Yahoo! Raises Price of Email Stamps

Over at Yahoo! (YHOO Quote - Cramer on YHOO - Stock Picks), little things mean a lot.

The Internet company said Thursday it would start charging for certain email services it has long provided free of charge.

The move is part of Yahoo!'s ongoing effort to generate more revenue from the people who visit its Web site, particularly by trying to turn Yahoo! users into paying Yahoo! customers at every turn.

On Friday afternoon, Yahoo! was trading at $18.70, up 11 cents.

In an email to Yahoo! users on Thursday, the company said that effective April 24, it would charge $29.99 a year to either forward email sent to a user's Yahoo! Mail address to another email address, or to access their Yahoo! email through Outlook or another email program, rather than through Yahoo!'s Web site.

As part of that package, which the company is offering at $19.99 for the first year to early takers, customers will be able to send email with file attachments as large as 5 megabytes, instead of the 1.5MB that's the current limit. And they'll be able to send email without the promotional text that Yahoo! automatically appends to the bottom of email sent through the free, Web-based Yahoo! Mail service.

It's unclear how much additional revenue the move might generate for Yahoo!. Presumably, when users today access their Yahoo! email through a non-Yahoo! email account or by employing an email program that bypasses the company's Web site, the company isn't able to generate page views on which it can place paid advertising.

'Monetizing'

But here's a ballpark estimate. Let's assume that 1% of Yahoo!'s 86 million active registered users worldwide have both the computer literacy and the desire to access their email by the alternative means for which Yahoo! is charging -- admittedly a wild guess, though it's based on our personal experience guiding friends and relatives through computer usage.

Let's further assume that 5% of those users want the service badly enough to pull out a credit card and start paying for it. That acceptance rate is another rough estimate based on past experience of companies that have started charging for free Internet services.

Run the numbers and you end up with 43,000 paying customers, or $1.3 million in annual revenue. By comparison, the company reported revenue of $717 million in 2001, $146 million of which came from fees and listings.

Separately, the company last month added Dow Jones as a news source, in a manner a Yahoo! spokeswoman says is designed to get more visitors to Yahoo! -- 219 million people in the fourth quarter of 2001 -- to sign up for free Yahoo IDs.

When users click on links to Dow Jones stories in the Yahoo! News and Finance areas, they'll only be able to read the first few paragraphs of those stories unless they log in as a registered Yahoo! user.

"It's part of our overall strategy to increase registration across Yahoo!," says the spokeswoman. "By encouraging registrations, we hope to engage users and deepen relationships, as well as monetize the user base."