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Free ISPs based on ad-driven model may not work -- Indian cos better watch out! 

Anil Wanvari  
Net Zero.net, the free US ISP, about which epitaphs were written about evenbefore it started, is still around. More than 16 months after it was flaggedoff in the US, its subscriber count is more than three millionsubscribers.

But is it still the same? Yes, it is. Will it stay the same? No one expectsit to. The doomsayers are coming out of the closet again. Analysts say thatNet Zero is getting just $2.40 cost per mille for its banner ads. Which isone-fifth to one tenth of what it expected. And half of what other onlineservices are getting.

Industry watchers are questioning whether users are really using the freeInternet access service so often. Less than half of the users log into theNet using Net Zero; they are still using their paid for Internet accessaccount. NetZero needless to say is bleeding badly every month thanks to ahuge ad campaign in a bid to retain its subscribers. But it has lots ofventure and public funds at its disposal to plod on; its market cap is at ahefty $2.2 billion.

One analyst has warned that the free ISP may collapse if it does not changeits business model. Ads alone cannot support the service, it points out,because it is not the best ISP access going around. The company has to comeup with alternate streams of revenue: subscription could be a good bet,alliances another, e-commerce a possible third. For the third to work, itwill have to get people to use it for access in the first place.

Subscription may not work totally because other earlier free ISPs arefinding it difficult to convert their free subscribers into paid ones.

Alliances, it has struck in recent times with corporates in the hope ofbuilding up its subscriber base. The analyst has said that Net Zero willhave to adapt. The lesson to be learned from its experience: free ISPs basedon the ad driven model may not work. Are there are any lessons to be learntfrom the Net Zero experience? Free works in the world of the Net.

But free has to bring along with it value; value that the customerperceives. Nimbus Communications has been threatening to give away freeInternet access. But it has not matched its threat with action as yet. Thefreebie tag may not work forever though. It will have to change its model ata later date.

Glitches of Online shopping
A lot of people have cribbed about Rediff.com's non-delivery of goods andthe poor shopping experience they have had with its mall.

Deliveries have been late in coming or products have been out of stock. Butthe portal is working hard at getting its act together and chief AjitBalakrishnan has made it his leitmotif not to dissatisfy even a singlecustomer. That will take a lot of work because of the immaturity of theIndian Internet market.

But what is the international experience? The Boston Consulting Group saysthat at least four out of five online shoppers in the US, which is supposedto be the bastion of online shopping, have encountered one botched purchasewhile 28 per cent of all purchases fail. 48 per cent of those surveyed saidthat the sites were taking too long to load, 45 per cent said they could notfind the products they wanted because of poor design and navigation.

Poor fulfillment and technical snafus were another complaint. The BostonConsulting Group said that six per cent of consumers said they hadblacklisted the real world outlet of an online store because of a poorvirtual shopping deal. 23 per cent said that they would just ban the onlineoutlet while 28 per cent said nyet to online shopping totally. Mind youconsumers in the US are getting impatient. The expect a home page todownload within less than 13.2 seconds, to find a product within 5.8 minutesto locate a product, 4.5 minutes to complete the product, and 6.4 days forthe product to reach their doorstep. Net stores in India will have to watchout. It won't be long before even the Indian consumer becomes moredemanding.

Indian sites lose out to Asian counterparts in B2C segment
Here's another morsel from the Boston Consulting Group. Business to consumer(B2C) sites in Asia are booming. South Korea is leading with 396 sites whileChina had 339 e-commerce portals. Taiwan had 168 B2C sites while Malaysiaand Indonesia had 34 and 32 B2C portals. 11 per cent of them were mallswhile computer product shops totted up to 10 per cent. The rest of thestores sold books, magazines, cards, gifts, flowers, travel products orfinancial services.

Here's the sad part: India sites do not figure in the list of e-commercesites at all in Asia. All you wannabe Webpreneurs, are you listening?

The author is CEO of http://www.indiantelevision.com, a portal on thecable, satellite and terrestrial television industry. Emai l:television@vsnl.com, television@hotmail.com

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