Pinning Hopes on Computer Bulletin Boards : People are starting home businesses by offering services that help hi-tech aficionados reach the information superhighway.
Thousands of Southern Californians have discovered a route to the information superhighway through a spare bedroom in Greg Gooden’s Van Nuys home.
As many as 60 people convene there at once. Some socialize or play games, others use a library, some pick up their mail. Most stay for hours and many linger far past midnight.
Gooden doesn’t actually see these people. Instead that visitor traffic communicates over computers and through his own local computer bulletin board company called The Annex. “You can get almost any kind of information you need straight through your computer,” Gooden said. “It’s like going to the library without leaving the house.”
Nationwide, the big on-line computer systems include Prodigy, CompuServe and America Online; this trio alone has nearly 10 million subscribers. Their customers, via computers, can buy and sell stocks, play games, do library research, book airline tickets and read newspapers.
But computer enthusiasts also pay to use tiny computer bulletin board systems (BBS) such as Gooden’s. Nationally there are more than 57,000 bulletin board systems operating today, according to Boardwatch Magazine, and many are run out of garages, basements or spare bedrooms. So many new systems are going on-line every month that a reliable count is impossible. “We’re still not exactly sure how many bulletin boards are operating in our area,” said Myla Harris, account executive with Pacific Bell.
For customers, part of the lure of small computer bulletin board systems is price: Many services are cheaper than the major on-line systems. And smaller systems give customers the chance to communicate more with more local computer users.
Despite the boom in small bulletin board firms, however, the industry suffers from profitless prosperity. It’s been estimated that nationally only 5% of the bulletin board systems are profitable, maybe another 15% break even, and the rest lose money.
Dale Porter, 31, quit his job to run a bulletin board firm called KBBS out of his home in Northridge. He started it six years ago with a $2,000 IBM computer, plus $4,200 for software, computer modems and installation of 16 telephone lines.
Three years ago he was excited enough to quit as a computer programmer with Blue Cross of California to devote all his time to KBBS. More than 8,000 computer users regularly log on to KBBS, Porter says, and while limited access is free to any caller, only his subscribers get full use of his programs. About 25% of those callers eventually subscribe, and they pay an average of $10 per month.
Although he took a substantial pay cut to run his own business, Porter believes that its growth potential will eventually pay off. “Running KBBS isn’t as lucrative as my old job was, but (it’s) growing,” he said. “As with most small businesses it takes a few years to get a decent return on your investment.”
So 24 hours a day, subscribers throughout the San Fernando Valley and surrounding areas simply dial a local telephone number to link up with KBBS, The Annex and other computer bulletin boards.
KBBS and The Annex provide several channels where users can engage in live trivia games, group conversations or private chats. There are public discussions where users post questions or comments covering topics that range from horticulture to Howard Stern. They can obtain free games, spreadsheet and word processing programs and even buy products from an on-line shopping service. Subscribers can also send electronic mail to others, including to anyone outside the system who has an Internet address.
The Internet is a worldwide computer network that was designed in the 1960s to link computers at government research labs and universities. Today it’s the basic infrastructure of the fledgling information superhighway. Tens of millions have access to the Internet and their ranks are mushrooming.
One of Porter’s customers is Sharon Landers, 32, who has been a KBBS subscriber for two years. She subscribes to several local on-line services, and CompuServe because it has access to a hard-to-find medical database.
But she increasingly spends her computer time on small bulletin boards like KBBS. “One big attraction of a board like KBBS is its social character. I enjoy chatting with other users. Basically it’s an on-line community.” There are also in-person bulletin board meetings “that allow you to get together with people you’ve been interacting with” only on computers. Landers added that she met her current boyfriend while communicating on-line through KBBS. “Big services like CompuServe aren’t chat-oriented,” she said. “And KBBS doesn’t tack on any extra per hour charges like CompuServe does.”
CompuServe charges users $20 to join the system and then levies a monthly fee of $8.95. The subscription gives users unlimited access to their basic services, such as on-line publications and news files, but it allows only 60 electronic mail messages per month. Additional messages cost extra.
Subscribers of KBBS and The Annex are allowed full use of all system features for a flat rate. Porter’s KBBS has a one-year subscription, which limits users to 90 minutes of on-line time each day, at $9.50 a month. A comparable subscription at Gooden’s The Annex costs $8 per month.
“When you buy a modem, it usually comes with a trial subscription to one of the national services like Prodigy,” Porter noted. “But when the trial period ends and Prodigy sends you this big bill, you realize it’s time to start shopping around. That’s how a lot of my customers find me.”
On-line chat and interactive games are the most popular features on local computer boards. “In a sense my main product is the people who use my system,” Porter said. “A lot of computer users subscribe to KBBS just so they can interact with those people.”
One popular game offered by The Annex and KBBS is TradeWars 2002 in which a user assumes the role of a space ship captain who forms alliances or does battle with other players to accumulate cargo, money and power. Another popular game, Trivia, is similar to the TV game show “Jeopardy!”; contestants try to be the first to correctly answer questions posed by the computer.
Porter’s next plan to grow is to attract small businesses to log on with KBBS.
“Most (customers) access the system at night, so I have a lot of idle phone lines during the workday. With that excess capacity I can offer small businesses across Southern California an inexpensive way to communicate as an alternative to phoning and faxing,” Porter explained. “Employees can have teleconferences, exchange documents and files, and send E-mail. It’s a perfect telecommuting set up.”
People who run their own computer bulletin board service better like the job, because the hours required are enormous.
In a room no more than 15 feet square, Greg Gooden logs 18-hour days surrounded by an array of computers, monitors and technical reference manuals. Formerly an office manager, he was laid off last November and then decided to work full-time on The Annex. Since then, Gooden claims, his company would have been quite profitable, had he not plowed most of his revenue back into the system.
“Los Angeles is probably the most competitive market in the country,” he explained. “If you want your board to survive, you’ve got to keep upgrading the system.” The Annex has just increased its phone lines and can now accommodate 72 callers simultaneously. “And they’re begging me to add more,” Gooden said. Customers “don’t like busy signals. If they get them too often, they’ll just subscribe” somewhere else.
With more than 2,000 active users, The Annex generates about $7,000 in subscription revenue each month, but Gooden typically reinvests $5,000 of that in his system. “I’m in this business for the long haul,” he said.
Gooden says his revenues have increased almost every month since January, 1992, when he started The Annex as a rudimentary system capable of handling only eight callers at once."So far, (it) has surpassed all my expectations,” Gooden said. “It may not be outrageously profitable at this point, but I’m making a living and the subscription revenue is paying for the growth of the system.”
Indeed, Gooden intends to expand The Annex’s call-in capacity to 100 lines and to increase his slate of the Internet’s features, including being able to communicate overseas, by summer’s end. Gooden also sees growth potential by setting up a children’s computer bulletin board filled with games and educational files.
He’s also now moving the business out of his bedroom and into a recently leased office on Van Nuys Boulevard.
Another bulletin board entrepreneur, who concedes he’s undergoing some financial strains, is Eric Higgins. He owns BrainStorm, based in Simi Valley. “After four years . . . I haven’t come close to breaking even,” Higgins said. “Last year BrainStorm grossed $7,000. But I spent $14,000 upgrading and adding new features.”
Higgins, 32, has a full-time job as an engineer with MagneTek, a defense subcontractor in Simi Valley--although MagneTek recently announced it was moving most of its operations to Tennessee.
Higgins started his own computer bulletin board after trying various on-line services and finding their quality disappointing. “I thought I could put together a more user-friendly setup,” he said. To start, he spent $2,000 on an IBM clone PC, and another $800 on software, modems and getting two telephone lines installed at his home.
So far Higgins has regularly tapped his defense contractor paychecks to subsidize BrainStorm’s expansion from two phone lines to eight. He expects to do so again soon when he increases to 16 lines.
Today Brainstorm logs almost 200 calls a day and has about 630 regular callers. But Higgins said only 180 are paid subscribers. So far this year he’s grossed about $3,400 in subscription revenue, but Higgins said BrainStorm needs 80 new subscribers each month to break even.
“I really don’t mind dipping into my own pocket to improve the system,” Higgins said. “I’m convinced that the BBS industry has a big future, and I want to be a part of it.”
To attract more business, he puts free ads in computer publications and he attends local computer club meetings and trade shows.
More than anything else, an expanding user base--and the subscription revenue it provides--are the lifeblood of a successful bulletin board. As Higgins put it, “He who gets the most callers wins.”
One thing this trio of bulletin board operators has in common is a conviction that their industry will keep growing.
“In the 1980s, people asked you for your fax number,” Porter said. “In the 1990s, they’re going to be asking for your Internet address.”