When future historians search for moments that symbolized the peak of the Internet gold rush, they might zero in on a scene that took place in Manhattan two weeks ago. A pair of entrepreneurs hurled cash--some of it real, some of it fake--out of a window and filmed actors grabbing the bills as they floated to the sidewalk.
The falling dollars were for a television commercial that aired Sunday touting the latest logic-free Internet business plan: Give away cash. Lots of it. Through a never-ending sweepstakes at a Web site called iWon.com.
IWon.com is luring visitors by handing out a $10,000 prize each day, $1 million every month and $10 million every April. Surfers have only to show up and click to get a shot at the moolah, the idea being that somehow advertisers and commerce revenue will follow.
Skeptics sniff that giving away money is no way to build a business. But the venture has the backing of once-staid CBS Corp., which has pledged $100 million in cash and on-air promotion.
The network bought into the idea of building a Web guide like Yahoo by giving away money, signing on only weeks after two New Yorkers with no Internet experience walked into CBS President Mel Karmazin's office in March and proposed it. Built in secrecy from a suburban New York warehouse, iWon.com debuted Oct. 5 and almost immediately broke into the top 50 sites on the World Wide Web. It drew an average of 380,000 visitors a day and ranked No. 46 in traffic among all Web sites during the first week of November, according to Media Metrix Inc.
The raining-money commercial aired during CBS's "Touched by an Angel," announcing the first $1 million winner, Kimberly Lamagno of Running Waters, Calif. Then iWon.com flew her to New York for a shopping spree.
Lamagno, 38, said she wept when she heard the news, then ran outside and jumped up and down with her landlord in their front yard. The Internet jackpot ended a year of woe for the divorced mother of two. She said her mother died in the summer, she spent weeks hospitalized with hepatitis and recently she wrecked an uninsured car. "I still can't believe it," she said. "What this is going to do is make my stress level drop."
Sound like supermarket-tabloid fare? You could say the same thing about the Internet fever that has gripped the planet like a crazed computer virus, creating panic in otherwise sane people who think they have somehow blown their lives by missing out on the Internet bucks that are blasting from the stock market with hurricane velocity.
IWon.com taps into this emotional vein somewhere between greed and angst, as do the sweepstakes popping up all over the Internet (check out FreeLotto.com, Webstakes.com and TreeLoot.com) and the quiz-show revival sweeping network television. You've seen ABC's revival hit "Who Wants to Be a Millionaire" and the Fox knockoff, "Greed," right? In which ordinary people like Kimberly Lamagno answer not-so-tough questions for a crack at mega-money?
IWon.com makes the game of easy money even easier. Here's how it works: Surfers earn up to 100 points a day for clicking on links, with each point giving them another contest entry. Every item on iWon.com has a tiny number beside it representing the number of points earned for clicking. IWon.com has made deals with many Internet companies to supply the clickable content. It is standard fare at all the big Web guides, such as jobs listings from Monster.com, auto information from AutoWeb.com and free fax from Jfax.com. IWon's centerpiece is a Web directory from Inktomi Inc., but it also includes content from many of the 13 Internet companies in which CBS has invested.
The $25 million in annual prizes is chump change in today's dot-com marketing frenzy. It makes iWon.com a cheap last-minute entry in the portal race for CBS, which had been the only major television network without its own Web guide. AltaVista, for instance, is spending $120 million over the next year to convince surfers it has the Web's smartest search service. And Web stockbrokers plan to spend more than $1 billion on ad campaigns this year and next, with E-Trade offering $1 million to the investor who guesses where the Dow Jones industrial average will close this year.
CBS's Karmazin and Chief Financial Officer Fred Reynolds were so impressed when they saw iWon's original PowerPoint presentation last March that they took a majority stake in the company. A month later CBS inked a deal with founders Bill Daugherty, formerly senior vice president of the National Basketball Association, and Jonas Steinman, a general partner at Chase Capital.
"Only three people at CBS knew about the project," Daugherty said. "None of our vendors knew what our model was, only that it was a CBS portal."
Daugherty, 36, said he and Steinman, 34, concocted the idea over lunch in January as they were marveling at the popularity of Yahoo and recalling McDonald's successful annual sweepstakes. After research showed that more than 90 million Americans play sweepstakes, the two decided they could build their own Yahoo with help from a big-name media company. "The kernel here is that we will reward you for using us to do what you would do online anyway--read the news or check sports scores," said Daugherty.
Leaders of the top Web guides don't see iWon as a winner.
"It has mass-America appeal to get rich quick," conceded Yahoo President Jeff Mallett. "But we don't think there is an ongoing model of paying people to come to your service."
Lycos Network chief executive Robert J. Davis gives the CBS portal play this much chance of succeeding in the long term: "No way." It's relatively easy to buy your way onto the list of the top 50 Web sites, he said, but much harder to reach the top 10, where the Web's leaders are vying for real profits. That requires delivering a useful service.
For now, the average Web surfer may have trouble telling the difference between Yahoo, run by more than 1,700 employees, and iWon, which has a staff of 30. But as Yahoo and Lycos pour their advertising revenue into building their services, and iWon hands ad dollars back to Web surfers, iWon will have little choice but to deliver cheaper services. And the difference will become apparent one day.
Until then, don't bet on iWon.com bringing home the real prize in the Internet sweepstakes: a valuable media franchise for the next century.
CAPTION: IWon.com rained money on Kimberly Lamagno, who cried when she became the new site's first million-dollar winner.