Can AOL's freeway handle the traffic?

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The Independent Online

We can all relax. We've got petrol in our cars (hopefully) so we don't have to travel with a bunch of first-time commuters who haven't learnt the basic social rules of public transport (no poking, prodding, staring, sniffing). But best of all, unmetered internet access, the holy grail of the new economy, has at last arrived.

We can all relax. We've got petrol in our cars (hopefully) so we don't have to travel with a bunch of first-time commuters who haven't learnt the basic social rules of public transport (no poking, prodding, staring, sniffing). But best of all, unmetered internet access, the holy grail of the new economy, has at last arrived.

AOL, which a few weeks back joined AltaVista in blaming BT for the slow (or, in AltaVista's case, imaginary) rollout of unmetered access, last week launched a flat-rate service for £14.99 per month to its current users. AOL said its service is a "million miles away" from AltaVista's failed attempt because its telco suppliers now have access to a wholesale Fraico (Flat Rate Internet Access Call Origination) product which was waiting to be released by BT, meaning the cost to telcos and service providers is capped.

Within hours of the news (great timing, this), World Online admitted that it had so heavily subsidised users that it has been forced to cap the number of hours its users can stay online as part of its inclusive unmetered package. If, as industry pundits tell us, cost and ease of getting online is hindering the growth of e-commerce in the UK, it's a bit naff of World Online to make it more expensive to spend less time on the internet than through AOL.

Never mind, the analysts at Gartner Group believe it is the speed, via the introduction of broadband services such as ADSL, not the price of surfing that will really get us surfing, letting us shop quickly and to hell with the cost. That gets my (impatient) vote.

Battling for bargains

If consumers have to wait for pages to download, and pay through the nose for the privilege, they are going to want bargains once they are online. Ready at the shop door is the French-based comparison shopping directory Kelkoo.com, which last week merged with Norwegian-based shopping portal Zoomit.com, giving it an additional 210,000 customers across Scandinavia.

The deal, the third acquisition the company has made since April, puts increased pressure on UK shopping directory ShopSmart, which has until now pretty much led the pack here. Following investment from AOL and Wal Mart, and the acquisition of Wal Mart/Asda's Valuemad.com comparison shopping site last month, ShopSmart has a lot of marketing power behind it, starting with dishing out two million "How to Use the Internet" guides to shoppers in 240 Asda stores nationwide.

Kelkoo, though, has received a £9.25m funding from its own and Zoomit.com's investors, putting it in a buoyant position, with cash reserves of £31m and plans to float on the stock market next year. "It will be very hard for a US competitor to enter Europe now," warned one Kelkoovian. As if on cue, this week US-based comparison shopping site DealTime, which is 49 per cent owned by European media group Bertelsmann, officially launches its UK service. The fight is on.

The A&R man online

I swear I heard the music industry singing in the ear of the online world last week, a change from its usual response of shutting its ears or running screaming from the horrors of cheap digital downloads on the many start-up music sites.

In the same week that MP3.com defiantly continued its plans for a European expansion following its ceasefire with the major record labels, EMI, one of the largest music publishers in the world, shook hands with peoplesound.com. Why? Because peoplesound.com uses EMI's technology to find out whether a new artist showcasing on the site is likely to be a hit or a miss. In other words, it's another A&R tool for EMI, and it gives a dot.com launched only last year the support of a major player.

"Considering it costs about £75,000 to sign an artist, £150,000 to produce a record, £250,000 to market it, and £300,000 for the video, you are looking at a minimum investment of between £500,000 and £750,000 to sign an artist. Then you've got to get radio or TV play and even if you do, you still face a 50 per cent chance of failing. Anything that reduces that risk is seen as a good thing," commented Ernesto Schmitt, president of peoplesound.com.

Lisa Simmons is a reporter at Revolution magazine

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