Pay-to-surf site moving into prizes instead

An online direct marketing company with a "pay-to-surf" program will announce later this week that it is changing its name and its game.

mValue will become Sweepsurf.com, and instead of paying members by the hour to search the Web, the Los Angeles-based company will have regular drawings for cash prizes.

mValue chief executive Jay Haynes said the change is a result of focus group research and discussions with its members.

"Our focus groups and members told us they wanted to get the opportunity to win bigger prizes," Haynes said.

mValue customers download a program that delivers advertisements and promotions to them as they surf the Web. Currently, mValue pays members 50 cents per hour to view the ads as they surf. Members can earn additional money by referring friends to the program.

The change comes amid turmoil in the online direct marketing industry.

Last month, Hayward, Calif.-based AllAdvantage.com laid off almost 10 percent of its staff and withdrew its planned initial public offering. In April, MyPoints.com agreed to acquire rival Cybergold in a $157 million all-stock deal.

Meanwhile, CoolSavings.com, MyPoints.com and Promotions.com have seen their stocks plunge to near their 52-week lows.

The pay-to-surf model is costly. AllAdvantage reported paying $32.7 million to members from December to March but earned only $9.1 million in the same period. mValue, a privately held company, refused to comment on the financial information with their old model or with the new program.

The move into offering cash-prize drawings will put mValue into direct competition with sites like iWon.com. But Haynes said he did not find that prospect daunting.

"Every space on the Web is fairly crowded now," he said. "Luckily the Web continues to grow, and we're going to be participating in that growth, hopefully."

mValue's change of direction came to light in an email mistakenly sent to some of its customers. In the email, an mValue representative told members that the company would pay off its outstanding debts to members owed more than $20 by the end of September. The representative said mValue members who had accrued less than $20 would have to request a check from the company through its Web site.

"Thank you so much for your mValue membership," a company representative said in an email to one mValue customer. "We look forward to seeing you on Sweepsurf."

Haynes said the email was a "draft" version of the company's plan. He declined to say how it differed from the company's upcoming announcement.