Digital River Buys FreeMerchant Subscribers

By Dennis Callaghan  |  Posted 2002-01-04 Print this article Print

E-commerce service provider Digital River continued its acquisition spree Friday by buying the subscription base from Network Commerce.

E-commerce service provider Digital River Inc. continued its acquisition spree Friday by buying the subscription base from Network Commerce Inc. Minneapolis-based Digital River paid $875,000 in cash for the approximately 3,000 customer subscriptions it is acquiring. Network Commerce may also receive a share of the revenues generated by the customers over the next 10 months, according to terms of the deal.
The acquisition is the ninth Digital River has made in the last three years as it consolidates the e-commerce software and services market. The company most recently acquired Orbit Commerce Inc. and Inc. in October.
Digital River CEO Joel Ronning said in a statement that the FreeMerchant site acquisition was part of his companys continuing efforts to support small-to-medium enterprise sites through its E-Business Services division. hosts online storefronts for small businesses for monthly fees ranging from $9.95 to $99.95. It also offers custom Web site building services. The service was originally free and boasted more than 200,000 small business subscribers. As it faced pressures to expand its revenue streams, Network Commerce began charging for the services—based on service levels offered—in November 2000. The free services were then eliminated completely last March. Network Commerce, then known as Inc., acquired in April 2000 for $34 million(though only $2 million of that was cash). The companys stock now trades over-the-counter for pennies a share. Network Commerce recorded just $1.5 million in revenues in its most recent quarter, ended Sept. 30, 2001. That was down from $18 million in the same period the previous year. The company turned in an $18.5 million net loss in the third quarter of 2001.

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