August 18, 2000
by Tom Mainelli

(IDG) -- Thinking of trying out one of those services that pay you to
surf? Better do it soon. Their own popularity--and vulnerability--is
threatening their survival.

The latest casualty,, suspended its surf-for-pay
service in July while it looks for a company willing to partner with
or buy it. The service experienced huge growth spurts shortly after
launch, but the site's engineers soon realized this was due to hackers
generating massive numbers of fraudulent registrations.

[The use of 'hackers' here is wrong and misleading. Perhaps he
should have substituted it with 'CNN journalists' instead. Anyone
had the capability of creating fraudulent registrations. Trying to
blame "hackers" generically is irresponsible and incorrect.]'s shutdown comes on the heels of news that
AllAdvantage--described by Jupiter Communications analysts as a
"pioneer" in the unproven surf-for-pay business model--laid off 10
percent of its employees. Earlier in July, AllAdvantage shelved plans
to go public after a fiscally disastrous stretch, when it paid out
$32.7 million to surfers on advertising revenues of just $9.1 million.

Growing Up Too Fast's story sounds like a cautionary tale a wise old
venture capitalist might tell Internet startup cubs. Launched on June
5, the site offered a modified Internet Explorer browser (with
integrated ad space) that you could download by entering personal and
demographic information.

When you used that browser to surf the Web, the company would send you
targeted advertisements based on your demographics and the sites you
visited, company spokesperson Bill Johnson says. For example, a female
surfer visiting the clothing store might receive ads for other
women's clothing sites. For every hour surfed, you accumulated 50
cents of credit toward items in the company's prize catalog, which
included notebook computers and exercise equipment.

The idea was to attract a large pool of users that advertisers could
then target very specifically, Johnson says. Growth was manageable at
first, with 3000 people registered in the first 15 days of operation.
Then's officials decided to drop the relatively
sparse prize catalog and offer something people really wanted: 50
cents an hour of the popular online currency Flooz, accepted by a
growing number of Web merchants.

"It was like the lamb entering the wolf's den," Johnson says.

The Flooz offer attracted new customers by the thousands. By June 25,
20 days after launch, had 10,000 registrations, and
participation snowballed from there. In one day the site drew nearly
4500 registrations. The first week of July the site surged to 65,000
total registrations, and staffers started to become suspicious.

Automated Surfers Cash In

"We assumed people wouldn't cheat us," Johnson says, admitting that in
retrospect this was naive. Company officials soon learned that crafty
computer users were finding ways to register hundreds of accounts, and
the majority of the site's new "users" were fraudulent.

Because the site wasn't set up to verify people's registration until
they tried to claim their earnings, it was nearly impossible to stop
the flow. The small company, with just five technical support people
on staff, even hired several of the persons accused of hacking the
site in an effort to stop it--to no avail.

["persons accused of hacking the site". This wording suggests people
had compromised the machines hosting their service. Compared to the
first paragraph, this becomes a big discrepancy. Fraudulently creating
additional accounts does not constitute 'hacking' their site.]

On July 10 the company suspended operations.

Now is seeking to partner with a security company
that can assist with its registration problems. Alternatively, it may
sell out to another pay-to-surf site, Johnson says. He would prefer to
relaunch the site now that the company has a bit more experience.

"We had no idea how large the cheater problem was," he says. The
hackers communicated with each other and even set up Web sites
explaining how to cheat the site, he says. Johnson estimated only 9500
actual users produced the 65,000 registrations. During its last week
of operation the company paid out nearly $315,000.

Flawed Model?

Despite's problems, Johnson says he still thinks the
paid-to-surf model can be successful--with some modifications. If relaunches, he'd like to see payments based on a
percentage of advertising revenues, instead of flat hourly rates.

Johnson says advertisers still value information that helps them save
money on today's "wasteful and deceptive" banner ads.

"We weren't trying to pump up the numbers," he says. "We were trying
to be honest."

Uphill Battle

Honest or not, companies like face an uphill battle,
says Harry Wolhandler, vice president of research at Web marketing
analysis firm ActivMedia Research.

Even if they can avoid fraudulent signups, these companies may not
attract the types of users advertisers really want, he says. The most
desirable users would likely not hand out personal information--and
give up privacy--to earn 50 cents an hour. "For people who like free
stuff, it's fine," Wolhandler says. For others, however, such services
simply aren't worth the hassle.

Still, a recent Jupiter Communications survey suggests that a rather
large percentage of people actually might consider surfing for
compensation to be worth the hassle. In that survey, 47 percent of
respondents say they would provide a Web site with personal
information in exchange for a chance to win a prize.