August 3, 1999 2:20 PM PDT

FreeMac signs Peter Max as spokesartist

A new company is entering into the free-computer foray by "thinking different" about the nascent market by offering free iMacs and signing on a '60s cultural icon to be a spokesperson.

As first reported by CNET News.com, start-up FreeMac.com, unveiled a plan to give away 1 million Apple iMac computers over the next two years. Initially, the company hopes to give away 10,000 computers by the end of the year.

The computers will come complete with Internet service from EarthLink and e-commerce services from Cybercash to qualified applicants.

Consumers will be able to register in September to get a shot at a free iMacs, the company said. Additionally, those who submit demographic information will receive a poster designed by pop artist Peter Max. Max serves as Freemac's spokesperson and "chief creativity officer," according to a company statement.

The start-up announced its plan in preparation for a presentation at a BancBoston Robertson Stephens conference in San Francisco today.

The company said it will differ from other free PC offers by its business model--which relies on a "community" of like-minded users.

"I think the [free pc] companies on the Internet that are either 100 percent dependent on ad revenues or ISP fees as a way of making their model work are on thin ice," said FreeMac's chief executive Jonathan Strum. "I'm hoping that because we have a more full-featured business model that diversifies revenue streams, that will provide us a backstop," he said.

FreeMac.com will profit from advertising and e-commerce revenue, as well as by signing on subscribers for Earthlink's Internet service.

For instance, a requirement of the offer is that customers agree to pay for three years of EarthLink Sprint Internet access service at the standard $19.95 per month and qualify for a FreeMac Visa card. EarthLink is the default ISP on all iMacs.

Like Free-PC, FreeMac.com will give currently available iMacs--not leftover models--to individuals who meet certain demographic criteria. In exchange, these iMac users will become members of a "community," said Strum.

That means users will get to build their own Web pages and access what the company said will be exclusive multimedia content stored on 2 gigabytes of space on the iMac's hard disk drive. One possibility includes broadcasting live events to users, such as the painting of a special mural by Max in commemoration of the millennium.

Strum's other hope is that this community will be inclined to shop on the Internet. To that end, FreeMac has partnered with Cybercash, an e-commerce technology and services company. Cybercash will make the InstaBuy shopping service available on all computers FreeMac ships.

FreeMac community members register for their "wallets" as part of the registration process.

Strum said today at a press conference that the company will rely on permission marketing, meaning they are invited to respond to product and service offerings through promotions such as contests, rather than a continual revolving of banner ads on Web pages. The company hopes that consumers will continue to purchase products online through the Instabuy service in order to gain a source of ongoing revenue.

Apple's Reaction?
Industry observers have been expecting Apple to begin offering some kind of Internet access, despite Apple interim chief executive Steve Jobs's somewhat dismissive comments at a recent trade show. Nearly all of the major PC companies have either started selling their own ISP service or offering free service for limited periods. The iMac is also dropping in price, making subsidizing the cost of the hardware in an ISP contract easier to do.

Nonetheless, FreeMac will likely face intense scrutiny. In recent weeks, some of the PC companies that offer "free" or heavily discounted systems have floundered. Customers have complained about late orders and poor customer service, among other problems.

The new company won't likely be classified as a standard Apple dealer, because it is giving the machines away, rather than selling them, an Apple spokeswoman said.

 

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