Apple: set .Mac free (you’ll make more money!)

There’s been a lot of discussion in the Mac community about .Mac lately.

.Mac is Apple’s $99/year online service that is basically the online publishing component of the iLife application suite. It incorporates:

  • webmail
  • iPhoto publishing and sharing
  • easy website publishing from iWeb
  • online file storage
  • syncing of bookmarks and calendars between multiple Macs
  • groups

Much of the talk in the Mac community has been around price: is it really worth it? After all, Google gives you Gmail with 2+ GB (free), there are other sources of online file storage such as Yahoo’s Backpack (free), and $99 would easily buy you your own domain name and server space at a lot of web hosting companies … in fact, it could easily be a lot cheaper.

There’s no question that Apple’s integration of the tools with iLife, and the quality of the presentation is worth something. But the number of Mac owners actually using .Mac has to be minimal, even tiny.

So my question is: would Apple make more money if they made .Mac free, and slapped Google AdWords on it?

How much do they make?
Well, even if the percentage of Mac owners paying for .Mac is not high, there’s still a lot of money in it.

If 500,000 people were paying for .Mac, Apple would gross $50 million a year. I think that number would be very high. There’s a story at C|Net from 2002 claiming that Apple had almost 200,000 subscribers, but I seriously doubt that it’s grown immensely, even though pageviews on Alexa have grown somewhat over the past few years. Most of that increased page viewing is likely due to visitors, not subscribers.

Let’s say there are 300,000 subscribers today, and Apple makes $30 million/year from them. Could they do better?

Plentyoffish
Well, let’s take a look at an AdWords example: PlentyofFish. It’s an online dating site, it is entirely free and AdWords supported, and its owner just cashed a million-dollar check. Well, almost a million.

He says his CPM (cost per thousand) pageviews is under $1. Well, let’s do some math:

– $500,000 for a month
– CPM of about $1

He must have gotten about 500 million pageviews. Adjust the number up or down a bit, depending on your inputs, but that’s about where it stands.

A free .Mac: show me the money
Let’s assume, given that .Mac is a fairly good service and it’s tightly integrated into iLife, many, many Mac owners would be users of .Mac if it was free. I think a conservative guess would be that 10 times more owners would use .Mac … meaning that you’d have 3 million people instead of 300,000.

Well, if you compare .Mac and PlentyOfFish pageviews at Alexa, you’ll find that today, they’re almost neck-and-neck.

In other words, .Mac should have about 500 million pageviews a month.

Multiply that by 10, and you’re at a whopping 5 billion pageviews a month. Apply the same CPM metrics of PlentyOfFish, and a back-of-the-envelope analysis would tell you that a free .Mac would make Apple about $5 million each and every month.

Apple, set .Mac free: you’ll make more
Which means, that at $60 million/year, Apple would double its revenue by reducing the price of .Mac to free. Which would seem to be a great idea …

Plus …

A free .Mac would also be an excellent selling point for new Macs. And don’t forget: a wonderful marketing tool for all the non-Mac-owning relatives of Mac users who would visit .Mac to see their cool relations’ funky digital creations.

.Mac is already free as in speech. Maybe it’s time for Apple to make it free as in beer.

. . .
. . .

Some thoughts on the argument above:

  1. Would CPM on a non-dating site be lower, equal, or higher than a dating site? I don’t know, but obviously the answer is important. I could argue .Mac would have a lower CPM (people searching for dates are pretty focused, and if they see ads related to it, will probably click one or two) and I could argure more (there would be lots of profitable niches in .Mac sites, such as vacations, parties, special occasions, etc. … all the things that people take pictures of and blog about).
  2. Would Apple feel that putting advertising from Google on a Mac product adversely affect the Apple brand … even if the online product is full of user-generated content?
  3. Is a figure of 10x the number of Mac users using .Mac if it was free low? I know I’d be using photocasting in a second!
  4. What other tie-ins between iLife and .Mac could Apple make if there was a clear revenue model based on Mac users actually using .Mac? Video from iMovie? Syncing of your .Mac mail and your Mail.app mail?
  5. As Fred has commented below, you could easily have a user-option: pay and get an ad-free .Mac, or get it free and have an ad-supported .Mac.

And whatever else I might be missing …

[ update ]

A quick note spurred by one of the comments below: I did pay for and use .Mac for two years … so I do have some clue as to what the service is. However, if you think I’m missing the real point of it, or a large part of the value of it, please, please do enlighten me (and everyone else) in the comments. Thanks!

[tags] apple, .Mac, web 2.0, iLife, free, CPM, google, adwords, adsense, john koetsier [/tags]

 


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13 CommentsLeave a comment

  • Why do we need another free service pasted with ads that are crawled by bots? There are PLENTY of those already. Somewhere in the market, there has to be a service for the rest of us that DON’T LIKE OR WANT THE ADS all over our pages. I will continue to pay my $99 a year not to have them. .Mac has a wealth of flexibility and options for that $99…. like:

    The only IMAP mail on the internet for that price
    Authenticated SMTP
    Mail over SSL
    Fast webmail
    Generous bandwidth allotments
    OS integration with syncing
    Disposable email addresses
    Family account packs

    All without annoying flashing banner ads and bots walking my page. I get less spam in my .Mac account than anywhere else, and it enables me to communicate with far-off family in ways that weren’t possible before. My advice to you would be to go use myspace, and leave this oasis alone for those of us that appreciate it for what it is.

  • No problem – there could easily be a dual-use system: pay if you want ad-free, free if you’re OK with ads.

    Oh, and btw, I don’t use .Mac, but I do have my own server. I pay more for that than I would for .Mac … I’m not looking for free hosting. One major difference, of course, is that people who pay for their own hosting at a traditional hosting company get their own domain name … not some blah/blah/blah name, and get their mail at their own domain as well.

    I’m not saying everyone would like it; I’m am saying there could very well be an economic rationale for Apple to offer it (because lots of people would like it).

  • Hi John,
    I have thought about this too. I started my .Mac account when it was free. One of the things that prompted me to pay to stay was the email address. Back when I got my .Mac email address my cable internet provider was @home.com. My email address then was socheltree@home.com. They sold out to ATT, and my email address became socheltree@attbi.com (or .net – can’t remember). Then they sold to comcast and it became socheltree@comcast.net. I had to change my address 3 times and had never changed ISP’s. For me, having a constant personal email address was worth paying for.
    I also have socheltree@yahoo.com and socheltree@gmail.com, but since I don’t pay for these, I have less confidence that Yahoo and Google feel obligated to continue the service long-term.

    I often think I should just get my own domain, but .Mac works so well.

    I also am very much opposed to having ads on my site. If I was generating enough traffic to warrant having ads I would want editorial control over them and to collect the revenue from them myself. As it is, I don’t have enough traffic to warrant it, they would be a nuisance I am more than willing to pay to avoid them.

    That said, I could imagine users may be interested in using an advertising-paid (different from free) service, but I have a hard time picturing how something like that would look while still fitting into Apple’s clean design.

  • The only problem with .mac is that people who don’t actually use it think they know what it is. You are correct in what you presented about 25% of the value of .mac. It is MUCH MORE than you presume it to be. Since you have already made up your mind, there’s no point in going over something you don’t understand.

    That’s not to say you’ll find value in it – to each his own.

    is .Mac perfect – no … but the price concerns me very little. I can afford $8.25 a month so you are wrong to harp on the price.

    The problem with free is you’ll have a couple million people who just the pages to drop a couple photos and never go back.

    I cannot say what % of .mac users use the web pages but life and software is NOT all about how much you can monetize or how many page views you get – because .Mac is more than just web pages so just measuring by page views is pointless. I visit my .mac account several times a day without accessing the “public” portion but then there’s no way to measure that.

    .Mac is a convertible. If you own one and drive one around – you understand. To others, they just don’t get it.

  • I don’t mind paying a little bit to NOT have advertsing on my site and the integration thing is nice.

    However it’s completely unfair to non-US residents. I can’t speak for other countries, however in Canada we are paying $139 CDN which these days is about $122 US – compared iwth $99 US. And this isn’t including taxes.

    I appreciate that exchange rates are a fluctuating thing and Apple can’t be changing their prices every time the rates change – however the US/Canada exchange rate has been relatively stable for past 2 years. Apple dropped their Canadian prices in January – which some claimed was a reflection of the higher value of the CDN dollar.

    Well.. Prior to January, the .Mac price in $CDN was $149. The exchange rate at the time was about 0.85 which works out to $126 USD. At the time the rate had been around or above 0.85 for 4 months, and above 0.80 for over a year.

    So why are we paying a Premium because we are in Canada? I suppose part of that is so that Apple can afford to setup and maintain the capability of billing us in $CDN. Rather than forcing us to simply pay the same as their U.S. customers based on the current exchange rates. That way the Canadian govermnet can get their cut as well.

    But ultimately the service are being provided by the same computers and disks and network providers as they are for the U.S. customers. It’s not like my .mac account lives on a system up here in Canada.

  • Great comments – thanks, people.

    jbelkin: if I’m not getting it, help me get it. What is the 75% of .Mac that I’m not getting?

    I did subscribe to .Mac for two years after the iTools switch-over, but eventually I felt the value was not there.

    In other words, I don’t think the jazz analogy (if you don’t know what it is, I can’t tell you) is going to work for me.

  • Issues to consider:

    1. Current .Mac pool is closer to 750k with an attrition rate of 20%. I would assume cost of acquisition is ~$60

    2 .Mac is a *premium* service. Core target is someone who will actively shell out money over and beyond the current crop of “free” services. The core value of .Mac is in the bundle of services. Remember Marketing 101, people buy bundles of value not applications. That is precisely what .Mac provides and is its core differentiation.

    3 Advertising on a .Mac would be quite contrary to how a *premium* service is run. Part of the cachet of premium clubs is the exclusivity factor. Anybody can get a @yahoo account, not many have a @mac address. There is a perceived exclusivity to this.

    4. Running an ad based model, screams me-too and significantly lowers the differentiation with respect to other brands (@yahoo, @msn etc). Perception towards the Apple brand is weakened.

    5. Marginal increase in revenues with a lowering of the exclusive/premium categorization lowers the overall image of the Apple brand. Categorization of the brand suffers.

    Ergo .Mac pricing has more to do with the overall positioning and branding strategy of Apple than making a few incremental dollars.

  • I understand the value of .macs integrated services. I use .mac everyday and I am happy to pay for it – even here in Canada where we pay a premium! I don’t want “AdWords” littering .mac – I don’t want “Ad”-ANYTHING littering .mac. Its great just as it is.

    What I do NOT understand is why people who don’t use .mac are always whining about the price compared to the “great” free alternatives out there. What am I missing?

    Please, go ahead and cobble together a disparate collection of “free” services/tools that can replace .mac. When you have done so, please post precisely what you are using, how long it took you to put the package together, and how effortlessly you can work with the iLife suite for posting content to the web, synchronizing computers, backing up your drives, using virtual storage and Drop Box, photocasting, IMAP mail, etc., etc., etc.

    If you don’t want to use .mac., or feel there isn’t enough value for you, don’t use it. But please, don’t discourage or mislead others who could greatly benefit from this service. I encourage anyone to give it a try – today, not 3 years ago – and see what you think.

  • Great points, Sandeep. I’d like to know how you know there are 3/4 of a million people on .Mac, but you sound pretty credible.

    One thing: I have a .Mac address, but I feel a lot better about my @sparkplug9.com address in terms of personal branding. I think the personal domain is huge – at least to a lot of people.

    . . .
    . . .

    dBerg: like some others reading this post, you seem to be getting the impression that I want .Mac very badly, but am unwilling to pay for it.

    Let me correct that: I’m not interested in using .Mac. I have my own domain, my own server, my own space.

    It very nicely integrates my blogging, my online file storage, my email (webmail and desktop), my photos (plugin to Flickr), my surfing (plugin to del.iciou.us), and just about anything else I’d want, whenever I want to install it.

    The point of my post is to explore what it would be like for Apple to make .Mac free … not to “whine” that I can’t personally use .Mac without ponying up.

    (And yes, I did say I’d use photocasting … but that’s about it. And I won’t cry if I can’t, because Flickr works just fine, thanks, and adds all kinds of community aspects that .Mac doees not.)

    Hope that clears that up!

  • .mac really serves two distinct audiences that might not overlap so it confuses the value equation for a lot of people.

    It’s brilliant for casual/average users who want to post stuff on the web and for it’s also great for roadwarriors/file syncers.

    I’ll just talk about casual/average users and others can talk about the advanced user choices.

    It is integrated with ilife ’06 like NO ONE else can do it.

    For casual/average users, two clicks will get your photos or videos posted online in a classy attractive manner. Sure, there are lots of places to pst photos but even FLICKR can be confusing and some of the photo sites require login for people to view. And a lot of places where you can post photos also have photos & ads that might not be appropriate – again, that’s not to say these other places don’t offer great things for free but if you want the easiest and the safest way to go – .Mac – even all the pages are extraordinary classy and attractive as ONLY Apple can produce – a lot of those places are just downright ugly … or worse, will delete your photos after a year if you don’t buy something.

    Same with videos – while you can list 50 places to post video – is it a place you wanna send Aunt Martha to? Where do your videos go, into some community chest with pointers to lots of other questionable videos? Or would you prefer your own page?

    For mail – again, yes, probably 100 places that offer free mail but no ads and a nice professional domain – not “hotmail.”

    You also get free software every few months – I believe in the last year, there have been some 300 GarageBand jams, lucasfilm sound effects, and games.

    There are video tutorials to EVERYTHING OSX from getting started to learning to use iLife and it’s all Apple great – they are about 5 minutes in length and everyything is covered in great detail with screen captures. There must be about 150 of these.

    It’s hard to figure out what files to backup & sync – they provide a setup – you just click the files you want backups of – and then manually or automatically – you have your keychains, bookmarks, address book contacts, ical and any FILES you want back-uped – just click. And the files appear as files/folders on your storage area … (or you can acess your bookmarks, address book & calendar through a browser)

    Your storage area by the way is icon based – you get a ‘virtual’ hard drive. No guessing where it is through text – it’s all visual, you want to backup a file, just drop it into your documents folder or create a folder and drop it in that.

    They also allow you to “serve” files – for instance if you do eBay auctions, you get 1 upload photo for free but you can embed as many photos in your HTML – however you cannot use GeoCities because yahoo will not you use their space to just park a file and serve it up on eBay – you can create a link to go to GeoCities but there’s no photo in your eBay auction page – .mac lets you do that so you can drop as many photos you want into a .mac folder and it will serve it up on eBay directly when a person views your page.

    And speaking of HTML, while they always had a iweb component, it was kind of slow so now, you set it up in ilife and then upload – again, it’s WYS and it’s classy as only Apple can do it. And easy. Of course, for BBedit users who like to knock out text HTML, to them it’s not worth it but for 85% of average people, they just want to create a website for fun or for their small business – what could be easier than moving everyting around and then clicking PUBLISH?

    Again, it’s not for everyone but it’s for a lot of people.

    Same with the cards – no need to feel you’re giving away not just your email address but your friends to some diant unknown card company … again, not for everyone but it’s safe and it’s there.

    That’s about 60% of the features of .mac – some other user can fill you in one the advanced syncing features.

  • How about this: I use .Mac, and have since it was the free iTools service, and I’m looking for a way to leave. I’ve used it today and three years ago and, frankly, it hasn’t changed all that much for me pumping more than $300 (or is it $400 now) into it.

    I’m a huge fan of Apple and the Mac (own a 20″ Intel iMac, buy iLife each year, etc., have owned three different iPods) but sorry, folks, but you’re drinking the Kool-Aid on this one. When antivirus was part of the .Mac price, then, yes, I could see a $99 price point. But Virex disappeared a year ago and Apple has not added anything to the service to make up for that. Has no one noticed this fact?

    Futhermore, I easily receive 40+ spam messages a day on my .Mac account. I have gone so far to stop forwarding it to my Gmail account (which, interestingly enough, gets about 1 spam message a week) because I’m tired of looking at the crap that Apple doesn’t filter.

    Backup, while kinda slick, just doesn’t do what I need it to do and does not handle the incremental backups the way I need it to, so that adds nothing for me.

    Now as for posting:

    Flickr, in terms of posting photos, is a much stronger service and works wonderfully with iPhoto and a shareware plug-in.

    .Mac web hosting is lethargic, to say the least. If you’re just looking to blog, then getting a Blogger account and a BlogSpot site works just fine… and Flickr can work with all of the popular blogging sites, which is a huge boon when posting photos to your blog.

    File sharing? Well, frankly, the only person I share files with is my wife, and she’s in the house. I don’t need an online service for that.

    IMAP e-mail? Sure, that’s nice… but if I have a good webmail client, why would I use a desktop client at all? I’m on Gmail… and I think it’s a slick client with no need to do IMAP (though I do POP to back it up).

    Bookmark synchronization? Firefox and Google Browser Sync. It goes further than Safari and syncing over .Mac.

    What has been keeping me from leaving is the calendaring… but Google Calendar has changed that landscape. I can subscribe to all of the Google and WebDAV calendars I want through iCal and send them to my PDA through iSync… no issues.

    So, at this point, I’m leaving .Mac this year. I don’t need to shell out $100 for a service that Apple is barely maintaining. Are the services “cobbled” together? Somewhat. I’m cool with that. It works the way I want it to, which is not the case with .Mac.

    So, before dog-piling on John, rest assured that there are plenty of folks like me who cannot justify the $100 any longer and we are not planning on coughing it up this year.

  • Whoa. Great comment Geoffrey. You’ve obviously thought this all out.

    Your point about spam resonates strongly with me. My Gmail email address is the ONLY one I post publicly un-obfuscated on the web, and I get very minimal spam to it.

    I think Gmail has the strongest and best anti-spam protection available.

  • John, I wasn’t under the impression that you wanted .mac…which is why its hard to fathom why you’re commenting on it at all. JBelkin has described much of what makes .mac so great, and why it is perfect for most – but not all – users. Those who want to cobble together disparate services, as Geoffrey Sperl has done, or run a domain, server and space, as you have done, aren’t the target market for .mac. However, you’re both a tiny minority; most users do not have the time, skill or inclination to bother with your techniques. For them, the simplicity of .mac and the wonderful integration with multiple applications makes for very good value, indeed.