AllAdvantage.com Tweaks Pay-for-Ad-Viewing Model, Angers Members

  |  June 5, 2000   |  Comments

As pay-for-ad-viewing AllAdvantage.com prepares to gopublic, it's raising the ire of members in the US, by reducing the maximumamount of money it will pay to users per month.

As pay-for-ad-viewing player AllAdvantage.com 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, AllAdvantage.com 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. AllAdvantage.com 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 AllAdvantage.com chief executive officer Jim Jorgensen in an email sent out to members.

The company did not respond to inquiries from internetnews.com 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, AllAdvantage.com 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 AllAdvantage.com'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, AllAdvantage.com 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 alt.consumers.free-stuff reveal people suggesting alternatives to AllAdvantage.com such as DesktopDollars.com, MVALUE, and ClickDough. Of course, these anonymous postings should be taken with a grain of salt.

AllAdvantage.com 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.

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