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Yahoo!, Spinway Duo to Deliver Free Dial-Up

Yahoo! Inc. Monday selected Internet service facilitator Spinway Inc. as its preferred partner for free dial-up services.

The two firms agreed to co-brand free Internet access services for Yahoo!'s business and marketing clients. Yahoo! content will be featured as the start page for the free Internet service.

Under the terms of the agreement, Yahoo! will also represent certain advertising inventory on Spinway's network.

Drew Lanham, Yahoo! senior director of business development, said Yahoo! intends to build upon Spinway's success in the free dial-up market.

"By leveraging Yahoo!'s Fusion Marketing platform, our agreement with Spinway offers a value-added extension of Yahoo!'s personalized services and commerce solutions," Lanham said.

Spinway already provides co-branded free dial-up services for Kmart's BlueLight.com, Ace Hardware's Ourhouse.com, Spiegel.com and other online branding initiatives.

Danny Robinson, Spinway founder and chief executive officer said teaming with Yahoo! furthers it ability to build another online branding success story.

"Through this agreement, Yahoo! and Spinway will enable more brand leaders to create a quality online presence that bridges the gap between the online and offline worlds," Robinson said. "Together with Yahoo!, Spinway can expand the reach of advertisers online and offer integrated marketing solutions that establish direct relationships with end consumers."

Although several free service providers bit the dust last week, Robinson, said its services would not meet the same fate.

"The success or failure of free ISPs depends heavily on each vendor's business and revenue model," Robinson said.

"Spinway's business model is to partner with companies like KMart and Ace Hardware who are brand leaders with expansive brick and mortar distribution means," Robinson added. "It's enabled us to become the fastest growing free ISP with the lowest churn rate in the industry."

Robinson said that free ISPs that have to spend the time and resources to build their own brand, making already tight margins an operational nightmare.

"Worldspy, for example, relied heavily on an e-commerce revenue model, but the profit margin for an advertising model like Spinway's is a lot higher," Robinson explained. "Also, placing too much emphasis on any free ISP's user base is ineffective because many of the users that joined some of these early ISPs tend to switch from one to the other, or they use the free ISP as their secondary access point."

Robinson contends that Spinway's business model is a hit because it has enabled the firm to acquire more than 3 million users in six months.

Robinson said many of Spinway's subscribers are new to the Internet and offering access for free is a great way to lure first time users to the Net, but free access is not enough to keep users coming back for more services.

"Touting the amount of users alone is not enough," Robinson said. "Instead we should be asking questions about the quality of customer service, the users' affiliation with their ISP's brand, the churn rate, whether the users are new to the Internet, and whether the free ISP is their primary Internet access provider.

"In the end, the answers to these questions will determine who becomes the market leaders in the free ISP market," Robinson said.