NEW YORK (Reuters) - Comet Systems, the developer of the Comet Cursor software to help Web users search the Internet, said on Monday it signed a one-year distribution agreement with Internet search engine GoTo.com Inc. (NasdaqNM:GOTO - news), marking another step in the growth of the pay-for-performance market.

Under the deal, Comet said it will send hundreds of thousands of searches a day to GoTo in exchange for a portion of revenues. By clicking the Comet Cursor on a term, an individual can search any Web text and be led to different sites.

GoTo's search listings will be immediately available through Comet's search cursor, and Comet Cursor's tens of millions of users will have access to GoTo's search listings. It marks the first agreement between GoTo and a client software company, Comet said.

``A great key to our success is that many companies say we have a wonderful new way to search and download our software,'' said Ben Austin, Comet vice president of marketing and communications.

Comet started life in 1997 mainly as an online advertising company. But the company decided to concentrate more on developing software and technology rather than depend on advertising.

``It became clear for us in 1999 that the online ad market was not the basket where we wanted to place all our eggs,'' Austin said.

The online ad market has taken a beating in the last few months as advertisers have criticized its effectiveness, and general ad spending has fallen as the U.S. economy has slowed.

But analysts have cited paid placement within search engines as one bright spot in the gloomy online ad sector.

GoTo.com's revenues have jumped nearly 30 percent between the fourth quarter of 2000. In a report published Monday, Internet market research firm Jupiter Media Metrix said many ad-supported Internet companies have seen double-digit declines in the first quarter.

While GoTo makes its money from online advertising, its business model is different from many Internet sites, which sell ads to supplement their editorial content. For GoTo, the ads are the content. Its Internet search engine only lists results from businesses that have paid to be listed.

Austin argued that Comet's business model is more effective than online advertising. ``With millions of unique users, we can get significant earnings from the traffic we send,'' he said. ''We are also able to give them the information they want at the time they want.''

``It's a very different market than relying on online advertising,'' he added.

Comet claimed that its software has been installed by more than 88 million unique users, and that the traffic the company has generated has placed the company in the Nielsen NetRatings Global Top 20 Web Properties.