Free E-mail Coming This Fall

Two competitors may shake up the electronic communications market

This fall, consumers may have a new choice when it comes to E-mail. Two companies will be going head-to-head as they offer advertising-supported E-mail free to anyone who wants it -- a direct challenge to commercial online companies and Internet access providers now offering E-mail as part of their subscription services.

Such advertising-subsidized services could also offer a potential way to provide access to new information services without shutting out those who can't afford subscription fees -- the so-called information have-nots.

The companies, FreeMark Communications Inc. and Juno Online Services, are operating on the same basic premise, but are implementing their services in slightly different ways.

Both have chosen E-mail because of its wide use. "It's not the sexiest sounding Internet application, but it's the only one that everyone uses," said Charles Ardai, president of Juno, which is targeting consumers and small businesses.

E-mail also is the only interactive application that has a proven utility to consumers, said Robert Young, president of FreeMark. Other services, such as interactive chat, almost all have a very short life cycle, he said. Even the commercial services have "tremendously high" churn rates -- which is the rate that people cancel their subscriptions. Young previously was vice president of Delphi and spearheaded its entry into providing Internet services, as well the company's sale to Rupert Murdoch.

Prodigy has been using ads for years, but has very strict standards so users are not inundated with them, said Carol Wallace, program manager of communications for the company. Users may only see four to six ads a month and there certainly are some very vocal users who don't like the ads, but there are a lot of users who do, she said. Prodigy is increasingly moving away from straight advertising to more of a sponsorship model.

Wallace said she isn't concerned about FreeMark or Juno as potential competitors, while Pam McGraw, spokesperson for America Online, said it's too early to tell. Online services offer more than E-mail; users also get Internet access and access to databases and forums, so it's an unfair comparison, McGraw said.

FreeMark and Juno have an interesting business model, but they will face a challenge, Wallace said. Some users are very likely to say "Hey, I'll do anything not to have ads in my E-mail," including paying a subscription fee, she said.

Still, the advertising-driven model has some attractions, including using advertisers to subsidize access. With legislators debating the nature of "universal service" for the information superhighway, ad-supported services could be a way to prevent a feared division into information haves and have-nots. Such fears have already spawned a variety of proposals to regulate and subsidize access to the information superhighway.

The systems are approaching the market in different ways. Both FreeMark and Juno require that customers dial into their servers and then use their software, which acts as an offline reader so that users only need to be connected to download and upload mail. However, the two systems have different mail formats. Initially, the services will be geared to Windows users.

FreeMark is opting for a graphical presentation with three levels of advertising. Each message will be sponsored by one advertiser, so if a user receives 10 messages they will see 10 ads. The mail will come in a mailbox, with a stamp on it, said Young, but instead of a U.S. Postal Service stamp, it will represent the advertiser. When the envelope is opened, a small banner in the body of the message will state that the mail was paid for by a certain company. Users can then click on the banner to see a display page, which will be more like a print ad that can be used for promotions and coupons, Young said. More than 100 advertisers should be available for the fall rollout, he said. Because the system is geared to the novice user, FreeMark has traded some advanced features, such as encryption, for design. The features will be included in later releases.

Juno plans to stick to an E-mail format more familiar to users of other Windows software, and has features such as a list of mail messages rather than a display of envelopes. The company is attempting to create an E-mail package that contains the best features of other mail packages, such as format or the ease with which multiple copies can be sent, Ardai said. Two features planned for future release are encryption and the ability to attach non-text files, he said. The message screen will contain a separate panel for ads; the number of ads a user sees is linked to the amount of time the software is used, not the number of messages viewed. Therefore, in the time it takes to read 10 messages, a user may see two or three ads instead of the 10 offered under the FreeMark system, Ardai said

Both companies charge advertisers only for the ads that customers view, and both will use demographic information provided by users to target ads. Additionally, both companies said that they are very concerned about privacy. "We want to make a service that we would feel comfortable using," Juno's Ardai said.

Two things will determine FreeMark and Juno's success, Prodigy's Wallace said. First, they must show if anyone is really using a service just for E-mail. "I believe there is a segment that does [maintain separate E-mail accounts]," so that makes it a very feasible service, she said. Second, the functionality of the E-mail package must be very, very good to lure consumers, Wallace predicted.

If it is, this fall when FreeMark becomes available in select cities and Juno becomes available nationwide, they may become very common domain names. Both companies have more information about their products on the World Wide Web at http://www.freemark.com or http://www .juno.com. Juno also is allowing beta testers of its service to sign up via the Web.


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