Free ISPs Changing Online Marketplace

The growing ranks of free Internet service providers are mostly marketing tools rather than potential revenue or profit sources, experts say, although they are gaining interest and forcing some changes in the “dot-com” field.

The free ISPs appeal to bargain-conscious consumers, often drawing new Internet users from among those who might otherwise be only “thinking” of trying the Internet without actually taking the plunge.

Once they attract at least a minimum audience level, the free ISPs are attractive and viable for advertisers, Internet analysts say. For advertisers, they are “a good, inexpensive way for serving up ad banners on the providers’ Web sites,” said Dylan Brooks, an analyst at Jupiter Communications, a cyberspace market research firm in New York.

“In fact, the advertisers don’t even have to be fussy because, even if the ISP has a low audience, the advertiser will benefit from the audience the ISP has,” he added.

One free ISP is BlueLight.com (https://www.bluelight.com), launched by retailer Kmart Corp. in conjunction with Yahoo Inc., the Internet portal. BlueLight recently announced its 1 millionth customer after only four months in operation.

“It’s to their credit that they can bring in so many customers,” said Lisa Allen, an e-commerce analyst at Forrester Research in Cambridge, Mass. “One can view it as underwriting one big marketing expense. But it’s clearly intended to help the company get new shoppers and increase the loyalty of existing ones.”

Juno.com (https://www.juno.com), a partly free service from Juno Online Services Inc., hopes to add new customers to its traditional paid Internet subscriptions, as well as fees from e-merchants who get customers through its Web site and fees from advertisers.

“There are tens of millions of Internet users who started early, and now their sons and daughters” are online, said Charles Ardai, Juno’s president and co-founder. “Our goal is the 100 million users who will come in in the next few years.”

In some ways, the free services represent an evolution in the use of the Internet. Free access developed as a way of undercutting the main players, and monthly fees charged by the major providers have been falling.

But most of the free operators are not making money.

Juno had a $15.7-million loss in the final quarter of 1999, in great part because of “our spending $16 million to acquire new subscribers,” Ardai said.

Fran Maier, BlueLight’s marketing vice president, said: “We thought that a free Internet provider could be promoted by Kmart as a traffic builder. But we found that traffic can be driven to both stores and the Web site.”

However, she added, “We don’t expect to make a profit for at least two years.”

Get2Net has focused on adding traveler users to its kiosks in airports and highway gas stations. Stenbeck Group of Stockholm, which owns Get2Net, operates 6,000 pay phones in Europe and saw the free Internet service as a good addition to that business.

“We felt that people in this country [the United States] did not want to pay for the Internet, especially when they are on the run,” said Pamela Osborne, Get2Net’s marketing communications director. “That proved to be right. We have 162 terminals and each is getting between 30 and 40 users per day. We hope to have 1,000 terminals in the next couple of years.”

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Other Free ISPs

* AltaVista (https://www.altavista.com)

* Freeinternet (https://www.freei.com)

* Freewwweb (https://www.freewwweb.com)

* Get2Net (https://www.get2net.com), a kiosk operator

* Freedom (https://www.ifreedom.com)

* NetZero (https://www.netzero.com), one of the largest providers, which has arranged a deal to beincluded on some Compaq computers

* The Simpsons (https://www.thesimpsons.com)

* Worldspy (https://worldspy.com)