LookSmart "Free" Clicks Expire

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"Free" clicks given to LookSmart customers as part of a legal settlement ran out this week, the search firm said.

The clicks were distributed to LookListings customers over a 20-month period as part of the settlement of a class action suit filed on behalf of LookSmart's customers after the company switched to a pay-per-click model.

In 2000, 2001 and 2002, an unspecified number of customers paid from $99 to $299 to be included in the company's LookListings directory for what was described at the time as a one-time fee. In 2002, LookSmart switched to a pay-per-click model, leaving those customers high and dry.

A class action suit was filed on behalf of the customers and LookSmart settled out of court. "Since the most anybody paid was $299, the plaintiffs were all given 20 months at 100 free clicks a month, a value of 15 cents per click, the going rate for paid inclusion," said Dakota Sullivan, VP of marketing for the company.

"The clicks are just now expiring. Clicks for those who purchased the product in 2000 or 2001 actually ran out in December. There are two separate expiration periods for free clicks," Sullivan said.

The lawsuit is not the only obstacle LookSmart has had to contend with. In October 2003, Microsoft's MSN opted not to renew its contract with LookSmart, leaving the company reeling. LookSmart had depended on MSN for about 70 percent of its revenue. It's been fighting back ever since.

As part of its recovery strategy, at the end of April, the company acquired filtering software product Net Nanny. Prior to that, in December 2003, the company announced plans for drastic layoffs. The head count has been reduced to 152 people, according to Bill Lonergan, the company's CFO. Staff numbered 368 when LookSmart last made that information public.

The strategies appear to be helping. The company beat Wall Street estimates and revised its guidance for 2004 upward in its most recent earnings report.