BlueLight Adopts Orphaned Spinway ISP Customers

Often when an ISP goes under, its customers are left incommunicado. But the 6 million customers of Spinway are getting a new lease on their defunct Internet service, because BlueLight.com has acquired the failed company.

But the price tag may increase from its current free status, notes Dave Karraker, BlueLight.com communications director. BlueLight.com intends to shore up the newly acquired ISP through the end of the year and then evaluate the free Internet service model, Karraker says. He is adamant that BlueLight.com plans to always offer ISP service, but the free ISP model may not last.

The acquisition is a marketing move for BlueLight.com, which gained 5.2 million ISP customers through the free service it has offered through Spinway for the past year, says Dave Karraker, BlueLight.com communications director.

"Friday [December 1] Spinway ran out of money and closed its doors, so BlueLight stepped in and purchased the assets," Karraker says.

Financial terms of the acquisition are not being disclosed. But costs are "very modest for BlueLight," according to Mark Goldstein, BlueLight.com's chief executive officer. The investment will "have very little impact on our current march toward profitability," Goldstein adds.

Spinway has been providing third-party ISP service to businesses such as Spiegel, Costco, Barnes & Noble, BlueLight.com, and others. After the acquisition, BlueLight.com immediately contacted all of Spinway's former customers. BlueLight.com offered the options of continuing the relationship with the new owner, redirecting their links, or going dark. Spiegel, Barnes & Noble, and Costco are all staying with the BlueLight.com service, while others plan to redirect.

Resources Retained

BlueLight.com acquired all intellectual property in addition to retaining 30 Spinway employees, who will continue to work out of Spinway's former offices for now. BlueLight.com will maintain Spinway's current network of local Internet dial-up providers, ensuring that current customers' regular service will be maintained. (See "ISPs @Risk.")

When the acquisition is completed, Spinway itself will cease to exist as a company.

BlueLight.com is an independent e-commerce company majority-owned by Kmart. The company has provided free Internet service for the past year as a major marketing move to draw consumers to its online shopping site. (See "A Blue Light Special Shines on Kmart's PC.")

The service currently boasts more than 5.2 million subscribers after just 11 months, making it the fastest-growing ISP in U.S. history, according to Karraker. An average of 12,000 subscribers sign up daily, and BlueLight.com distributes ISP CD-ROMs in more than 1400 Kmart stores nationwide.

"BlueLight's Internet service is an invaluable marketing tool for the company," Goldstein says. "We feel it's in our best interest, and in the interest of all our subscribers during these tough times for pure-play dot-com companies, to make sure it continues." Whether that translates to continued free Internet access for BlueLight.com customers remains to be seen. (See also "The Best and Worst ISPs.")