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What's Your Price?
by Taylor & Jerome

Bill Gross wants to shine a flashlight down your shorts.  Luckily, millions of people are eagerly ahead of you in line.  This madcap marketing scheme is trademark Bill: bold, a little scary, and just loopy enough to turn scores of investors into millionaires.  It's driven by Free-PC, his latest Internet startup, a company that hands out... well, free PCs--Pentium-class Compaq Presarios, to be exact.  You also get two years of free Internet access and e-mail.

In return, you must undergo the marketing equivalent of a proctology exam, providing the company with all manner of demographic, financial, and personal details about your life.  You must let Free-PC (www.free-pc.com) follow you around the Net.  And you must promise to be at your PC at least 10 hours a month (your free Presario automatically tattles to the company if you fail to log enough hours).

Kick Me  These aren't the only catches.  Just 2GB of the 4GB hard drive is available for your files.  The other half is reserved for folks such as Barry Diller--a $10 million investor in Free-PC--who want to stock you system with movie previews and advertising.  The viewable area on your puny 15-inch monitor is further reduced by an inch of nonremovable banner ads at the bottom and along the right side.  At first, these come-ons will cater to the demographics you provide.  Over time, they'll goad you according to your shopping patterns, entertaining you with "content" about things you're interested in (buying).

Who would fall for this ruse?  Well, aside from the millions who hit the site in the first 48 hours--requiring the company to add 20 servers to its system--probably no one.  It's surprising how fast a half million rubes dropped their knickers on the spot, revealing personal info, hoping to be among the initial 10,000 households to snag free hardware.

OK, you're not surprised that large numbers of people will sell their souls for a box of circuit boards (large numbers of people will sell their souls for a box of corn flakes).  The real puzzler is how Free-PC plans to make money off these purchased souls.

Bill Gross is no dummy.  His other startup, idealab, has incubated and launched more than 20 Internet companies.  Among these were Citysearch.com and eToys, both runaway successes.

From this experience, Gross discovered that repeat customers brought in the big bucks.  The trick is in getting them to stick around your site.  With Free-PC, he hopes to create "the stickiest customers in history."

His words, not ours.

Like Glue  By knowing your shopping habits, fetishes, and net worth, Gross believes he can create the ultimate one-to-one marketing.  He calls it a new broadcast network.  Marketers will pay a lot for this data, he believes, both in highly targeted advertising and in commissions for online sales.  Because of the explosive response to its free PC offer, the company scotched plans to distribute machines on a first-come, first-serve basis.  Instead, it's selecting recipients based on their demographics.

This makes sense.  Trouble is, surfers with the highest incomes, best credit ratings, and hungriest appetites for online shopping typically don't need free PCs.  And they're loathe to give anyone a peek up their financial skirts.

Paying roughly $500 per computer, Gross thinks highly of the information he plans to collect.  Will Web merchants hold it in the same regard?  We think not.  And every free PC that neglects to go shopping becomes a substantial liability.

Turning cybermerchants into Big Brother is a bad idea.  The privacy concerns are outrageous.  And the business model itself rests on jittery assumptions.  Bill Gross thrives on precarious odds like these.  With slumping prices for hardware, the idea is destined for an early grave.  But if anyone can keep it alive, Gross can.

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Created on April 12, 2020.
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