Cybergold, a company that pays people who look or shop at certain Internet sites, has entered the micropayments business, letting people buy small-ticket items with the cash rewards they have accumulated.

At least 50 on-line merchants are participating in the fledgling program, which targets purchases of $10 or less that credit card companies are not particularly eager to capture. Among the retailers that have begun accepting Cybergold money are the CDNow music store and, an on-line community Web site with 10.2 million members and a shopping area.

Four-year-old Cybergold's 3.4 million consumer members have squirreled away $1.5 million in their accounts by interacting with 125 merchants that give cash rewards. For example, people who sign up for a cobranded Cybergold Visa card issued by MBNA Corp. earn $20. Cybergold subscribers who shop at Totally Toys earn a 10% rebate on purchases or 25 cents for visiting the site.

The cash can be credited to a bank or credit card account or, under the new program, toward purchases of merchandise from sites accepting micropayments.

In promotional materials to Internet merchants, Cybergold states: "If you want to sell on-line content with a ticket price of less than $10, you face a difficult challenge: a prohibitive fee-ridden credit card system." The company, which is based in Oakland, Calif., says its system is cheaper and easier.

Despite the seeming slap at the credit card industry, Cybergold counts MBNA and Visa U.S.A. as two of its biggest partners. Nat Goldhaber, founder and chief executive officer of Cybergold, said his is the first company with the ability to credit a person's card account without the existence of a previous charge.

In general, merchants may only credit a card account when a person returns a purchased item. Visa is apparently testing this standalone-credit concept with Cybergold. Visa has also introduced Cybergold to First National Bank of Omaha, which does merchant processing.

Mr. Goldhaber said interest in Cybergold is starting to spread. "It took us 18 months to reach the first million members, six months to reach the second million, and three months to reach the third," he said.

In October, Cybergold raised $50 million in an initial public offering on the Nasdaq market. Its third-quarter revenues were $1.38 million, up from $283,000 a year earlier.

Andrea Williams, an analyst at E-Offering Corp. in San Francisco, said Cybergold exceeded her expectations by 42% in the third quarter. Ms. Williams, whose company has options in Cybergold, said she expects $4.4 million of revenue for the full year, up from her previous estimate of $3.7 million, and $18.4 million in 2000.

Shortly after Mr. Goldhaber founded Cybergold in 1995, he filed for two patents.

One application was approved by the U.S. Patent and Trademark Office in August. The patent is for the process by which Cybergold advertisers pay people for looking at their pitch.

This patent "covers instances in a digital environment where consumers are compensated for paying attention," said Mr. Goldhaber, who invented the process.

The other patent, which has also been approved, appears to have even broader implications because it concerns consumer privacy, one of the hottest subjects in Internet commerce. It covers a process -- which Cybergold calls "privacy management" -- by which people can parcel out personal information in exchange for money.

The idea of compensating people for their personal information has been around for a while, and some companies already have adopted such programs. Safeway supermarkets, for example, offers discounts to shoppers who let the store track their buying habits. People who consent are given a store card with a magnetic stripe that is swiped at the checkout counter. The information is then sold to marketers.

Consumers perceive a value in disclosing their buying patterns because they are being compensated for it, said Jim Sowers, director of legal affairs at Cybergold.

It says its method lets people disclose demographic information -- such as their income, age, and family status -- without disclosing their identities. Marketers would typically compensate consumers for such information.

"Privacy management is complementary to our existing business," Mr. Sowers said. "It would further round out the ways you can earn money as a Cybergold member."

Mr. Sowers is policing the patent rights and said more than 10 companies he knows of may be infringing.

Cybergold is "ramping up, and we will look more closely at potential licensees," Mr. Sowers said. He declined to identify companies negotiating for licenses other than the shopping Web site.

Mr. Sowers would not say how the privacy patent would be used in licensing agreements but said it could offer "some opportunity for real revenue" growth. "We view intellectual property as more of a shield rather than a sword," he said.

Many electronic merchants have begun offering some sort of incentive for visiting them or doing business on their Web sites. Mr. Goldhaber said Cybergold will seek out the "biggest companies whose activities would have the biggest impact on us."

Meanwhile, Cybergold is coming up with new offerings of its own, including one called Cash2Register, which pays people to fill out product registration cards. Cybergold gets fee income for each person who fills out a warranty card on-line, according to Ms. Williams of E-Offering. Cash2Register is a "potential source of free customer acquisition for Cybergold," she wrote in a report.

Cybergold views its relationship with MBNA as another cash cow since the on-line company earns a fee for each credit card customer MBNA picks up.

Analysts familiar with incentive and rewards programs say Cybergold's proposition is particularly appealing because people can earn cash for their on-line behavior.

Melissa Shore at Jupiter Communications in New York called the company's system unique and praised its move into micropayments. "Cybergold's traditional marketing has been focused on redeeming earned rewards for cash," she said. "Now there seems to be a shift to redeem rewards for actual merchandise."

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