BT dot.com: Paid E-Mail: Deliverance Or Doom?

BT DOTCOM: COVER STORY
PAID E-MAIL
Deliverance Or Doom?

Arvind Kajaria is trying to get his 2 million reluctant subscribers to pay for their e-mail. It could be a bold, profitable move-or his final one.

By Vinod Mahanta

It was a sultry mumbai afternoon on June 15, when Arvind Kajaria walked into his Ballard Estate office. Things were to get equally sticky inside the conference room. Kajaria, CEO of struggling Net portal 123india.com asked his business heads: shall we start paid e-mail? Everyone froze.

''The writing was on the wall,'' says Kajaria, who points to online giants like usa.net launching paid e-mail. Closer home, three Chinese sites 263.net, 21cn.net, and netezee.com have started charging, and Chinese biggie tom.com is also about to start paid e-mail services.

In the dotcom world, asking subscribers to pay for e-mail is close to blasphemy. Think about it. If your e-mail is free, would you suddenly agree to pay, especially in India, notorious for its skinflint surfers? But if you are a struggling dotcom-which 123india is, after layoffs and plummeting ad revenues-you simply may not have a choice.

A host of dotcom revenue models have gone the way of the dodo: b2c, c2c, and all those other smart acronyms. It was a matter of time before they considered cashing in their most popular services. ''It's difficult to sustain a venture purely on advertising revenues, and portals must broadbase their revenue streams,'' admits Kajaria.

Despite in-company fears, Kajaria, took the leap. Internal research indicated there was a need for ''premium'' e-mail services: with online calenders, more storage space, real-time quotes, personalised horoscopes, multiplayer games. After all, not so long ago, like e-mail, no one in India could conceive paying for plain, old water. Then along came something called Bisleri.

On July 6, an e-mail went out to 2 million subscribers of 123india mail, informing them that they might have to pay up. If this works, 123india could find a sure, stable revenue stream (e-mail is the killer app on the Net). If it fails, 123india could have made its final gamble. Abysmally low conversion rates to paid services could mean a direct hit for page views, which further means already low advertising could simply disappear.

The big picture doesn't look very good. India's net penetration is scant, with a user base of between 6 and 10 million, almost all of whom do use e-mail. If that sounds substantial, remember that the majority is students and people who access the Net from office, hence they will not pay.

Then, no sooner did 123india announce paid mail, Yahoo! and Indiatimes ran ads trumpeting that their mail would remain free. That means any paid e-mail service provider will always have to contend with a very low initial rate free accounts being converted into paid accounts. ''Conversions will also depend on equally good and free alternative products, and how many players move into the paid-services arena,'' says Vivek Bali, coo, sify.com, which is watching 123india's fate with interest.

Paid mass services like e-mail, listings, and auctions don't sit well with the Net's freewheeling, and free, credo. Various studies show that about 80 per cent of users say they will switch providers if they are charged for e-mail. Ominously, in China, conversion rates for the sites that launched paid e-mail have been hardly 2 to 3 per cent. Yahoo's listings fell by 90 per cent when it started charging for classifieds.

Thus far, 123india isn't bucking that trend. The company would not divulge the number of conversions. But ''strong suggestions'' from users sent its marketers scurrying to offer discounts. So now students, elder students, families with multiple mail ids can get a 50 per cent discount on the monthly fee of Rs 100, apart from another Rs 100 worth of freebies at cybercafes and cinema halls-which makes it, hush, free?

So who will pay? Executives who have experienced flashy corporate mail, small and medium enterprises, and corporates. ''There will be people who will pay, the important question for the sites is: are there enough of them?'' says, Matt Adams, a Hong Kong-based Media Analyst, in stock broking firm, CSFB. A low subscription base and lots of potential competition is a recipe for disaster.

Timing, says Adams, is critical in charging for services in India's uncertain market. Indeed, giant Rediff announced in April that it would start charging for some of its content, but has not been able to time the launch of service as yet.

And so, almost everyone is waiting to see what becomes of Kajaria and 123india, before charging for e-mail and the goodies that will come with it. Advertisers may be keen to target the premium segment-and thus, be charged premium rates.

What could happen is that plain vanilla e-mail service might remain free and the loaded versions will likely come for a fee ranging between Rs 50 and Rs 125 a month.

''Paid services will have to be bundled, (they must be) unique, and reliable. The bundle will also have to be marketed like any other product so that the customers pay,'' says Sunil Lulla, CEO, Indya.com, which plans to launch a similar bundle of paid services shortly.

Archiesonline and Indiatimes have launched an online product, Myclub, which allows customers to send 100 Archiesonline e-cards in one year, for a paltry Rs 399. Even VSNL has started charging Rs 600 per year for its corporate e-mail services.

The irony is that it's the smaller players who might have to turn pay. Giants Yahoo! and Hotmail might never go pay, because they get revenues from mass marketing and advertising (Though Yahoo does charge for additional space). But relative small-timer usa.net was prompted to charge for its e-mail services precisely because it did not have a large enough user base.

So, if paid mail gets past this conundrum, 123india could get a fresh lease of life. Failure could mean death-till the arrival of next renewal period.

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