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Juno works the phones in service

The email service announces a deal with long distance firm LCI for exclusive advertising rights to Juno's 4.5 million subscribers.

Free email provider Juno is working the phones.

The company announced a deal today with LCI International under which the long distance carrier will become the only phone company with advertising rights to Juno's 4.5 million subscribers.

The five-year, multimillion-dollar agreement provides Juno with an up-front payment in addition to an unspecified cut based on the number of customers that sign up with LCI.

The deal also specifies that the companies will leverage Juno's email network for sign-up, billing, and customer service. That, according to Juno, will result in lower rates.

"The beauty of our business model with LCI is that with online sign-up and electronic billing, we will be able to save on printing and postage and offer services at reduced costs," said Juno executive vice president Bob Cherins.

Exact rates and offerings have yet to be hammered out, added Cherins, who expects the details to be finalized by June at the latest. Test marketing will begin in mid-April.

Juno is not alone in pitching phone deals to its subscribers. America Online entered a arrangement with Tel-Save Holdings last year to offer discounted rates to AOL subscribers. These types of exclusive marketing alliances are attractive to telcos because of the large customer bases held by online services and email providers.

How large some of these bases actually are, however, is a tricky question. With AOL, advertisers can be fairly sure that the vast majority of subscribers are using the service because they have paid for it.

But free email providers like Juno and Microsoft's Hotmail encounter skepticism from marketers and analysts alike because anyone can sign up, either once or numerous times, and then never use the site's features or visit the site again.

Juno, which says it is adding 10,000 to 12,000 users every day, estimates that about 20 percent of its 4.5 million subscribers use the service on a daily basis, and an average of 50 percent use it at least once a month.

Like other free email services, Juno relies on advertising dollars. But its members are required to supply personal and demographic information when joining to help advertisers target them. Ads come in the form of interstitials, pop-up windows, or banners.