Yahoo Sheds Premium Services Sans Web Access

Facing declining demand for premium service packages without Internet access, Yahoo last week began notifying its Yahoo Plus subscribers that their subscriptions for fee-based content and services will be halted as of April 22. From that point, subscribers can still use their Yahoo Plus ID to access a free version of the service, but one that does not provide future updates for premium Yahoo Plus services.

For $5.95 a month, or $3.95 a month with an annual subscription, Yahoo Plus offered plenty of software and services--for security/antivirus, e-mail, entertainment, and storage--but not Internet access.

When Yahoo Plus launched in late 2003, demand for "bring your own broadband access" bundles was higher, but has since dwindled as prices for broadband--and complimentary services--have fallen. In its place Yahoo has substituted co-branded broadband services with top telecoms like Verizon and AT&T.

"Interest has clearly shifted to co-branded packages, and it's become clear that Plus is not a core part of our growth," said a Yahoo spokesman. "It will allow us to focus completely on our co-branded efforts."

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Last summer, Verizon replaced Microsoft's MSN with Yahoo as the default Web portal for its DSL service. In turn, Verizon aligned a Yahoo-branded Web browser and default home page for all its new broadband users.

Yahoo has a similar arrangement with AT&T--formerly named SBC Communications. As with Verizon, Yahoo receives a cut of revenue for every new broadband subscriber, while the providers get a piece of online advertising, search, and premium services dollars through Yahoo.

Like SBC, Verizon is spending billions of dollars extending its fiber-optic network across the United States. It plans to sell video programming through its fiber lines on top of speedier Internet access. Cable broadband typically costs about $45, but the Bells have priced their DSL as low as $14.95.

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