MSN Offers Free Internet Access Plan

MSN Tuesday announced it is aggressively
stepping up advertising and marketing efforts to make the most of its
recent surge in online popularity.

MSN reported an unprecedented growth trend in new membership over the past
four months. The Microsoft Corp. (MSFT)
subsidiary said it added 500,000 new users since December 1999.

As a part of its eager plan to continue acquiring new subscribers, MSN this
week introduced its free six-month service program.

Yusuf Mehdi, MSN vice president of marketing said its free service plan is
currently unrivaled by other Internet service providers.

“There’s never been a better time or a more compelling offer for people to
get on the Internet with MSN,” Mehdi said.

The MSN free six-month Internet access promotion is valid through June 30
in the U.S. for Windows 95 or later operating systems. After the free
access program expires, new subscribers are charged $22 each month for
Internet access through 12-months of service, as the program requires a
one-year team of service and the deal is subject to early termination

MSN reports that current 39 million unique visitors stop by the MSN Web
site each month. Its MSN Messenger Service services more than 10 million
active users and its free Web-Based e-mail service supports 61 million
active accounts worldwide.

David Yoffie, co-author of the book Competing on Internet Time and professor at Harvard University, contends that MSN’s free access is nothing more than the 500 free hours that rival America Online, Inc. (AOL) offers its new customers.

The promotion to boost MSN may also be a sign that Microsoft may be preparing to spin off MSN as a result of Monday’s antitrust verdict. Yoffie said that MSN would have to alter its business model if it were to become a separate firm.

“There are two things MSN would lose if it was spun off,” he said. “Today it has very deep pockets, which allows it to continually re-invest in new areas, which would be very hard to do if it was spun off. . .In addition, part of MSN’s traffic has to come through its position on the desktop of all new Windows machines sold. And that would also be something harder to drive going forward because it may not be on the desktop anymore.”

“Think about what happened with the breakup of AT&T. Former step-children aren’t always the best behaved and aren’t necessarily the partners that you are most interested in protecting.”

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