That free iPod won't come easy

Have you gotten your free iPod yet? Me neither.

I almost did last week, after visiting an Internet site that promised a free music player. Instead, I ended up paying $15 for a music club subscription, $10 for some DVD rentals, and $6 for a bottle of diet pills. If only I'd paid another $50 for human growth hormone or for a Viagra substitute, I might be listening to music on a new iPod right now.

But I'm already big enough. I refused to pay and my chance for a high-tech freebie dwindled away, along with about $30 hard-earned dollars.

Go ahead, laugh. Those free-iPod ads splashed all over the Internet are such obvious scams that no sixth-grader ought to fall for them. Except they aren't all scams. There's a company that really does give away iPods, and makes money at it. Dozens of happy customers happily sing the praises of Gratis Internet Inc. of Washington, D.C., founders of the FreeiPods.com website.

"It's completely free," said Ruben Seda, 24, a sales analyst at Ross Stores Inc. in New York. "Absolutely, it's a good deal."

Gratis has been doing this kind of thing for about five years. Cofounders Peter Martin and Rob Jewell began with a decidedly low-tech giveaway.

"We started with freecondoms.com," said Martin. But it worked, and led to other giveaway programs. Gratis still offers free condoms, but you can also get free personal computers, flat-panel monitors, video games and game consoles, even free handbags.

But the iPod giveaway has been something special. Gratis has given away 11,000 brand-new ones, Martin said, at a rate of 300 to 500 a week.

Participants must plow through a long list of offers for platinum credit cards, satellite TV systems, and anti-wrinkle cream. To start down the road toward your free iPod, you must first agree to one of these offers. It will often take a week or more for you to get credit for signing up.

Next, you must convince other people to visit the site through a Web address linked to your account. If five of them sign up for one of the services advertised on the site, you get your iPod.

To understand how Gratis makes a profit from this, consider that it costs hundreds of dollars to attract a single new customer. FreeiPods attracts thousands of people who are eager to sign up for attractive deals, if there's a freebie thrown in. The result, for Blockbuster Entertainment's new online DVD rental business, or Discover Card's platinum credit card operation, is a sharply lower cost to win new customers. Gratis collects some of that saved money as a fee, then uses it to buy condoms, computers, and music players at wholesale rates, and give them away to subscribers.

"The consumer gets a free thing in the mail . . . the advertiser gets a potential new lifelong customer, and Gratis tries to cut a profit in between," Martin said. Does it work? "We've been essentially profitable since day one," he replied.

Still doubtful?

So was James Holst of Arlington, Va., a 24-year-old systems engineer for defense contractor Lockheed Martin Corp. He heard about FreeiPods.com from a skeptical friend. "He was interested but he wasn't sure if it was legit or not," Holst said. "I Googled the website for some articles about it and I found some people who had some success, so I figured I'd give it a try."

Two months later, Holst had an iPod. It had taken him that long to get five acquaintances to sign up. "I started offering $20 to people" to help him meet his quota. Three of his friends agreed; two others did it for free. "I ended up paying $60," Holst said. "But I ended up getting my iPod."

If my first experiment with free iPodism had been with Gratis, I might be a happier man today. Instead, I clicked on an Internet ad posted by an outfit called Incentiverewardcenter, which claims an address in Delray Beach, Fla. The unwary visitor is first hauled through a long series of Web pages, where he's asked to approve of various retail offers. FreeiPods.com does the same thing. It's time-consuming, but no big deal.

Next comes the gimmick. At FreeiPods, you eventually reach a page from which you must choose an offer -- any one of them -- and you're good to go. At Incentiverewardcenter, you're shown three consecutive Web pages, and told you must choose two offers on each page.

This didn't seem so bad at first. The first two pages featured inexpensive, even attractive deals -- CD clubs and movie rentals, for instance. It's that third page where the trap swings shut. There was a free application for a credit card, but everything else cost serious money. And much of it was trash. Human growth hormone at $50 a bottle? Please.

By this time, the sucker -- me -- had signed up for at least four offers. The company will get paid its commission for delivering a new customer. But the offers on the final page are so unattractive that our poor sap drops out before qualifying for the iPod. It's technically legal, but phony as TV wrestling.

I'd gladly let Incentiverewardcenter defend itself, but the company ignored both phone calls and e-mails. It's easy to understand why.

A saga like mine is the sort that makes a man bitter and cynical, perhaps for life. Music normally cheers me up, but now it merely reminds me of what might have been.

Hiawatha Bray can be reached at bray@globe.com.