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Until now, Cybergold focused on ways to incent users to interact with ads by rewarding them with cash, often in small increments, which they could redeem online. Today the Berkeley, Calif.-based company gives its users a way to spend that pocket change immediately in increments as low as 25 cents via its new Earn & Spend Community.

Located on the Cybergold site (, Earn & Spend includes a variety of online merchants selling digital content, ranging from MP3 music files, articles, maps and software. Merchandise includes tax software from 2nd Story Software, screensavers from R.I. Soft Systems, MP3 music files from Epitonic, legal guides from Nolo Press and photo services from Photos to Go. Cybergold is also working with @Work, a division of high-speed cable access service @Home, to develop a system to use Cybergold micropayments.


A marketplace was in Cybergold's original business plans, said Nat Goldhaber, founder-CEO.

"My goal was to get to a million and a half users before we went public with it," Mr. Goldhaber said, noting the company reached 1.5 million members in the past month.

Mr. Goldhaber also sees its micropayments system as a way to support the increasing pool of self-published content on the Web.

"The standard publishing model is too expensive for most people to self-publish," he said. Through Earn & Spend, it's finding an indirect way for advertisers to still subsidize this content.

The fact that MP3, a digital format for music and audio, is beginning to hit the mainstream is "a gift from the gods," he said.

"All of a sudden we have a way for people to make small payments for single cuts" from an album, he said, adding that it's a chance to sell the music, something record companies have been struggling with as users commonly pirate MP3 music tracks online.

David Marshak, senior VP-principal consultant at the Patricia Seybold Group, Boston, said until now Cybergold specialized in the microcredits space. And when users only earn pocket change, "how useful is that?"


With Earn & Spend Cybergold has "married microincentives with an industry that understands micropayments," Mr. Marshak said. It's "taken out the middleman on small-ticket items."

Cybergold's advertisers include America Online, AT&T Corp., EarthLink and Visa USA.

To support the new area on its site, Mr. Goldhaber said it's promoting the new service to its members as well as in online ads. Advertising is handled in-house. Cybergold is in the middle of a round of financing, he added, and expects to launch its first offline consumer campaign in the next quarter.

Cybergold isn't the only company that deals in micropayments. CyberCash, Reston, Va., specializes in online payment systems, including cash, credit and check. It has a system called CyberCoin to focus on micropayment systems for digital content. Multiple incentive programs are also available on the Web offering

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