Is the Web's Free Ride Switching to a Toll?

The sites they are a-changin' so you have to surf harder for the freebies.

Tom Spring, PCWorld.com

On Halloween, thousands of little kids dress up as Harry Potter, knock on their neighbors' doors, and get free candy. The Web has worked pretty much the same way.

But a stroll through last week's Internet World Fall 2000 suggests online freebies may be headed for a ghoulish fate. This year it was hard to miss the show's somber tone and its emerging emphasis on fee services over free ones. As the trend turns, you'll find yourself getting charged for what you previously found free online.

The dot-com freebie sector has suffered this year. Providers of free Internet access have seen a string of failures, such as iFreedom.com, Freewwweb, and WorldSpy. Among Web services, calendar site PlanetAll.com was bought--and closed--by Amazon.com. America Online recently acquired and shut down free voice portal Quack.com. Free Web file-swapping company Scour recently closed its digital doors. (See "WorldSpy Closes Its Doors" and "AOL Finds a New Voice.")

Time to Pay Up Online?

Dot-coms like FreeDrive.com are typical of companies getting serious about their business plans. FreeDrive.com still offers consumers 50MB of free file storage, but tries to entice you to upgrade to a new tiered pricing plan that starts at 100MB of online storage for $10 monthly, up to 1GB for $100.

"Free is important, but consumers need to recognize we need to make money to stay in business," says Tim Hallgard, FreeDrive.com business development manager.

Many unprofitable online companies had pinned their hopes on online advertising. But that route hasn't led to riches, forcing many to rethink their business strategies.

Search utility firm Navixo is among them. Navixo, which made its debut at Internet World, offers a Web-surfing aid intended to streamline Web site navigation by dynamically generating site-specific browser skins that automatically change by site.

Navixo planned to create custom browsers for hundreds of sites and spend millions marketing to consumers, says Nadav Goshen, Navixo's president. Instead, Goshen pared back the number of custom browsers to 100 and is soliciting businesses to sign on with Navixo before customizing their sites.

"Nobody cares about how many users you have," Goshen says. "We are under pressure to make money, not give away our technology. Things have changed a lot in the past year."

Goshen originally envisioned assembling several million users, then cranking up the ads or possibly being acquired by a portal shopping for customers.

"Everybody wants to charge something for their services, but nobody wants to pay for anything," says Jon Abeles, vice president of corporate relations at UstreamIt. The company invites anyone with a Web camera to record and store a 45-second streaming video message on its site. You can e-mail friends the location to view your message.

UstreamIt still offers free video messaging, but trimmed its free VideoMessage.com offer. To save money, it reduced the maximum length of a video message to 45 seconds from five minutes, and serves up twice as many banner ads to video viewers.

End of the Free Ride

Other companies have turned their products from freeware to adware.

Babylon.com's popular single-click information tool, which offers definitions, translations, and conversions, used to be ad-free. The site now has a new plan for profitability, running banner-like ads in its Babylon.com software client. At Internet World, the company announced it will showcase Encyclopedia Britannica's content (for a fee). It also now collects royalties when visitors click through its links to Amazon.com and make purchases.

Babylon.com Chief Executive Officer Shuki Preminger bristles at the suggestion that its money-making plans may affect Babylon.com's quality of service.

"The pressure is on everybody doing business on the Net to prove their company can make money," Preminger says. "We will."

The Internet may, indeed, be a lot like Halloween. Just as dot-coms are finding a fragile future giving away the store without making a dime, you don't give packs of M&Ms to neighborhood kids every day of the year. Not unless, of course, those kids want to rake the leaves in exchange for a Hershey Bar.