sourced from sfgate.com
by Verne Kopytoff
21 February 2006
Yahoo Inc. is considering offering free music downloads, discounts on DVD rentals and frequent-flier miles to users who make the Web site their primary search engine.
The possibility was disclosed in a recent online survey of some of Yahoo’s e-mail users, intended to gauge interest in a rewards program, that detailed the idea and provided a list of potential incentives.
In contemplating such a program, Yahoo is showing the lengths to which it may go to try to erode Google Inc.’s dominance in search. But it also illustrates Yahoo’s concerns about the rest of the industry, which has signaled increasing interest in offering users carrots for their loyalty.
In December, Microsoft Corp. Chairman Bill Gates suggested that his company may offer cash or free products to users of its MSN search engine. A few months before that, A9, owned by online retailing giant Amazon.com Inc., started giving frequent users small discounts on purchases from its parent’s Web site.
Offering rewards to search engine users isn’t new. During the dot-com boom in the late 1990s, a number of companies including AllAdvantage.com and MyPoints.com gave cash, prizes and loyalty points to users, although many of the companies eventually went out of business or were sold at fire sale prices.
That’s not to say the model never works. One exception is iWon.com, a Web portal that offers cash prizes for using the site. After some success during the boom, iWon is now owned by Ask Jeeves and its parent company IAC/InterActiveCorp.
Kathryn Kelly, a spokeswoman for Sunnyvale’s Yahoo, called the company’s user survey about rewarding search engine users a part of regular, ongoing research. She emphasized that “nothing has been set in stone” about whether Yahoo will implement such a program.
Danny Sullivan, editor of Search Engine Watch, an online newsletter, said that even though Yahoo’s search engine is comparable in quality to Google’s, most people still use Google. He called Yahoo’s consideration of rewards an attempt to “break the Google habit” of many Internet users.
Google led the U.S. search industry with a 48.8 percent market share in December, according to Nielsen/NetRatings. Yahoo had 21.4 percent of the market, while Microsoft was third at 10.9 percent.
But there are dangers to rewards programs, Sullivan said. If users are rewarded based on the number of queries, they may simply enter queries all day and disregard the results and, more importantly, the online advertisements that appear next to them.
Yahoo’s survey said that users who sign up for the rewards program would be required to do most of their searching with the company. The program may require users to register, so the company can track usage, or use a Yahoo rewards toolbar.
Recipients of the survey were given a list of 10 possible rewards to choose from, including an advertisement-free version of Yahoo e-mail, five free music downloads per month, discounted subscriptions to Yahoo Music Unlimited, donations to charity, a discount on Netflix DVD-rental subscriptions and 250 frequent-flier miles that could be used on most major airlines.
Searching For Online Rewards
Yahoo is considering free offers, discounts and rewards to users of its search engine. Here are some of the possible incentives listed in a recent survey of Yahoo’s customers:
- Five free music downloads per month
- Donations to charity (of users’ choice)
- Unlimited Yahoo mail storage (instead of 1 GB)
- Discounted personals (one free month and US$19.95 per month thereafter, instead of US$24.95)
- Frequent-flier miles (250 per month)
Source: Chronicle research