Monday, April 11, 2005
The Gmail Conundrum
The Economist recently had a special on the consumer's ability to leverage the Internet into making better buying decisions. A story called Buying the Future made this comment about targeted advertising using Gmail as an example.
Gmail, a free online e-mail service offered by Google, could provide a clue to the way things are going. It has lots of features and offers 1,000 megabytes of storage space, much more than its rivals. In return, users agree to allow small text ads to be placed in their e-mails. The ads are selected to match the subject matter of the e-mail, with Google's ad-placement software picking up on certain key words.
Regular readers will remember that the privacy concerns of Gmail have been discussed on this blog earlier. Seeing this comment however reminded me of something I've been meaning to ask about the nature of Gmail's business model. For a while now, Gmail has offered free POP access. I, for one, read my Gmail using Thunderbird. Obviously, when I download the messages to Thunderbird, the ads that generate revenues for Gmail are stripped away.
How does Google plan to make money off advertising if a large number of users shift to reading Gmail via their clients? Or are they betting that most users will not use POP access? More likely, are they planning to do a Yahoo and start charging for POP access once they have a critical mass of users? The website says they have no plans of charging for the service now or in the future. So, how do they intend on making money then?
Gmail, a free online e-mail service offered by Google, could provide a clue to the way things are going. It has lots of features and offers 1,000 megabytes of storage space, much more than its rivals. In return, users agree to allow small text ads to be placed in their e-mails. The ads are selected to match the subject matter of the e-mail, with Google's ad-placement software picking up on certain key words.
Regular readers will remember that the privacy concerns of Gmail have been discussed on this blog earlier. Seeing this comment however reminded me of something I've been meaning to ask about the nature of Gmail's business model. For a while now, Gmail has offered free POP access. I, for one, read my Gmail using Thunderbird. Obviously, when I download the messages to Thunderbird, the ads that generate revenues for Gmail are stripped away.
How does Google plan to make money off advertising if a large number of users shift to reading Gmail via their clients? Or are they betting that most users will not use POP access? More likely, are they planning to do a Yahoo and start charging for POP access once they have a critical mass of users? The website says they have no plans of charging for the service now or in the future. So, how do they intend on making money then?
