In an effort to catch up in the industry, the Web destination joins the free trend. Users will be hit with a stream of ads.
AltaVista, a Web destination that persistently lags in popularity, thinks it has hit on the perfect gimmick to catch up to industry leaders Yahoo! and America Online: free Internet access.
The strategy's success depends on how many consumers willingly subject themselves to a constant stream of advertisements. AltaVista requires customers to click on a window of ads and Web links on the computer screen at least once an hour, or be disconnected.
But if AltaVista succeeds in luring millions of Internet customers, as well as many more visitors to its network of sites, it could trigger a new movement by large access providers. AltaVista says it has signed up 50,000 users since launching the service Thursday and aims for 1-million users within a year.
Several small upstarts, such as ZapMe! and Bigger.net, offer free Internet access that elsewhere costs up to $260 or more a year. But AltaVista stands out as the first major Web brand to join the trend.
"It's inevitable that these types of services will be offered," AltaVista spokesman David Emanuel said. "We think it's a very viable economic model."
But some were not so sure other providers would swap the monthly fees they rely on for revenue for less certain advertising sales. Joe Laszlo, who follows Internet use for the Jupiter Communications research firm, said AltaVista's action is unlikely to force the top Internet content providers to provide free access.
AOL, which drew more than 5-million new users in the past year despite raising its rates by $2 a month to $21.95, has no plans to give away the store, spokeswoman Tricia Primrose said.
AltaVista, based in Palo Alto, Calif., was sold by Compaq Computer Corp. in June to the Internet investment firm CMGI Inc. for $2.5-billion in a deal that has not yet closed.
It is depending on 1stUp.com in San Francisco for computers and other hardware needed to provide Internet access.
Some analysts say AltaVista, which ranked No. 10 among Web sites last month, has little choice but to take a radical approach.
"They have to because they're so far behind," said Charlene Li, an analyst with Forrester Research. "AOL and Yahoo! are just huge."
Only 1-million of the 63-million people online in the United States dial in for free, but that is changing as computermakers and even banks have begun to bundle free access with their own traditional services.
"From a consumer point of view, it's a bonanza," Li said. But profit margins will be tight, and few companies can afford to follow suit for long, she warned.
"There will be somebody coming out next week offering free Internet service to compete with AltaVista that doesn't require clicking on an ad. So the bar will keep going down, down, down," she predicted.
Some smaller companies offering free access, such as Bigger.net, have foundered over complaints of poor service and an endless streams of ads.
Matthias Gordon-Murer, a woodworker in San Francisco, eagerly signed up for FreeMac's offer of a new iMac computer next month in exchange for paying for three years of Internet access _ a $720 commitment.
Now that AltaVista is offering the same access for free, he's not sure the new computer is worth it. And like AltaVista, FreeMac will monitor his Internet use to send advertising in his direction _ a condition he'd rather do without.
To sign up for AltaVista FreeAccess, users must provide the company with demographic information including age, sex and ZIP code. Describing shopping habits and favorite Web sites is optional. The information _ and the ability to follow every mouse click the users make _ will be used to target the ads.