Dotcoms start charging for services

Call it the end of the free lunch. In recent years, consumers have become
used to feasting on online freebies of all sorts: news, share quotes, music,
e-mail and even speedy Internet access. These days, however, dotcoms are not
making news with yet more free offerings, but with layoffs--and with
announcements that they are to start charging for their services.

Content sites pioneered the trend. To gain access to Variety.com, the online
version of the film and music-industry news magazine, as well as to some
sections of TheStreet.com, a business-news website, users now have to pay an
annual subscription of $59 and $199.95 respectively. Salon.com, a political
and literary online magazine, offers its readers a choice: either put up
with bigger advertisements or pay a subscription of $30 a year. Now other
types of electronic offering, such as PayMyBills.com, are also morphing from
free to fee.

The company that everybody is watching is Yahoo!, an online media giant. If
the Silicon Valley company, which attracts nearly 190m users a month, cannot
get people to pay up, few other consumer websites will be able to manage it.
Faced by a shortfall in advertising revenue, Yahoo! is now trying to make
money elsewhere. Earlier this month, it introduced a real- time share-quote
service for a monthly fee of $9.95 and announced that it is to market an
online music subscription service called Duet, which will be launched by
Sony and Vivendi Universal this summer.

It comes as no surprise that Internet firms should be looking for new
revenue streams. Although dotcoms have mostly been depicted as the epitome
of entrepreneurship, many are in fact the product of virtually free access
to capital. Venture capitalists, equity markets and banks pumped billions
into online start-ups--to reach as many "eyeballs" as possible and then
supposedly "monetise" them by selling advertising. But those days are over.
Now, these firms have to come up with more plausible business models.

This will not be easy, especially for content providers. The recent trend
notwithstanding, there will always be a lot of free material online, with
which paid sites must compete. Volunteers are producing more and more
Internet content, for example in the form of "web logs", online diaries
about anything imaginable, which are sometimes better than professional
journalism. And many commercial sites will resist the urge to charge. Print
publications, for example, are unlikely to scrap their free online editions
soon, because these generate a lot of new print subscriptions and have (so
far) only slightly dented the publications' offline businesses, if at all.

Can pay, but won't

The real problem, however, appears to be that Internet users have come to
expect online services to be free, at least in America. Only pornography
websites, and the online edition of the Wall Street Journal, have so far
attracted a large number of paid subscribers. Consumers' unwillingness to
pay (see chart) appears to be particularly pronounced when it comes to
services that were formerly free. When Yahoo! started charging fees for its
auction services in January, for instance, listings dropped by more than
80%.

Even those users who are willing to open their wallets are loth to make
small payments here and there, preferring instead to pay a flat fee, says
Andrew Odlyzko, a researcher at AT&T Labs. This aversion to being "nickelled
and dimed" does not bode well for sites such as Yahoo! that want to charge
extra for this or that premium service. Instead, it favours the business
models of companies such as AOL, whose subscribers pay a flat monthly fee
that gives them access to most of AOL's content and services.

So what is a struggling dotcom to do? The best hope is just what most,
including Yahoo!, are doing: to cut costs, broaden existing revenue streams
and tap into new ones as much as possible. Some Internet companies, such as
CNET Networks, have already made more space for advertisements. Others have
syndicated their content and services to other websites or are trying to
make money from e-commerce. Interestingly, the start-ups that seem to be
best prepared for these changes are those that, for one reason or another,
were not showered with cheap capital and always had to struggle to make ends
meet. An example is PlanetOut.com, a website aimed at gays and lesbians.

Many Internet start-ups will end up closing their virtual doors--or being
bought by large traditional companies, once valuations have dropped low
enough. It would be ironic indeed if many erstwhile leading lights of the
"new economy" ended up as loss leaders of some boring old-economy
corporation.

SOURCE: The Economist via DigAfrica
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North Africa: Local language domain names selling rapidly

Nearly 75,000 websites to date have registered an Arabic character URL
address using any of several technologies now available to bypass the Latin
character-based Internet domain name system. Most addresses were registered
over the past six months, since the Dubai inaugural meeting of the Arabic
Internet Names Consortium (AINC). A non-profit organisation based in Los
Angeles, AINC comprises member companies offering unique Arabic domain name
solutions. They meet periodically to agree on standardised address suffixes
in Arabic, even as they fiercely compete to win a critical mass of
registrants. A frontrunner has already emerged, increasing the likelihood
that its technology will become the region's standard.

Each company offers a unique Arabic character domain name which functions as
an alternative route to a website with an existing Latin character address.
The companies' differing business models are informed by their respective
technologies. Providers of a front-end or "keyword" solution, which re-maps
Arabic characters into ASCII code, face the formidable task of uploading the
requisite software application to individual users. Providers of a back-end
solution need only sign on Internet Service Providers (ISPs) and backbone
providers, but risk total obsolescence if an incompatible solution wins the
day.

The growing prevalence of Arabic character domain names stands to boost
Internet adoption across the Middle East and North Africa. Viewed in a
broader context, the "Arabisation" of web content and computer interface are
major drivers of Internet uptake. New users will hail mainly from the
region's lower/middle-income classes, where foreign language mastery will
remain a luxury but computers will become more easily accessible. A
meaningful contingent will also hail from the more affluent sphere,
particularly in the Gulf states, where proficiency in English is not
necessarily a prerequisite to the maintenance of a comfortable standard of
living. The latter group has had ample opportunity to use the Internet but
been deterred by a relative lack of Arabic-language content.

Demand for Arabic character domain names is difficult to forecast because of
a major wild card: non-Middle Eastern companies wishing to adopt an Arabic
name in order to address the region's Internet users. We forecast that the
market for names within the Arab world alone will be worth $126m over the
next two years. (This figure stems from our research on public- and
private-sector Internet adoption and the ratio of subscribers to domain
names. It also accounts for a likely reduction in domain name registration
fees.) Forty-five percent of the demand will come from Egypt, the most
populous Arab country, where the government aims to make dial-up Internet
access available free by October 1st 2001. Another 43% will come from the
Gulf Co-operation Council (GCC) states, led by Saudi Arabia and the UAE.
Most of the remaining 12% will be divided between North Africa and the
Levant, with Morocco and Lebanon contributing the lion's share.

The major back-end solution provider for Arabic domain name registration is
Nativenames.net, a California-based technology and Web development company.
Its business model involves the installation of an Arabic platform add-on
free of charge on the region's ISP servers. A server needs to run Windows
2000 or Arabic-enabled Windows, or use version 9.1 of Berkeley Internet Name
Domain (BIND), an implementation of the Domain Name System protocol.

The company authorises portals to sell its Arabic domain names at the
standard rate of $35, from which it takes a considerable cut. In countries
where there is a single backbone provider, such as Morocco and the UAE,
Nativenames need only sign on the backbone provider; the ISPs and, in turn,
their subscribers, automatically fall into place.

For the countries in which additional legwork is required, Nativenames is
well on its way, having signed on all but two of Egypt's 70-odd ISPs, three
out of nine in Lebanon, and five out of six in Jordan. Saudi Arabia's
Internet backbone provider and regulator, the King Abdulaziz City for
Science and Technology (KACST), has yet to sign on, making Saudi Arabia the
company's major blind spot. In the two months since its launch, Nativenames
has registered more than 50,000 domain names.

Of the major players in the Arabic domain names space, Walid.com, with
13,000 names registered and counting, is the leading front-end (download)
solution provider. I-dns.net offers a rival back-end solution and dominates
the Chinese character domain name space. Its strategy of signing on ISPs to
exclusivity agreements seems to be less effective in the Arab world,
however.

All these solutions may become obsolete should the powerful non-profit
Internet Engineering Task Force (IETF) decide to reengineer the Internet's
base character set from ASCII to Unicode. This and other eventualities may
lead the current Arabic domain name solutions players to try out creative
spin-off ventures, enabling them to leverage their knowledge base in other
applications. Such opportunities abound in an era of blurred linguistic,
cultural and national boundaries. Western governments stand in immediate
need of effective transliteration solutions for immigration and
naturalisation databases.

Large pharmaceutical and food companies require advanced linguistic
technologies to manage massive lists of contacts, clients and employees in
Arab countries. In a region where the population will double over the next
25 years, the management of names and other proper nouns is a solid growth
industry.

SOURCE: Pyramid Research via DigAfrica
------------------------------------------

Worldwide competition forum to be created

The formidable transactional costs of mergers and acquisitions could be
diminished if a new global competition initiative succeeds. A forum is to be
created with the support of the European Commission and senior competition
officials from the US and developing nations.

EU competition commissioner Mario Monti assured a legal conference in
Washington: "It is not our aim to establish a new 'talk shop' or to
duplicate or substitute valuable work that is carried out, and must continue
to be carried out, in international organisations such as the WTO, UNCTAD or
OECD."

Mr Monti's speech followed agreement on the need for a "global competition
forum" reached at a gathering of antitrust officials and competition
practitioners in Ditchley Park, England. The organisation is intended to
promote greater coherence and co-ordination among national competition
policies, with a formal launch expected next autumn.

"Procedures regarding reporting thresholds, notification and informational
requirements, fact-gathering processes and other issues could well benefit
from discussions among competition authorities and other competition policy
professionals working together to identify best practices," said Merit
Janow, a professor of trade and economics at Columbia University, in a
report for the international bar association (IBA).

Business has lobbied intensively for an organisation that would lower the
costs of mergers and acquisitions (M&A) activity, with implications for many
national jurisdictions. "Agreement on streamlined procedures could lessen
the administrative burden on crossborder mergers," said Johan Ysewyn, a
partner with Linklaters in Brussels. "There is also significant variation in
deadlines, making the whole process extremely burdensome."

Governments, on the other hand, believe the forum will prove valuable in
their fight against complex international cartels. Particular emphasis will
be placed on the concerns of developing nations with emerging competition
law regimes, said J William Rowley of the IBA.

The US administration, however, has not yet expressed its support for the
initiative -- but the Commission is trying hard to convince it. "I believe
that the main mission of the forum should be to put in place an inclusive
venue where those responsible for the development and management of
competition policy worldwide could meet, engage in constructive dialogue and
exchange their experiences on enforcement policy and practice," Mr Monti
told his audience in Washington.

SOURCE: Business Europe via DigAfrica

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