Published in The Australian, February 21 2002

SINCE the tech-stock crash of April 2000, journalists have eagerly sought out the next wild example of internet hype gone awry.

Last Thursday appeared to deliver in spades, when the Packer-backed online company Ecorp announced that plans to introduce a range of paid services to its Ninemsn division meant that it wouldn't become profitable until 2004.

Attacks on the credibility of earlier profit pronouncements were to be expected; the company had previously said that Ninemsn, consistently ranked as Australia's most popular website and developed in partnership with US giant Microsoft, would finally hit profitability in 2002, five years after it was founded. However, journalists also chose to interpret the introduction of paid services as a big switch by the company, and a possible harbinger of the death of all free (that is, advertiser-supported) internet services.

The Sydney Morning Herald described the plans as a "major about-face" and added that "the great free internet ride" had "ended with a thud". The Australian Financial Review opened its report with the statement that "the great online nirvana where content was free and businesses still made money was laid to rest" by the deal.

Such stories don't reflect any glory on Ninemsn -- but they also show an ignorance of recent history. Charging users for services has always been a part of the Ninemsn ethos, and Ninemsn is hardly the only remaining player in the free services field.

The MSN brand itself is a leftover from an earlier attempt by Microsoft in 1995 to launch a paid service to rival traditional internet service providers. Users of that MSN received exclusive content and forums, as well as dial-up access to the larger internet, in a model similar to that of rival AOL. The project (developed locally in conjunction with Telstra) failed to attract a large enough paying user base, forcing Microsoft to try again.

Microsoft relaunched MSN as a largely free portal service, partnering with Ecorp locally to create Ninemsn, which used content from the PBL television and magazine stable. Revenue was to be drawn largely from online advertising.

While Ninemsn quickly became Australia's most popular site (driven, in large part, by users of the free Hotmail email service), paid services have never entirely disappeared. Several magazine-based websites on Ninemsn only provide full access to subscribers to the print edition. Other fee-for-service Ecorp businesses, such as online recruiter Monster and auction company eBay, are heavily promoted on the site.

Announcing the new services, Ninemsn management talked up an optional enhanced version of Hotmail that would allow users to store extra mail for a fee. Several papers appeared to interpret this incorrectly as saying that all Hotmail users would soon be forced to pay for the service. In any case, users keen for extra storage can already access it, simply by setting up a Hotmail account with an address outside Australia. (Canny users can save the fee anyway by using Microsoft email software, which allows mail to be stored on their own hard drive.)

More generally, while Hotmail may dominate the free email market, there are literally hundreds of alternative sites providing similar services, including key MSN rivals such as Yahoo and Excite. If MSN sites worldwide chose to start charging for all their services, the most likely effect would be a boom in user numbers for those rivals.

Microsoft's own history demonstrates that it's one thing to announce a paid service, and quite another to implement it. When the company poached former New Republic editor Michael Kinsley in 1996 to found an online magazine called Slate, it was predicted that it would be the first successful subscription-only web publication. Six years later, its content is still free after several failed attempts at a subscription model, and Kinsley has stepped down as editor.