Yahoo! lines up BT deal

The European chief of internet giant Yahoo! has agreed a multimillion pound deal with BT to promote a raft of new broadband services as it attempts to bring in more subscription revenue.

Mark Opzoomer, managing director of Yahoo! Europe, is looking to introduce range of paid-for services to increase the company's revenues after the initial success of similar moves in the US.

The BT deal will see the two companies co-operating on the promotion and marketing of a new Yahoo! UK Plus product, which will be sold alongside BT's direct access high speed service BT Broadband.

The move is Yahoo!'s first foray into the area of paid-for services in the UK, and although Mr Opzoomer said pricing would be "very competitive", he refused to say how much it would cost per month.

The service will include a bundle of premium products and services, including multiple email accounts, parental controls, digital photo storage and anti-virus software.

Mr Opzoomer told MediaGuardian.co.uk that there were plans to launch further "bundles" at regular intervals, tailored to specific groups such as "gamers" and "entertainment freaks".

Yahoo! will seek content deals with broadcasters and rights holders to provide exclusive video and music content, he said.

"The way forward is through offering consumers a range of products and bundles from which they can choose, rather than charging them a blanket subscription," added Mr Opzoomer.

"It's a very good time to begin the process. There is generally more of a willingness to pay for services among broadband customers. BT is the best partner in the UK market and we will partner with other telcos around the world," he said. In the US, Yahoo! has developed a similar partnership with SBC to deliver its broadband services.

Yahoo! recently reported a 50% rise in revenues as a result of its move towards paid-for services in the US and better than expected ad revenues,

"With more than 2.2 million unique paying relationships, we have been able to clearly demonstrate Yahoo!'s leadership in the premium services area, and we are excited to build upon our momentum with this partnership," added Terry Semel, Yahoo!'s chief executive, who has led the drive towards paid-for services.

However, the deal is likely to further complicate relations between BT's retail arm, which sells the direct access service and its service provider arm BT Openworld, which also sells its own broadband package.

Pierre Danon, the BT Retail chief, said that Yahoo! was the "strongest internet brand in the UK and Ireland", comments sure to infuriate his colleagues at BT Openworld.