Free US Internet service providers can't exist without advertising, or so it would seem as the first ad-free free ISP experiment fails.
White Plains, N.Y.-based WorldSpy, was launched in November 1999 and reportedly amassed 250,000 subscribers since it began offering service. It became defunct as of June 30, and will offer its subscribers a switch to Juno.
"We are not buying WorldSpy as a company, that is one important distinction I would like to draw," said Charles Ardai, Juno president and chief executive. "They are referring customers to us and, if they succeed, we would then compensate WorldSpy for that subscriber."
While Ardai refused to reveal how much Juno would pay WorldSpy per subscriber, he did indicate that Juno would pay with its stock, not cash. Juno will forward "switchers'" e-mail to their Juno accounts, so former WorldSpy customers would be able to continue using their old e-mail addresses. Juno offers both free and premium Internet services.
The business plan underlying WorldSpy was elegantly simple. Forget annoying ads - people who hated pop-up ads were invited to join an ad-free environment that would pay for itself via e-commerce.
The brain behind WorldSpy, commodity trader-turned-dot-com entrepreneur Alan Clingman, envisioned WorldSpy as proof that knowledge of people's shopping habits would be worth more in the long run than mindless banner displays.
Clingman told Inter@ctive Week at WorldSpy's launch that the ISP would break even if 25 percent of its subscriber base would buy US$240 worth of products from WorldSpy's site once per year.
The key to being able to close this number of sales was in technology provided to WorldSpy by another one of Clingman's companies. MicroPortal.com.
MicroPortal is capable of creating instant profiles on ISP customers. The information was then used to adequately market goods and services on WorldSpy's home page to these potential buyers. This plan apparently crashed and burned.
"If you don't charge your customers and you don't show ads, there just isn't enough revenue. That business model doesn't work," Ardai said.
Juno does both. In fact, according to Ardai, 660,000 of its subscribers pay for "premium" Juno services. The company had 3 million subscribers as of last quarter's results.
Clingman was traveling and wasn't available for comment. WorldSpy President Sharon Rothstein was also unavailable for comment.
This is not the end of the line for Clingman and his team. WorldSpy was just one of the projects of Clingman's incubator firm, iCentennial Ventures. MicroPortal and 2000 Logistics are two others.
