NETZERO WINS BIG IN INITIAL BATTLE.

Byline: David E. Kalish Associated Press

Even as investors gave the usual hero's welcome to the newest Internet stock, there were strong signs that the newcomer's main product - free dial-up access to the Internet - might not be the wave of the future after all.

Shares of Westlake Village-based NetZero nearly doubled Friday, the first day of trading after the free Web service's initial public offering of stock.

Investors apparently were unfazed by news that Microsoft, which had considered giving away access to customers of its MSN service, is actually going the other way and raising its fee by $2 a month, to $21.95.

Still, Microsoft's decision came amid increasing skepticism by analysts toward the free-Web trend. One problem, they say, is getting users to stick with a free service, which makes money by parading a steady stream of advertisements across a user's screen.

Several early providers of free Web access, including Bigger.net and Tritium Networks, have died trying to make a profit.

``After doing further work on the `free access' business model, we are also highly skeptical that it is economically viable,'' Merrill Lynch analyst Henry Blodget wrote in a report to investors Friday.

Microsoft, for its part, is placing its bets on its for-fee service. Starting Oct. 5, MSN service will cost the same price charged by America Online, the No. 1 provider of Internet access.

Despite the risks, analysts say companies are likely to continue to experiment with providing free access, particularly to consumers who are heavy users of goods and services.

NetZero's public offering was the latest test of enthusiasm for the trend, and investors appeared to embrace it, boosting the company's stock more than $13 to $29.125. Notably, the big gain came at the end of a week in which technology stocks have suffered punishing losses on Wall Street.

Fueling investor optimism are projections that the number of Internet users will swell from 63 million in 1998 to 177 million in 2003, according to International Data Corp. That's a lot of eyeballs for advertisers' messages.

``My inclination is that NetZero will have a dramatic increase in advertising because it's free,'' said David Menlow, editor of IPO Frontline, a Millburn, N.J.-based newsletter for individual investors.

But thus far, providers of free access have had mixed success in keeping customers, and most have yet to earn money.