In an aggressive attempt to shift consumers to paid services, Yahoo is telling GeoCities members that it will disable their Web sites if they exceed certain bandwidth limits.
Yahoo sent notices to GeoCities members who use more than 3GB per month of data-transfer space for a Web site, saying that to keep such sites
continuously running, members should join one of its paid Web-hosting
services: the recently launched GeoCities Pro or GeoCities Webmaster.
"Shortly, all free member sites transferring more than the allowable data limit will be disabled for portions of the day until usage falls to within the prescribed limits," the notice read.
Yahoo declined to comment on the number of GeoCities members affected.
GeoCities, which it acquired two years ago, makes personal publishing tools and runs Web-based communities.
GeoCities Pro and GeoCities Webmaster are part of Yahoo's efforts to beef up its non-advertising-based revenue. Investors have been pressuring the
Sunnyvale, Calif.-based company to find sources of revenue beyond the
troubled advertising sector. In April, newly hired CEO Terry Semel, a former
Warner Bros. co-chairman, emphasized his intent to develop paid services throughout Yahoo.
Launched in August, the paid Web-hosting services offer customers an
ad-free site with more features such as advanced tools to build a Web page and a personal domain name with greater storage space. Yahoo will continue to offer free Web-hosting services with fewer features.
GeoCities Pro, which costs $8.95 per month along with a onetime, $15 set-up fee, includes a personal domain name with five e-mail accounts, 25MB of storage, 10GB of data-transfer space, and five sub-domains that help organize the site. The other service, GeoCities Webmaster, doubles the amount of storage space, data transfer, personal e-mail accounts and sub-domains for $11.95 per month plus a onetime, $15 set-up fee.
"Yahoo's trying to improve its business model, and at the margin it can do so by charging high-intensity users for that intensity," said Jordan Rohan, a media analyst at investment banking firm SoundView Technology Group, formerly known as Wit SoundView. "It would make sense that they would
charge more for people that have more saved, but it doesn't win any friends."
Rohan added that revenue from GeoCities paid services would contribute
little to Yahoo's immediate financial results. He noted that GeoCities'
members are a small percentage of the Web portal's audience, and only a
small percentage of those consumers would likely opt for paid services.
"If there's a free competitor that's widely known by consumers, then paid
services will fail," Rohan said. "Paid services have a really difficult
time competing with free services. They can attract a niche market, but
they don't usually expand beyond that."
Yahoo, however, said it believes there is potential for revenue with the
paid Web-hosting services. The company would not disclose any financial
figures for GeoCities or the number of registered consumers.