Free Email is Worth Only $0.0025 per Month

How much income do Microsoft, Yahoo and Google earn from your free email account? Only about one quarter of a cent per month, according to new data from China, the world's largest online market.

The 470 million free email accounts registered by Chinese netizens generated $3.64 million in advertising revenue for service providers like Yahoo and Hotmail during the last three months of 2006, according to data from the Beijing office of research firm Analysys International. This indicates that the average income from a single account was only $0.0025 per month

China doesn't like Hotmail and Gmail

Apart from Yahoo, foreign email providers are not popular in China. While local firm NetEase claims its users have registered more than 170 million email accounts, Hotmail has only 7 million and Google's Gmail only 1.5 million. The total for Yahoo China, Yahoo's joint venture with local firm Alibaba, is 77 million; local firms Sina and Sohu each claim slightly more.

If the free email revenue was shared equally between companies, then the largest provider, Netease, would earn less than half a million dollars per month from advertising on the service. On this speculative basis Hotmail would earn only $17,500 per month, and Google only about enough to buy a high-end laser printer for its Beijing office.

As China has about 140 million internet users, the total number of free email accounts reported by Analysys, 469.8 million, indicates that many users are signing up for multiple accounts. The company did not explain how it made its estimates, although in the past it has relied largely on data supplied by companies for such surveys. There's also no indication that the statistics distinguish between active and inactive accounts.

The estimates measure income earned directly from free email, and do not attempt to account for income earned from users who come to check email, but then continue on to use other services on a portal site - and also ignore the generally positive impact on brand value.

The total income from China's email market, including free email, paid personal mail and enterprise mail was $11.56 million in the last three months of 2006. We are awaiting further clarification from Analysys regarding some of these figures.

Free email income worldwide

google gmail china screenshotIt's difficult to determine how these free email advertising revenue estimates from China might compare to those from other countries. Chinese netizens are among the wealthier and better educated members of their society, but their average disposable incomes are still less than 20 percent those of Western internet users. This lower spending power makes them less valuable to advertisers, and reduces the amount that an advertiser will pay per advert.

On the other hand, people in China have traditionally been less exposed to sophisticated, intrusive advertising than people in more developed countries, and they tend to be more trusting of perceived authority sources – although these traits are changing.

As a result of this, they are generally more receptive to advertising, and less likely to see a difference between advertising and other sources of information. These factors make them more likely to look at adverts and more likely to believe what they read – increasing the effectiveness of advertising, and therefore ad prices.