ISP DOING A-OK NETZERO SET FOR PRIMACY.

Byline: Jesse Hiestand Staff Writer

WESTLAKE VILLAGE - Already the leading free Internet provider, NetZero Inc. stands to reap thousands of new customers with the demise of two chief competitors, including AltaVista Co., which will end its free service Sunday.

Palo Alto-based AltaVista plans to cut off some 4 million users because its service provider, 1stUp.com of San Francisco, is going out of business - ending service to 130 other companies that relied on its free access.

Also this week, Spinway Inc. of Sunnyvale, the behind-the-scenes provider for free Internet service from Yahoo Inc., Barnes & Noble Inc., Kmart Corp. and others said it will cease operations and sell some of its assets to Kmart's e-commerce company, BlueLight.com.

``We have been saying consistently since we went public a year and a half ago that by Christmas 2000 we would have little or no competition left because nobody else had adopted a branded approach to free Internet access,'' said Mark Goldston, NetZero's chairman and chief executive officer.

By striking out as its own brand, rather than anonymously supplying other sites with a service, NetZero has drawn some 6 million users, making it second only to America Online Inc. (25 million users) among all Internet service providers, Goldston said.

Goldston predicted a huge influx of new users as AltaVista, Spinway- based free ISPs and other providers shut down after struggling to get enough advertising revenue to stay afloat.

``Their business models were predicated on them splitting revenue,'' he said. ``In ours we keep all the revenue.''

In most cases, free Internet users save up to $20 per month, as typically charged by providers like Earthlink Inc., in exchange for detailed personal information and an advertising banner taking up part of their computer screen while they are online.

CMGI Inc. of Andover, Mass., said last month it would divest 1stUp.com because the company would not reach profitability in the foreseeable future, said Allison Huffman, a spokeswoman for CMGI, which also owns a majority stake in AltaVista.

``We've been thinking about how we can make our companies the market leaders,'' Huffman said. ``The real challenge for 1stUp.com was that the bulk of revenue came from online advertising and, compared to the cost of the daily operations, they weren't making enough money from advertising.''

AltaVista spokesman Jim Shissler said the company, a leading search portal, never intended the free Internet service to be its key business.

``It was an excellent marketing vehicle for us to expose new Internet users to our core service of search,'' Shissler said.

Indeed, most of the people who signed up for the free service, about 3 million by the company's count, rarely used the service, if at all, he said. There were about 1 million regular users.

NetZero said about half of its 6 million subscribers used the service on a regular basis.

Despite a shakeout in the free Internet access market, reflective of the tech sector downturn in general, NetZero's Goldston said free access remains a viable business and one customers have become accustomed to.

``We're doing exactly what NBC television and radio does - you don't pay to watch 'Ally McBeal,' '' Goldston said. ``This is what the broadcast media has done for 50 years. An advertiser-supported access model is called television and radio.''