Connecting the Public to the Web Via Kiosks
If John Shin has his way, “Internet stations” or kiosks one day will be as ubiquitous as pay telephones and automated teller machines--and the base of a new Internet-generated industry.
The 32-year-old attorney heads up Web-On-Site Inc., one of a surge of start-ups that aim to make money by charging advertisers to get their messages in front of highly targeted demographic groups, such as well-to-do ski buffs and college-educated young workers. They do it by offering Internet access, often for free, in places with lots of foot traffic, such as bars, airports and ski resorts.
The race to lock up locations is on. Baltimore-based Web-On-Site has installed more than 100 of the Web-ready kiosks in sports bars, restaurants and ski resorts and is hoping to get its kiosks into doctors’ offices and senior citizen communities as a way to tap drug company ads.
A competitor, Golden Screens Interactive Technologies Inc. in California, is after high-traffic areas such as malls, highway service plazas and the athletic club market. And Get2Net.com, a Colorado-based outfit that is among the most closely watched in the industry, has staked out airports and travel plazas.
“The industry is very fragmented right now,” said Generosa F. Litton, a kiosk industry analyst with Frost & Sullivan, an international market research group in Mountain View, Calif. “It’s really still in the pilot, or experimentation, stage. The companies trying it are trying to figure out exactly how to make money from it.”
The potential revenue picture for those angling for advertising revenue is significant, given the explosive growth in Web-based advertising, say experts.
Spending on Web advertising is expected to mushroom to $12.6 billion by 2002 from $5.5 billion today.
From 1% to 2% of Internet users click on banner ads for more information. That means advertisers are increasingly looking for ways to get their ads in front of Web surfers most likely to be interested in their product or service, say experts.
Shin, co-founder and chief executive officer, estimated that if Web-On-Site is successful in its goal of installing 3,000 kiosks in the United States, the company would see a $100-million income stream from advertisers and partners, such as content providers who might pay to have their icon displayed for users to click on.
For now, the company is staying alive off about $30,000 a month in income and the backing of its private investors, all the while pitching venture capitalists for a cash infusion of $10 million to $12 million. Besides a cash injection, Shin said, “The key for us right now is locking up sites. Location, location, location is what it’s going to be all about. I believe larger companies will eventually be coming down the road, and they will covet these locations.”
In its quest to reach its goal of installing 3,000 kiosks, Web-On-Site has been providing the PC units for free to bars, ski resorts and other locations.
The company hasn’t run into difficulty lining up content providers--it has FoxSports, Betmaker and About.com, to name a few, and it has worked out low- or no-cost agreements with Internet service providers for connections. Landing advertisers hasn’t been the easiest sell.
The reason, said Hugh Bethell, president and chief operating officer, is that most national advertisers want a large market group to make their ad dollars worthwhile.
To build its market, Web-On-Site has set an aggressive target of rolling out 300 kiosk units in Baltimore, Philadelphia and Cincinnati by September.
Industry experts say one thing is for certain: Web stations will be popping up everywhere.
Banks of the kiosks can be found in several major airport terminals, in rest stops along the New Jersey Turnpike, and in the mountaintop lodges of Aspen, Colo.
In Europe and Canada, there has been a stronger rush by companies, largely telecommunications outfits like British Telecommunications PLC, to see if the kiosks are embraced by the masses.
Denver-based US West Inc., which provides long-distance and Internet services in 14 Western states, is one of the few telecommunications players that has made a foray into Internet kiosks.
It’s angling for the Web pay-phone niche and has installed 85 Internet stations in 80 locations. For the most part, they are in major airports and shopping malls, said Randy Tada, US West’s product manager for Internet terminals.
US West charges users $3.95 for the first 15 minutes of use and $1.95 for every 15-minute block after that. The units are averaging $10 per unit a day. “Right now, we’re not totally in it to make large amounts of money,” Tada said.
