Users, marketers drawn to free email

These Internet services do get something that is even more valuable than users' money: their personal information.

Part of the latest gold rush on the Net, free emailers make money by selling ads. Advertisers and marketers will gladly pay more for ads that are targeted and delivered to specific users.

"What you pay [with free email] is you trade some personal information," said Kate Delhagen, an analyst with Forrester Research.

For many people, getting free, portable email is well worth seeing ads along with their mail. "Email is mission-critical for more and more people every day," Delhagen added. "There's this incredible demand."

Several other factors make free email services look promising. Customers include a wide array of people. Some want separate accounts for special mailing lists or for private mail when their main access is through work; others want a more permanent email address while they try out different Internet service providers. In addition, there are users who may not own computers and can only get mail using these services through a library or a friend's computer, for example.

However, some are skeptical about free email, saying that it presents some problems. Spamming has been an issue on several services. Although email services have antispamming policies, people sometimes go there once, create a new account, and send a massive amount of junk email. Some free services have created controls to prevent their users from sending out multiple mailings; others haven't. Those that allow spamming are sure to face consequences, such as having their domain blocked by ISPs.

Privacy is another issue that concerns some industry watchers and consumer advocates. They say free email users are not guaranteed the same level of privacy as on an ISP or the same standard of service.

For advertisers, though, the business user who wants to log on from anywhere is a prime target, and what better way to target that user than through email.

"I was very much a pessimist on the value of free email," said Adam Schoenfeld, an analyst with Jupiter Research. "But I was swayed especially by the mobile professional user. Those are the demographics [that companies want]."

Schoenfeld is predicting that free email will become a regular part of every major Web site. Many sites already link to free email sites.

For instance, Philatelic.com, a stamp collectors' site, has links to several free email services, saying that many people like using them for the Philatelic email list.

The barriers to entry for free email are rather low, which means there are several newcomers. But as the industry goes through some rapid maturation over the next few months, some services are unlikely to survive. By next year, Delhagen predicts, the market will have shaken out somewhat, with only about a half-dozen left standing.