Safe House Online data storage ain't free anymore, but your company still needs it.

Free? You want free online storage? Of course you do. We'veall been taught to regard free Internet this and that as our right.(The only cure for that line of thinking seems to be to start yourown Web business.)

But, like so many other dotcoms, online storage providers arelearning they can't rely on Web ads or relationship-marketingnewsletters to cover their costs. When Net advertising wanedearlier this year, online storage companies' free userssuddenly turned from assets into overhead. In dotcom parlance, theycouldn't be "monetized."

Netdrive.com, which once provided 100MB of freestorage, has quit providing. Ditto for Myspace.com, whose 7.6million customers could once get up to 300MB free. High-profileDriveway, once a partner to MSN, has discontinued its end-userstorage services. The best it hopes to do now is sell its storageplatform to other Web sites.

The air hasn't gone out of the market, though: Survivors arescrambling to find new revenue models. Likely, they'll stumbleon a combination of end-user subscriptions and software sales. Newmarket entrant Everything Backup never even considered offering itsservices for free, says president and CEO David Roekle; and Xdriveand My Docs Online now charge for storage they previously gaveaway. Only FreeDrive still offers free storage (cut back from 50MBto 20MB), and it's making every effort to sellsubscriptions.

The problem is that even though users are quick to sign up foranything that's free, that doesn't mean they'll use itregularly-much less respond to marketing e-mails or ads. So who arethe most active online storage users and the most willing to payfor subscription-based service upgrades? Businesspeople. That'swhy so many sites are recasting their services with highersecurity, wireless data access and other extras that appeal toentrepreneurs.

Why bother with online data storage? Two words should suffice:rolling blackouts. Today California, tomorrow all the rest of thepower grid. Why not just back up at your worksite? Sure, but wheredo you store the tapes and disks? Close to the PC or server beingbacked up? Lightning, flood, earthquake, tornado, fire and burglaryall threaten them.

Security experts have always insisted you should back up dataoff-site. And once a file is online, it's easier for you toaccess from home or the road, share it with remote co-workers oruse it to populate your company's Web site. A few providerseven let you use mobile phones to access data or forward it to PCsand fax machines.

The provider you choose should have backup power,mainframe-quality environmental controls, rigorous security and, ofcourse, a system of backups for your backups.

Who's Who of Who's Left

Nothing separates the looky-loos from the serious customers likeasking them to pay. Phil Ressler, Xdrive's senior vicepresident of marketing, expects to lose 90 percent of his 9.5million customers as a result of his company's new $4.95monthly minimum. But he figures he needs less than 20,000 users tomake it a go, and he's already converted more than 95,000 topaying customers.

To further its professional appeal, Xdrive has upgraded itssoftware platform to provide faster transfer speeds, heightenedsecurity, peer-to-peer file sharing and tech support. ThroughXdrive, you can send files as e-mail attachments using anyWeb-enabled device, including mobile phones.

The company has also struck a deal with Microsoft so that itssite is one of the options for storing Web pages online offered bythe Web Publishing Wizard of Windows XP.

Partnerships like that can help companies attract customers inbulk. That's how My Docs Online of Naples, Florida, gets mostof its subscribers. Bell Mobility and Nextel customers use MyDocs' service to receive, view and forward files as e-mailattachments using Web-enabled devices.

My Docs never bought into the ad-supported model. Except for afew thousand Beta testers, individual subscriptions start at $34.95per year for 50MB.

Although FreeDrive still offers a free 20MB "TestDrive," try to find out about it from the company's Website. Arguably the largest storage provider, with 15.5 millionsubscribers, FreeDrive would rather you upgrade to at least a $4.95monthly subscription.

FreeDrive president and COO Dave Falter says about 30 percent ofhis 2 million business users have followed suit-that's 30 timesthe rate of consumer upgrades.

FreeDrive subscribers enjoy online chat, private and public filesharing, Web page clipping and access to files from Palm handhelds.Companies can negotiate prices for storage in 1GB increments.

The best prices for large amounts of storage can be found atEverything Backup, which sidestepped the temptation to provide freestorage. The still-small company's subscriptions start at$34.95 per month for 1GB of space.

Like most of the other providers, Everything Backup downloads anapplication to your desktop that you can use to map your drives.Everything Backup's software icon also lets you scheduleautomated backups of single files, directories or entiredrives.

Online storage will never replace your local hard drive, butit's a necessary adjunct. And if you're storing sensitivedata online, shouldn't it be in a secure facility whoseoperator has some chance of being there tomorrow?

Mike Hogan is Entrepreneur's technology editor.Write him at mhogan@entrepreneur.com.