Article on NetZero, ad-supported free ISP,same business model as X-Stream:
5/4/99
@d:Tech San Francisco Coverage: Breaking News
Ad-Supported ISP NetZero Gains More Eyeballs
VC Dollars on the Way
by Seth Fineberg
Managing Editor
Big things are happening for the once tiny and untested NetZero — the ISP that allows users to ride the Internet for free, provided they can deal with banner ads that do not close. Now on its 900,000th subscriber after only seven months of existence, the company has signed a co-branding agreement with LookSmart; it is also expecting to wrap up a "multi-million-dollar" round of VC financing in the next couple of weeks.
The deal with LookSmart will give NetZero access to a directory of over 1 million site listings in over 30,000 categories. Executives from both companies declined to discuss details of the partnership, other than stressing it will ultimately "add a rich experience for customers the moment they log on," according to NetZero CEO Mark Goldston.
The financing round will consist of NetZero's current VCs and several others. Goldston explained that the capital will help the company expand marketing efforts and grow its product offerings, but he did not commit to a decision on a public offering.
"If an IPO is warranted, yes it could happen in six to nine months — but for now we are concentrating on other things," he said.
One of the new product offerings will be called Zero Port, essentially a Java-based, customizable addition to a banner that supplies a user with more information about a product or service. Example: a banner ad for Charles Schwab can contain personalized, real-time stock quotes scrolling under the banner message.
NetZero started off with a questionable business model that doesn't seem to be causing problems for advertisers or content providers. The free ISP sells ad space at a $30-$65 CPM for banners that can not be closed or minimized on a page. (see October story).
Goldston claims that NetZero is able to sell ads at "the higher end of the CPM range." Also, he says the company now has 50 advertisers and that publishers and advertisers alike have "really had no problem" with the fact that NetZero banners block content on a given page. He also claims average click-through rates on these ever-present ads has been 10 percent, mainly because they are targeted to NetZero users based on their demographic information. |
