Hotmail Adds New Charges

In a move that suggests how Microsoft hopes to make money from the huge MSN user base, Hotmail will begin charging users for a formerly free feature-the ability to receive messages from other POP-based e-mail accounts. As of July 16, 2002, POP mail retrieval will only be available to Hotmail Extra Storage customers, who pay US$19.95 per year for 10MB of storage (regular accounts top out at 2MB, with incoming messages deleted beyond that point).

Since introducing Extra Storage in Sept. 2001 for US$12.95 a year, Microsoft has increased its price and added incentives to sign up for it. Most notably, in Dec. 2001, the company began canceling free Hotmail accounts that were inactive for 30 days (users can reactivate their free accounts if they act within 90 days, but all saved messages and addresses will be lost). Extra Storage accounts are not subject to cancellation.

Although these policies have not decreased the number of Hotmail users, growth has stopped-Microsoft still claims there are 110 million Hotmail accounts, the same number it had in July 2001. (Statistics for Hotmail Extra Storage are not available, but MSN claims 300,000 paying Web site subscribers overall, including those who use other services, such as online bill payment and gaming.) Despite the move to charge for some features, a basic level of Hotmail service “is and will always be offered free to consumers worldwide,” according to Product Manager Parul Shah.