• by February 26, 2004

Just when you thought the online advertising sector was picking up (and it is), there's a radical proposal advanced. This, from Yahoo! CEO Terry Semel, who proposed that one day (perhaps soon), Yahoo!'s subscription-only services could be ad-free. Semel, speaking yesterday at a Commonwealth Club event in Santa Clara, Calif., said ad-free services on Yahoo! are being contemplated but offered few details.

Semel's trial balloon is an interesting one but it's not an original idea. Premium cable networks originated with the notion that consumers would be willing to pay a monthly subscription fee to receive high-quality programming without commercial interruptions. The entire cable business was built on this basic premise. Video-on-demand and other premium video content offerings and services follow suit. Of course the cable nets have evolved and are now full of ads - house ads, teasers, and promos for future programming. It's not surprising that interactive portals would consider the ad-free model at some point. My sense is that even the big guys like Yahoo! must consider everything in order to grow their businesses and more importantly, to sustain that growth over the long run whether it's streaming advertising, TV commercials on the Web, rich media, or no media. But clearly, someone has to pay for the programming on services such as Yahoo! - whether it's advertisers or consumers. There is no free lunch!

Semel noted that Yahoo!'s for-pay services hadn't attracted enough subscribers yet to justify going ad-free. It remains a mystery just how many paid subs some of Yahoo!'s verticals have, though the portal is hardly alone in keeping those numbers under wraps.