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Microsoft Abandons Subscriber-Only MSN Model

Microsoft officials announced late this afternoon that they will cease to offer MSN on a subscriber-only basis and will move quickly to turn it into an Internet standard system supported by advertising and users.

"MSN now has about 600,000 subscribers, and 75 percent of those are paying customers," said Higgins.

"The Internet standard version of MSN will support TCP/IP, HTML and HTTP, along with other standards," Higgins added. "You'll be able to use any browser you like to navigate MSN," he said. "Our challenge will be to add value through better content." To illustrate his point, Higgins demonstrated a virtual chat feature using fully animated avatars.

Along with the change in access strategy, Microsoft will also change its methods regarding independent content providers, or ICPs. "The wealth of content on the Net has forced us to change this. There was simply no way we could compete in terms of MSN content vs. Web content," said Higgins. While the number of ICPs will not change, many are moving their content to the Web. To compensate for this change, MSN will rely on a mix of advertiser and subscriber revenue.

"We have to have scale for this to work," commented Bill Gates. "Some offerings will be exclusive, some won't," he added. Company officials are counting on MSN to continue to attract new subscribers with free Net access, technical support, some exclusive content, and the MSN community.

"We want to be the best place for people to start their Net experience," said Higgins.