Free? Not free?

Here I am again, coming at you with the latest on promotional stuff. The Boston Globe announced a newcomer, Jackpot Rewards was launched yesterday (February 20,2008) with support from some very famous names. The article, "Rewards site bets it can lure online shoppers", said investors included Boston advertising executive Jack Connors, former Fidelity fund manager Peter Lynch, and Clough Capital Partners chief executive Chuck Clough that backed the site with more than $16.7 million. Jackpot Rewards is a promising hit that will include shopping rewards, sweepstakes, charity, and classified ads.

Jackpot Rewards understands that people want discounts and free things. But they also know that people like to help others. Paying just a $3 weekly membership fee at JackpotRewards.com gives people access to hundreds of online retailer discounts like Apple, Barnes & Noble, and Best Buy. In turn, half of membership profits go to children's charities. Now, I know this violates all that I believe in (free is the only way to be) but I also think that it is a great way for people and companies to give back to the community and those in need.

Media analyst at JupiterResearch, Barry Parr also recognizes the threat that charging for memberships could pose for this company. He said that it will be harder to convince consumers to subscribe to this service online when they are used to getting it for free. In general, sweepstakes have an "unsavory" reputation in Parr's mind. He also says that having customers pay for this type of service raises questions about the company's business model.

Despite this, it doesn't seem like the investors of Jackpot Rewards are too worried. Jack Connors said he understands the risk and the concept of online sweepstakes. He also said that basing your business around giving half of your profits to charity will certainly make it a big number. Other questions involving gambling have also arisen around this new launch. Edgar Dworsky, a former assistant attorney general of consumer protection in Massachusetts who now runs ConsumerWorld.org, advises the company to be careful. Because they only make money from membership fees, it could potentially appear that they are selling 'lottery tickets', thus constituting as gambling. But, Dworsky did give the company credit for providing people a way to enter sweepstakes without paying a fee to keep it legal. (Note: It was not clear from the article just how consumers could enter without paying a fee.)

The heart of Jackpot Rewards lies in its shopper discount program. Members who visit participating retailers can earn cash back on monthly purchases and people can enter the sweepstakes as many times as they want by mail. According to chief executive, Jim Miller, the company needs 300,000 members to keep going. But with tens of millions of people shopping online, Miller and the rest of his investors aren't really worried. They are sticking to the idea of giving back to charities and communities to keep their new project running. It will be interesting to see if that is what really happens...