New ISP on the Block: iVillage

The women-focused media company is launching its own Internet access service, looking to entice subscribers loyal to the iVillage brand while offering a cut-rate price.

by Erin Joyce www.atnewyork.com Managing Editor [October 18, 2002]

Women-focused Web portal and media company iVillage is elbowing into the ISP game. The new dial-up service is called iVillageAccess.

The launch represents a bold move by the New York-based company to leverage its loyal base of about 17 million monthly visitors to website, as it diversifies revenue beyond advertising sales. For a company that made waves when it announced it would stop selling pop-up ads, the offering could help fill a gap where that revenue once stood.

At a monthly subscription fee of $17.95 ($15.95 monthly for subscribers who commit to a year of service), the iVillageAccess service is also a bold move to take subscribers away from the major ISPs, such as MSN and AOL, for a lower monthly price.

"I'd like to think we're friendly competitors," Douglas McCormick, iVillage chairman and CEO, said of the new service. "We'll be competing on price, quality, and affinity. People know the iVillage brand stands for a lot, and for simplicity and affinity. Many members are proud of their iVillage association, and are likely to become affinity members. Why not buy (Internet service) from a trusted brand?"

And why not switch from other providers charging more, goes the logic. The pitch offers features such as five different e-mail accounts "at substantial savings over AOL and MSN," or about $5 to $6 less per month.

"It's cheaper and it's simple," McCormick said. "People have enough complications in their life without trying to figure out how to reconfigure their e-mail."

The service is offering the TrueSwitch program, which helps users migrate e-mail contacts, addresses, and Instant Message buddy lists, and even sends e-mails to contacts letting them know their new address. TrueSwitch is also being deployed by MSN in its quest to poach customers away from AOL, and other ISPs are about to launch TrueSwitch as well.

The new service is a bit of a surprise, given that iVillage had said it was looking for a licensing deal with one of the major ISPs, notably AOL or MSN. Instead, it decided to contract with IP Applications, a Canadian provider of outsourced Internet services, including providing virtual ISPs (vISP).

By using an ISP outsourcer, iVillage is launching the service while limiting its financial risks by letting another company manage e-mail servers, points of presence, billing, customer service and IT support; it may be limiting its share of the revenues as well.

The virtual ISP route is gaining currency. ISP United Online recently bid $8.4 million in bankruptcy court for KMart's e-commerce site Bluelight.com as part of the retailers' Chapter 11 reorganization. The plan, which awaits bankruptcy court approval, is to run the site for KMart while taking a cut of the revenues it generates.

iVillage officials say a broadband or high-speed Internet access service is also on the drawing table, depending on how the dial-up service is received. McCormick said a high-speed offering would be a great outlet for the programming assets the company owns, such as the Newborn Channel and the Women's Business Network.

The former executive and founder of women's cable channel Lifetime Network stressed that iVillage was not abandoning its membership base that helped build the site. "A rule in Business 101 is to move into these new businesses in prudent way."

— End