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October 21, 2004

iPods and Calculated Risk team up to make a little money

IpodminiThe Web site www.FreeiPods.com has given away close to 5,000 free iPods to people who sign up for Web site referrals. The concept behind the Web site follows a two-step process: Users must first complete an offer, and then refer five more friends who also carry out an offer. So, how do they make money?

Gratis Internet, the company that runs the show, turns a profit by predicting how many people will complete the offer vs. the ones who don't fulfill all of the requirements. Actuaries may not have tapped into this market yet, but the actuarial inspiration is all there. Gratis Internet's profits are based on a simple formula, each offer that is signed up for earns the company, say 12 dollars; that same person refers 5 friends. The probability that all five of those friends complete the deal is, well . . . not promising. This margin of error is enough to turn a profit and send out ipod after ipod.

The company has delivered more than $1 million worth of iPods since the beginning of June, when the Web site was created. Examples of offers include signing up for a credit card or registering for a free trial with Blockbuster Video. After completing the two steps, users can get a free iPod or a $250 gift certificate.

You can check out how the site works at www.FreeiPods.com

Posted by Tom Troceen