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Another One Bites the Dust - Files for Bankruptcy

October 9, 2000

FEDERAL WAY, Washington - Users of free Internet Service Providers may have had the lyrics of the 1980 hit "Another One Bites the Dust" running through their heads this week, after yet another free ISP disclosed its financial problems. On Friday, parent Freei Networks filed for Chapter 11 bankruptcy protection in Seattle. The bankruptcy filing comes one week after the company laid off 30 percent of its workforce, reportedly because it was unable to meet its payroll. Several days before seeking bankruptcy protection, Freei also canceled its planned IPO, citing "current market conditions". spent lavishly on national television advertising campaigns, hiring celebrities such as basketball star Shaquille O'Neal to advertise its free Internet service. Television viewers may be familiar with the popular talking "Baby Bob" character, who introduced in national television advertisements. Baby Bob proved so popular that FreeI signed a deal in August to create a television series based on the Baby Bob character for the CBS Television Network.

Lavish spending without sufficient revenue apparently helped cause the demise of Freei. It has been reported that in 1999, Freei spent $19 million, while total revenues were less than $1 million.

Netzero reported that it had entered into an agreement to acquire certain assets of, subject to the approval of the bankruptcy court. "Our intent is to provide maximum continuity for users. NetZero intends to help users transition as smoothly as possible," said Mark R. Goldston, Chairman and CEO of NetZero in a statement.

No details of the transaction with NetZero were available. With 3.2 million users, is the fifth largest free ISP in the United States. Freei Networks is based in Federal Way, Washington.

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