Free ISPs Proliferate
L O S A N G E L E S, June 1, 2001 -- Maybe your allegiance to The Simpsons borders onthe fanatical. Or you wouldn’t dream of bargain hunting anywhere but Kmart.Or you’d rather give up fast food than your subscription to Seventeenmagazine.
Whatever your interest, all three have something in common: in the pastyear, they’ve started offering free access to the Internet.
Yes, it’s true. Faithful fans of Bart, Homer and the whole dysfunctionalclan can sign up at Simpsons.com for a free dial-upInternet account.
Ditto Seventeen, Kmart, as well as companies as divergentas the daily newspaper RockyMountain News, golf site ChipShot.com and Gay.com.
Many of the major Web portals have also begun offering free access,including Yahoo, Excite, Lycos and AltaVista, through its Micro AV division.
More Free Access to Come
Remember when Hotmail kicked off the free e-mail craze? The number ofcompanies hoping to grab new viewers or customers by giving them free access is growing weekly and shows no signsof slowing.
The business smarts of offering free Internet access are uncertain. Publiclytraded free Internet access providers such as NetZero are losing money, andmany analysts still wonder whether free access will fly.
But it doesn’t appear to be stopping companies from giving it a try. Infact, the rush to offer free access is good news for Internet users, who canexpect an expanding array of extras such as free online storage,calendars and all-in-one message boxes when they sign up for free accounts.
New York-based market research firm Jupiter Communications projects that 6.2 percent of all Internet users will log on through a free connection thisyear, doubling to 13 percent by 2003.
Jupiter also estimates that private-label free Internet access of the kindoffered by the Simpsons.com and Kmart will account for 70 percent of allfree dial-up accounts by the end of the year, more than double what it waslast year.
“Why would a consumer want Wal-Mart for an ISP? At the first level, it’s acompany you know and trust,” said Dylan Brooks, a Jupiter analyst.“Secondly, because presumably these companies will be giving you some kindof incentive to use it, like ‘Connect through our ISP and at our Web site [to]get an extra 10 percent off of anything you buy.’”
No, Bart’s Not an ISP
The Simpsons site is called a private-label service because the TV show isn’treally in the Internet access business. Instead, News Corp.’s Fox, whichairs the show on its TV network, contracts with an Internet access providerto market free Internet accounts under the Simpsons.com brand name.
So far, the biggest players in the private-label free access business are Spinway, a private Palo Alto, Calif.,company that provides free access for Kmart, NBCi, iWon.com and 1stUp.com, of San Francisco, which providesfree access for 70 partners, including the Simpsons, Yahoo, Excite and AltaVista. Last year, CMGI bought 1stUp.com for $60 million.
The biggest free Internet provider remains NetZero, the Westlake Village,Calif., company that helped pioneer the business when it launched its freeservice in October 1998. Since then, NetZero has amassed more than 4 millionsubscribers, half of whom access the service at least once a month.
One of the latest entries in the free Internet access business is Winfire, which recently changed its namefrom Broadband Digital Group. The private Newport Beach, Calif., companylaunched a free digital subscriber line service in April. In advance of thelaunch, Winfire officials said they’d pre-registered 560,000 people whowanted to subscribe.
Users Sacrifice Privacy
There’s no such thing as a free lunch, and the saying holds true for freeaccess. People who sign up for free access make major trade-offs. Themajority of free access providers support their efforts through advertising.To that end, they require users to download a small software program thatappears on screen whenever people are online, displaying a constant streamof advertising targeted to their particular interests, much like network TVshows are spliced with commercials.
Many providers of free access also monitor every move their subscribers makewhile online, collecting data to better target ads. In their defense, mostfree Internet access providers disclose all this information up front, sopeople know what they’re in for.
A few Internet access providers are attempting to sidestep some consumers’aversion to advertising by giving them the option of turning advertisingoff, and paying for access. Surfree, aSan Francisco Internet service provider recently acquired by Eisa.com, aDallas Internet service provider, charges $14.95 a month for dial-upInternet access. However, subscribers can download the company’s Surfbar ad viewer and for every hour they have the ad viewer turned on while they’reonline, they can knock 20 cents off their monthly bill. If they spend 75hours online a month, they surf for free.
WorldSpy, a private White Plains, N.Y., company, eschews ads altogether to support its free dial-up service.Instead, the company makes money by acting as a shopping gateway, funnellingits 250,000-plus subscribers to a list of dozens of online merchants who, inreturn, pay the company fees when people make purchases.
Says Matt Gore, WorldSpy’s marketing vice president: “Free is good. There’sno doubt about it.”