Tweaks Pay-for-Ad-Viewing Model, Angers Members

As pay-for-ad-viewing player prepares to go
public, it’s raising the ire of members in the US, by reducing the maximum
amount of money it will pay to users per month.

Rather than the 50 cents per hour, with a maximum of 25 hours a month, that
the company formerly paid, is reducing the payment in June
to 53 cents per hour, with a maximum of 15 hours per month. Under the
original model, a user (with no referrals) could earn up to $12.50 a month.
Under the new pricing structure, that same person can earn only $7.95 a
month. pays members for surfing the Internet and viewing
ads on a software toolbar that it distributes.

“These changes will enable us to achieve a balance between the needs of our
valued members and sponsors around the world,” said chief
executive officer Jim Jorgensen in an e-mail sent out to members.

The company did not respond to inquiries from by our
publication deadline, citing the need to direct all questions through its
legal department because of Securities and
Exchange Commission
“quiet period” regulations.

If postings on Usenet newsgroups are any indication,
members are beginning to look for alternatives to the service. Many are
citing technical problems with the “viewbar” on which ads appear, while
others want to get paid more for surfing.

What is especially interesting about this development is the timing of the
change. The new pricing announcement comes as the company is in its “quiet
period” before its initial public offering. This fact, along with the
latest stock market shakiness with regard to Internet offerings, could be
an indication that the company feels it needs to shift its model to reduce
cash burn.

Payments to its members are’s single greatest expense. In
the period since the service was launched in March 1999 to the end of that
year, the company laid out $17.1 million to its members. Members using the
service during the fourth quarter of 1999 earned an average of $4.14 per
month through the service. At the end of January 2000, AllAdvantage had
more than 5.3 million registered users, 1.7 million of which were active
users of the service. In January 2000, the company delivered over 6 billion
advertising impressions.

Yet, in its filings with the Securities and Exchange Commission, says it runs the risk of losing members as a result of
changes in its payment policy.

The document reads: “A large percentage of our referrals come from members
of our A-Plus group, which consists of members with 20 or more referrals
each. Changes in our payment policy, or the failure of our payment policy
to match that of a competitor, could have a disproportionate impact on our
A-Plus group, which might result in a disproportionate decrease in future
membership growth.”

And it appears those dedicated members are concerned. Usenet postings on
forums like reveal people suggesting alternatives
to such as, MVALUE, and ClickDough. Of course, these anonymous
postings should be taken with a grain of salt. earns its revenues from advertisements and sponsorships of
its “viewbar,” as well as from cost-per-lead deals. The company originally
filed for its initial public offering in February 2000, but it has not yet
managed to get its offering out.

News Around the Web