Fri, Oct 10, 2003 - Page 10 News List

Fee-based services may be cash cow for Internet portals

BY JESSIE HO  /  STAFF REPORTER

Dotcom businesses are regaining lost ground, as Internet portals reported better-than-expected online advertising revenues and begin to offer other chargeable services, industry officials said yesterday.

"I'm glad to announce that our [Yahoo-Kimo's] third quarter revenue this year has increased 28 percent over the second quarter," Rose Tsou (鄒開蓮), general manager of Yahoo-Kimo Inc (雅虎奇摩) said at a press conference yesterday. Tsou declined to say how much revenue they have garnered during the third quarter.

Yahoo-Kimo is the nation's largest Internet portal, with around 6.86 million visitors in August alone. The company increased its advertising revenue by 23 percent in the third quarter, Tsou said.

She refused to disclose the amount the company earned from advertising. Although 82 percent of the company's revenue in the second quarter came from Internet advertising, Tsou said, the amount of total revenue increased in the third quarter, and advertising only accounted for 69 percent of the total.

Tsou was speaking to reporters at a ceremony marking the company's second anniversary in Taiwan. US-based Yahoo entered the Taiwanese market in January 1999 and merged with Taiwan's No. 1 local Internet portal, Kimo, in November 2000.

Yahoo-Kimo began offering fee-based services in late 2001. Tsou said the company's revenue from such non-advertising sources is expanding, up from 18 percent of the total revenue in the second quarter to 31 percent in the third quarter.

"I think the progress made in non-advertising business shows that more and more users are willing to pay for online services," Tsou said.

Yahoo-Kimo services for which users pay include online fortune telling, graphics and ringtone downloads, and online gaming. To boost its bottomline, the company is considering charging for some services that are currently free for use, Tsou said.

For example, Yahoo-Kimo is mulling ways to turn its online auction site into a fee-based service, Tsou said without elaborating. The auction site is one of its most popular sites, generating an average NT$1 billion in transactions per month.

One analyst said the fee-based business plan might be as profitable as the company hopes.

"The key to success will be the price," Tiffany Duh (杜慧婷), a researcher at InsightXplorer (創市際), an online-market research firm.

"While most customers are now more willing to pay for online services, companies shouldn't be unrealistic and expect to make big money from the services," Duh said.

Duh said the current payment systems that Internet portals adopt are not as secure as customers may believe.

In addition, most people are still reluctant to pay for services that used to be free.

Thus, offering economical prices to consumers is important, she said.

Offering products that are appealing enough to lure customers is another pivotal factor, said Vicky Tseng (曾薰儀), public relations manager at PC Home Online (網路家庭), the nation's second-largest Internet portal.

PC Home charges users who subscribe to its newsletters, but found function-oriented items, such as foreign language courses and investment advice, are more popular than information services, Tseng said.

"You just have to determine what users really need," she said.

Both Yahoo-Kimo and PC Home declined to offer a figure for their number of paying customers.

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