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Monday, September 16, 2002

Online Subscriptions in their Infancy?

Terry Semel, Yahoo's CEO, just told Fortune Magazine that "every dollar that comes in from any premium service is incremental to us. Last year we had zero. Literally."

Yikes! Well, better late than never, one supposes.

Looking at all the interesting, useful, fun stuff that Yahoo is just beginning to charge for can open your eyes to the possibilities. Remember when Hotmail and Yahoo Mail had just come out, and you and three friends were the only ones to bother with them? Now, everyone uses them. The same growth curve is going to take effect for the most useful, more advanced stuff that we've become addicted to.

Yahoo! Fantasy Football (and baseball, etc.), a slick, high-powered service, is mostly free. It now comes with a range of potential add-ons, but the revenues are probably nothing to shout about just yet. But here's a cool twist: league managers can buy a package of premium services on behalf of everyone in their league. Right now, no one is using this stuff, but the math is favorable. You've got league administrators potentially helping Yahoo make $200 in revenue next year from a fantasy league where they might have made $20 total this year. I certainly didn't go dig around for the godawful fee Yahoo would charge me to sign my whole league up for the premium stuff, but it may not be long before this becomes a huge business. Yahoo's interactive fantasy league software (which many currently still use for free) already blows away many of the cottage-industry software makers in this area, and they can always make it better at relatively low cost.

I'm not spending megabucks on Yahoo services yet - a larger mailbox for $30 and the Java Real-Time Fantasy Stat Tracker for $9.95 - but that counts me amongst the one million Yahoo users who have bought a premium service. Those revenues are bound to grow quickly with each passing year. From a revenue standpoint, Yahoo has nowhere to go but up.

Posted by Andrew Goodman




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