Free ISPs Beware

In the last year, free access providers like NetZero, AltaVista and Free-PC have gotten a lot of ink. In my most recent column, I presented strong evidence that users’ wish to guard their privacy is the dominant reason why Internet users flee site registrations. In this column, I will make the case that users’ privacy concerns are a powerful nemesis of the free access companies.

84 Percent Nix Free Access

A nationwide poll of 403 Internet users contained the following question: “In exchange for free Internet access, would you be willing to provide very detailed personal and behavioral information that your access provider could possibly sell to other retailers?” A striking 84 percent said that they would not, while 13 percent said they would, and 3 percent weren’t sure. This poll was contained in The Strategis Group’sAdvertising on the Internet” study released last August.

The answer to this question jibes with the information contained in my last Ad Metrics column, in which I noted that 61 percent of those who have left site registrations have done so for reasons of privacy. I also wrote that certain kinds of information are more sensitive than others, as surfers are more concerned about giving their phone number and mailing address out than they are about giving their email address out.

Heavy Users Less Concerned With Privacy

If you slice and dice the data, which groups are the most concerned about privacy? Light users (those who spend fewer than two hours per week at home using the Internet) are the most concerned; only 4 percent would be willing to give personal information for free access. However, 19 percent of heavy users would be willing to give out such information. This may be due to the fact that heavy users trust the medium more or because they assume that advertisers already have a lot of information about them.

Internet Shoppers Less Concerned With Privacy

The survey also found that people who already shop on the Internet are more likely to give out personal information for free access. About 18 percent of Internet shoppers would give the info, compared to only 6 percent of Internet users who do not shop online. This is a happy coincidence for advertisers.

Education Not a Factor

Surprisingly, users’ level of education does not affect their willingness to give information for free access, nor is their income level a strong determinant. Males are slightly more willing to give this model a try, and persons in the 45-54 age group are most amenable to it.

Difficult Business Model

Jupiter Communications predicted last month that the free access share of the consumer ISP market would be only about 13 percent in 2003. The 13 percent figure in the Strategis Group study is coincidental, but either way, indications are that free access is not the wave of the future. Besides, when you add up the access charges and the customer service expenses, the business model is more difficult than it looks.

And it goes beyond the business model. Free Internet access isn’t the same as free gasoline. Customer service and reliability are big factors; customers may believe that they will get exactly what they paid for by signing up for a free ISP.

The biggest factor, however, is the wish to guard privacy. With only 13 percent willing to trade information for free access, the market is going to be very limited. As William Shatner might put it, “Privacy is big. Really big.”

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