About.com Scraps Freebies, ReturnPath Exchanges Names With Financiers

The dot-com that knows all about just about everything, does an about-face on free services this week. Meanwhile, an e-mail change of address firm scores $6.5 million in financing.

by InternetNews.com Staff [December 12, 2001]

Forced to deal with an extended ad market recession that has hurt revenues, New York-based niche topic portal About.com has joined the list of Internet companies scrapping freebie offerings to Web users.

The Primedia-owned company said it would no longer offer free e-mail and free Web page hosting on its network. Instead, subscribers must pony up about $30 a year to use About WebMail Pro, a premium service to be launched on December 15.

"E-mail is essentially a portal feature and we're not a portal," About.com general manager Mark Josephson told atNewYork. "Our users can keep their e-mail addresses but it's going to a paid service, like the personal Web page hosting service."

The premium WebMail service would include enhancements like 25 MB of e-mail storage, POP3 mail account to allow access through mail clients including Microsoft Outlook, Netscape Mail and Eudora.

As of December 17, Josephson said the free About SiteBuilder service, which allowed Internet users to build and maintain personal Web sites, would also be scrapped and users are being directed to the ZDNet's Sitebuilder platform, which is a premium offering.

"ZDNet uses the same Trellix technology that powered About SiteBuilder, and we've created a tool that will allow you to easily move your entire account, with all web sites intact, from About to ZDNet," the company said in an e-mail to Web page owners.

Users also have the option to convert to Freeservers.com, another paid Web hosting firm.

The About.com migration to paid services comes on the heels of a restructuring at the network of approximately 450 topic-specific Web sites.

In September, the company shaved its workforce and unveiled plans for a big jump into the e-commerce space.

About.com is under pressure from Primedia (NYSE:PRM) to stem the flow of losses, especially after the publishing giant was forced to implement deep staff cuts and a freeze on salaries and hiring.

With its unprofitable Internet subsidiaries (including About.com) performing poorly, Primedia reported net losses of $293 million ($1.29 per share) in the most recent quarter, more than 400 percent wider than the $56.3 million in losses in the same year-ago period.

Financing feat
In another example of how e-mail has come to dominate interactive marketing, e-mail change-of-address firm Return Path, which merged with competitor Veripost in October, has snared $6.5 million in new financing—no mean feat in a tight funding environment.

Sutter Hill Ventures led the round, with existing investors Flatiron Partners, JP Morgan Partners, Mobius Venture Capital (formerly SOFTBANK Venture Capital), and DoubleClick also participating.

Return Path provides a service aimed at helping businesses keep their e-mail lists free of "dead" addresses. Clients join, in effect, an e-mail partnership, which has them cooperating to keep one another's lists clean. When an e-mail user changes his address with one of the partner companies, he's given the option of making the change with the other partner companies with which he has a relationship. The system therefore helps consumers make changes more easily, which also helps Return Path clients.

"Return Path has wisely built its business by helping companies retain existing customers and increase the value of those relationships," said Greg Sands, managing director with Sutter Hill. "Recent events highlight the increasingly important role of commercial e-mail, and I've been very impressed by the progress the company has made with customers and partners."

Besides the anthrax scare, which proved to be a boon for e-mail marketers, the shutdown of Excite@Home's ISP, and the potential change of thousands of e-mail addresses that will likely ensue, also serves to highlight the importance of a service like Return Path's. The company's research has found that 32 percent of consumer e-mail addresses change annually, because of a change in ISP, job, or other events.

"We've seen a spike in e-mail address change registrations among Excite@Home subscribers in December, as well as for job changers given the fluid economic environment," said Matt Blumberg, Return Path chief executive officer. "Businesses whose customer e-mail lists contain these terminated e-mail addresses are also impacted at the height of the online shopping season. We can help them recover those unintended customer losses."

So far, Return Path has registered 2.5 million e-mail address changes, and has signed 120 companies to the service. Clients include the American Bar Association, Palm Computing, Pottery Barn and Saks Fifth Avenue. Partners include Acxiom Corporation, Bigfoot Interactive, DoubleClick, and Experian.

The funding comes hot on the heels of Return Path's merger with competitor Veripost, which occurred in October. The two start-up companies emerged at around the same time, and the merged entity is effectively the leader in the space. The first player to develop a commercial e-mail change of address service, Active Names, shut its doors earlier this year.

— End