Yahoo in talks to add fee-based video service

By Jon Swartz
USA Today

SAN FRANCISCO — Yahoo is developing a fee-based video service in one of its most ambitious endeavors yet to generate new types of revenue, people familiar with the Internet company's plans say.

Yahoo is in talks with CBS to show, via Yahoo, exclusive excerpts from the "Survivor" television show and is also in discussions with a division of Fox.

Yahoo declined comment.

Platinum Yahoo would be a cornerstone of Yahoo CEO Terry Semel's turnaround plan for the company, Internet analysts say. The former Warner Bros. executive has said Yahoo must create streams of revenue to offset a slumping advertising market.

Last month, Yahoo unveiled an ad-free Net radio service called Launchcast Plus for $3.99 a month, or $35.99 a year.

Since Yahoo ramped up its focus on fee-based Internet services in 2002, about 2.2 million people have signed up for its services, including online personals and high-speed Net access.

Fees now make up 32 percent of annual revenue for Yahoo, compared with 10 percent in 2001.

The Yahoo video service will compete with RealNetworks, a Seattle-based company with 900,000 customers who pay for Internet content from the likes of Major League Baseball, NASCAR, CNN and the Weather Channel. It charges $9.95 a month for exclusive content.

More companies offering similar services could help drive costs down, Internet analysts say.

And there appears to be room for several companies to prosper in the market as more households install high-speed Internet lines, which makes it easier to access services.

U.S. consumers spent $975 million on online content in the first nine months of 2002 compared with $670 million in 2001, the Online Publishers Association says.