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Free Mail vs. Paid Mail: Competition in Chinese Email Market
Chinese email users, who have been accustomed to receive free online services, are grumbling over some email service providers' recent decision to charge for Internet use.
NASDAQ-listed Sina.com announced on August 16 it would reduce its email carrying capacity from 50 MB to 5 MB, and begin to charge new mailbox subscribers.
In a strategic response, Sohu.com and Yahoo.com.cn formed a rival bond, assuring users that they would provide even better free email service.
The day after Sina's announcement, its major competitor, Sohu.com, asserted itself by launching a faster and more stable free mail service -- Lightning Mail -- to its users.
Yahoo got involved in the confrontation by moving its Chinese free mail server from the United States to Beijing at the end of August, aiming to optimize the service.
There are some 21 million regular email users in China; Sina has the lion's share, or 10 million, according to figures from the China Internet Network Information Center.
Sina was the first among Internet portals in China to provide free mailbox service in 1999. Its 50 MB email carrying capacity wowed China's fledgling network industry. But just two years later, it reversed its lead by cutting the free mail service and asking
for fees.
Wang Yan, president of Sina.com, explained that the era of providing free services to attract users with the purpose of making money from ads and investment capital is gone.
In order to maintain so large a mail system for 10 million users, the company has spent more than 100 million yuan (12.5 million U.S. dollars) every other year, said Wang.
Not only can Sina not withstand the cost, all dot.coms in China are struggling.
Internet portals have resorted to new revenue-generating modes. Well-known dot.coms including 21CN, 163 and 263 announced one after another they would charge for email service.
But this ticked off users. They responded that dot.coms were "removing the plank after crossing the bridge."
Many vowed to abandon Sina's mail service. A user surnamed Yang, a resident in Chengdu, capital of southwestern Sichuang Province, has considered filing suit against Sina for unilaterally violating the "agreement" for free email service.
At the critical point, the third leading website, Sohu.com, won the confidence of netizens by offering its Lighting Mail. Daily registration for the service was twice as high as for the old mail system.
Zhou Yunfan, executive vice president of Sohu, told the press that there's no need for a dot.com company to charge for every product.
According to Wang Jing, a publicity official of the company, Sohu profited mainly from ads, providing Internet technology and e-commerce.
For web users who pay, the service quality of the charged mailboxes is their prime concern.
Though Sina guaranteed high quality, speed and security to customers, Yang Ning, chief technology officer of Sohu, raised a doubt: How can complicated legal matters concerning mail service contracts with its technical limitations be solved ?
For example, Yang said, which server should be responsible in case of a failed mail delivery, the sender or the receiver?
Meanwhile, Yahoo moved in to become the first international website to locate a mail server in China by moving its Chinese free mail server from the United States to Beijing.
Zhang Xing, a publicity official of Yahoo, claimed that the move is aimed to optimize their free mail service by making it more steady and much faster. It reflects Yahoo's long-term strategy for gaining a big chunk of China's e-market.
Sohu and Yahoo have decided now is not the time to charge for email use -- a choice that came after market surveys were conducted, according to Yahoo senior executives.
Analysts here said it's still too early to say which of the rival teams will see the most profit, or whether the dispute will reposition the top dot.com runners in China.
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