September 27, 1999 4:35 PM PDT

CMGI to acquire free ISP 1stUp

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Internet holding company CMGI said today that it has agreed to buy free Internet service wholesaler 1stUp.com, in a move that solidifies the company's moves toward creating a full-service Web access and content powerhouse.

San Francisco-based 1stUp is the same company that provides CMGI affiliate AltaVista with its free ad-subsidized Internet access service, launched in August. The start-up also has signed a deal to provide its free service to Bolt.com, a teen-oriented Web portal.

The deal comes as CMGI has been moving to more closely integrate its various Web properties in hopes of taking on established Web players like Yahoo and America Online.

AltaVista, which the company agreed to buy from Compaq Computer in June, is turning into a kind of flagship for CMGI's properties. The portal has added several new services each month and is planning to launch a new version of its Web service next month.

The new CMGI-centric AltaVista is being designed to drive its huge user base toward other affiliated properties. The redesign will be followed by a multimillion-dollar ad campaign aimed at drawing Web-savvy surfers, sources have said.

Executives from the two companies today said that 1stUp's service will be tightly integrated into the rest of CMGI's stable of Web properties, such as Internet infrastructure company NaviNet and Web ad companies Engage and Adsmart. CMGI last week also agreed to acquire Web ad service firm AdForce.

Executives said that these companies will work well with 1stUp's ad-supported business model. Like other free ISPs, 1stUp's software allows consumers to go online for free, as long as they run a small application that tracks their interests online and displays highly targeted advertisements based on their online movements.

Engage provides ad-targeting technology to Web sites, a feature that executives said is likely to increase 1stUp's targeting capability, while Adsmart provides online ad technology to the advertisers themselves.

But today's purchase solidifies CMGI's desire to link its affiliates more closely to consumers. 1stUp acts as a wholesaler, allowing companies like AltaVista or Bolt to offer free ISP services under their own brand. CMGI's sprawling network of Web companies will now easily be able to take advantage of this service.

"The single largest trend affecting ISPs is low-cost Internet access, and we've been anticipating and building for this eventuality for several years," CMGI chief executive David Wetherell said in a statement. The company will offer the free ISP service to its partners, including other e-commerce and equipment retailers, he added.

The companies did not release terms of the acquisition.

CMGI today reported that fourth-quarter profit surged thanks to its investments in companies such as GeoCities, which was acquired by Yahoo earlier this year.

 

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