Microsoft to drop free e-mail list service

June 22, 2001

SEATTLE (June 22, 2001 5:21 p.m. EDT) - Microsoft Corp. plans to shutter its free e-mail newsletter service ListBot in order to draw users to its paid service.

In an e-mail sent to users Thursday evening, the Redmond-based software giant, which bought ListBot as part of a larger acquisition in 1998, said the service would be shut down in August.

Microsoft's List Builder will be offered to those users for $149 a year - the standard fee for the service that was launched in February.

The popular ListBot service, funded in part by advertisements, has between 90,000 and 100,000 customers.

About 10 percent of those clients already use a paid version of ListBot that was launched in late 1998, said Erin Hiraoka, director of marketing for Microsoft's bCentral division, which makes software including List Builder for small businesses.

She said the decision to shut down ListBot came after the company received feedback from business users looking for more sophisticated options within the service.

"I would say that our objective as part of bCentral is to really provide business functionality rather than community-based functionality, and in order to provide those services we fundamentally have to charge for them," Hiraoka said.

Microsoft said it offers a different free service through its MSN Communities program. But news of the shutdown still angered longtime ListBot users, many of which are smaller community organizations.

Others conceded this is an inevitable part of the shift in Internet business models.

"It doesn't really make sense to offer free services anymore on the Internet," said Ben Silverman, who uses ListBot to distribute his newsletter, DotcomScoop.com.

While many companies offered free services like ListBot when they were trying to gain market share, gather user data and make a name for themselves during the New Economy boom, the downturn has led more companies to think about making money, he said.

"It's about revenue now, and if it's not revenue-generating, there's no value from a business perspective," Silverman said.

In the past few months, Microsoft been very open about its plans to "migrate" users of its free services to paid services. Most notably, the company is hoping that those who use its free Hotmail e-mail and MSN Messenger instant messaging service will start using a planned set of paid services called .NET.