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| If iWon Wins, Do Portals Lose? |
| By J. William Gurley
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| February 07, 2000
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I want to know Have you ever seen the rain Comin' down on a sunny day? --Credence Clearwater Revival
With each passing day, a new Internet company emerges with a business model that is more aggressive than those of its predecessors. First, Buy.com attacked Amazon.com with low- to no-margin online retailing. Then NetZero and others attacked EarthLink and AOL with free Internet access. Even eBay (a company in which my firm has invested) had its business model challenged when Yahoo launched an auction service with no fees. In each instance, the argument was made that fees from advertising would be enough to make up for the loss in other kinds of revenue. While the jury is still out on the long-term viability of these models, their very existence raises questions about the economics of doing business on the Internet.
Since portals are already free, the only way to offer customers a better price is to pay them. And while several sites pay visitors money, I think the most interesting is a CBS-backed company in Irvington, N.Y., called iWon.com. The iWon.com proposition is simple. The more you use its portal, the more entries you get in each of three iWon sweepstakes. Each day iWon gives away a $10,000 prize; each month it gives away a $1 million prize; and once a year it plans to give away $10 million. Apart from this opportunity to make big bucks, the site is basically just like other portals--which is pretty much the point.
Does giving away $25,650,000 a year ensure success? Well, crazy as it sounds, the initial signs look promising. The site launched last October and became the 87th-leading site on the entire Internet (according to PC Data) in its first month. By December iWon was No. 28, with more than 8.2 million unique users. Americans have always been suckers for a lottery, and this lottery has no entry fee other than your time. Certainly, one could question the absolute numbers or PC Data's methodology; all the same, the jump in traffic in such a short time is too amazing to ignore.
Does giving away $25 million a year ensure success? The initial signs look promising.
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