Software makers cut price with ads

Choice: People willing to use versions of programs with advertising built in --and be tracked online -- can save money.

April 03, 2000|By Catherine Greenman | Catherine Greenman,New York Times News Service

With product offers popping up all over America Online and flashing banners festooning practically every commercial site, online advertisements are virtually impossible to duck. Although that is hardly a revelation, what is more surprising is that advertising has found its way into software into programs you pay for as well as free programs.

People who pay $60 to use Intuit's Quicken Deluxe 2000 financial software will find that if they go online to download stock quotes, the portfolio update page contains a 1-by-4-inch banner advertisement for companies such as AT&T and Charles Schwab. And users of Qualcomm's Eudora e-mail program who want to upgrade to the newest version can do so for free, if they also download a software module that delivers advertisements to their screens.

"We do see a trend toward ad-supported software," said Marissa Gluck, an online-advertising analyst at Jupiter Communnications, an Internet research firm. "I think people are willing to look as long as they're getting the benefit of the software."

But what is disconcerting about both Quicken and Eudora is not so much the advertisements themselves (although they are a distraction to some) but that they flash and change regularly, even while the software user is not logged onto the Internet.

Incorporating flashing banner advertisements into software programs is the work of companies including Radiate Inc., Conducent Technologies and Cydoor Technologies, which help generate revenue for software makers by selling space on the software to advertisers. Radiate, which changed its name from Aureate Media last month, brokers advertisements for more than 400 software applications, many of which are available for downloading at, one of the company's sites. These companies use their servers to deliver the advertisements to users' computers when the software is downloaded.

The companies also supply software makers with the technology that gathers advertisements while a consumer is online, a feature the software makers build into their programs. The advertisements are stored on the user's computer and appear whenever the software is opened.

Ad-supported software is most prevalent in shareware, software offered by companies under an honor system in which the consumer who downloads the software and decides to keep it is asked to pay for it.

Shareware manufacturers say that the honor system does not work and that advertising-supported software downloaded from the Internet helps them distribute their products more widely while increasing their revenue.

"The number of people who actually pay for the software is not as high as we'd like," said Bob Gorman, director of sales and marketing at PKWare, a company in Brown Deer, Wis., that makes software utilities such as WKZip, a file compression program. "This was a way to give people value in as painless a way as possible." PKWare works with Conducent Technologies to serve advertisements to people who download the company's products.

Carole Brummage, a spokeswoman for the Eudora Products Group, said that running advertisements "gives the user the $50 version for free, and it allows us to continue funding development of future services." Brummage added that Qualcomm gave Eudora users the option of paying $50 for an ad-free version.

"Today we don't advertise, but in a month or two we will," said Ken Rhie, co-founder and president of, based in Cupertino, Calif., a new site that offers users the ability to work in office applications such as word processors and spreadsheets, then store them on the Web.

Rhie said including advertisements in the program would allow people to try the products free, then give the opportunity to offer a paid service with no advertisements down the road.

"It's one thing to have a banner ad inside a search result," he said. "But on a spreadsheet, an ad would be distracting and probably not desirable for business users. We feel comfortable that people will pay for no ads in certain situations."

Some Eudora users, including Rick Crawford, are avoiding upgrading to the new version because of the advertisements, which he said were distracting. "If I bought a piece of software and it had ads on it, even if they were downloaded after the fact, I'd take it back," he said. "My time is worth something to me, as is my screen real estate."

In addition to supplying software manufacturers with advertisements, companies like Radiate Inc. also keep track of which advertisements the consumer clicks on and report that information to the software manufacturer and the advertisers. That raises privacy concerns similar to those associated with Web-based advertising.

"I don't really notice or mind the ads, but it's a disturbing thought that by clicking on one, that information could be collected and sent somewhere," said Jack Martinelli of Duxbury, Mass., who recently noticed advertisements with the stock quotes he downloaded using Quicken 97.

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