”, you say, “it’s the way to go”.
Online provider AOL might have overheard but for the fact the company seems to have its success inbred. Their bid for Netscape Communications, owners of the world’s second most popular browser, but an astonishingly popular home page at home.netscape.com is but one episode in a trend. The home page, alongside others such as Yahoo, Lycos and Infoseek, is a portal to the things that surfers seem to want and the places that advertisers want to rent. That the way to go is AOL, is shown by the company’s ranking at the top of the portal polls: the other month it gained almost 50 million visitors some of whom will have clicked on ad banners to bring in the revenue.
No longer is the key business renting modems for others to dial into, it is more about owning where people look. And when, every couple of months AOL recruits a million members to its service, it seems ever more the case that clicks on adverts count for more than their subscription fees.
But were, I wonder, any of the online providers prepared for the explosion of free Internet services in the UK? Whereas, to date they had enjoyed advertising revenue and the subs on the connection – now things really moved. There must have been crossed fingers as they watched Freeserve, owned by electronics retailer Dixons, offer a totally free connection to the Internet. In what seems like months, Freeserve overtook AOL’s subscription service – in fact, in a survey of recent buyers Freeserve gained twice as many new members than did AOL. Around them apparently new services moved in, offering even more than free – from multiplayer games services to the full ISDN connections and unlimited web space from Free-online. What funded this was the allegedly ‘huge’ amount of money that can be extracted from the telephone system because of the high price of local calls. It works like this: if you can stump up £50k cash, firms such as Easynet will set you up as a free service provider. On some reckonings, you start to make money with 10,000 users.
If the States have enjoyed flat rate or basically free local calls to the envy of many, for once some history was made in the UK. As long as the glitch in UK phone billing remains, free services will continue. The prospects are unsure but never mind, the effects on the ecology of the UK’s domestic Internet market are well underway: Richard Branson’s Virgin.net moved from subscription service to free; Rupert Murdoch’s British Sky Broadcasting recently joined the free fun almost in the same breath as BSkyB offered £300m worth of free set-top boxes for digital TV. In another breath his newspaper The Sun, launched its free CurrantBun.com service with a rack of sign-up CD-Roms in the supermarket. Microsoft’s MSN subscription service teamed up with BTClick to go free while telling paying customers that they could join the free service or continue to pay for the service if they wished too. Going further, a completely free service called screaming.net arrived from electrical goods retailer Tempo and telecom firm LocalTel. Even the phone-calls were free – provided they were off-peak.
Here, in the land of free, there are concerns that AOL’s move to almost halve UK subscription charges could pull in the new business.
In an entirely unrelated move AOL have teamed up with Hughes’ DirecPC in the US to offer broadband content delivered by satellite. DirecPC, was one of a range of promising high speed Internet delivery mechanisms which could not have found a more charmed partner. Set-top boxes powered by National Semiconductor’s MediaGX(tm) processor, and manufactured by Philips will be used by the planned AOL TV. An Internet enhanced television-viewing experience, without the fuss of a personal computer is what is promised. The processor can handle the multimedia plug-ins and applets found on many Web sites and allow AOL to offer a range of interactive services from its set-top box.