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For district schools who might be contemplating the ZapMe promise,
remember, there's no such thing as a free lunch.
Will N2H2, Inc. be next? I'm not sure, but a quick check of its
stock price might lead one to believe the end is in sight. --KS
Kurt Sahl
Doctoral candidate
College of Education
University of Washington
Seattle, WA
---------- Forwarded message ----------
Date: Thu, 02 Nov 2000 10:00:22 -0500
From: Gary Ruskin <gary@essential.org>
To: commercial-alert@venice.essential.org
Subject: NYTimes on ZapMe
Commercial Alert November 2, 2000
Following is today's New York Times article on the ZapMe Corp.
http://www.nytimes.com/2000/11/02/technology/02COMP.html
Free Computers for Schools: An Offer Too Good to Last
By John Schwartz
Earlier this year, Plainfield High School in Central Village, Conn.,
signed up for a free computer lab from the ZapMe Corporation. The
highflying company was promising to connect the nation's schools to the
Internet, asking only to deliver advertising to the students' computer
screens to pay the freight.
Last week, the Plainfield school superintendent got the bill.
An e-mail message from a company employee explained that times were
tough for ZapMe, which had come under attack as a tool of
commercialization in the schools and had experienced a drop in its stock
to just over $2 from a high of $13.75. As a result, the superintendent
was told, the company was quitting the free-computer business.
Starting in February, the message explained, "there will be a fee
charged for the service and equipment." It said the school could go
ahead and install the computers, wait until a price list arrived in
November before making a decision, or make arrangements for ZapMe to
pick up the equipment.
"It was quite a shock," said the superintendent, Mary Conway. Her school
had spent $4,000 to prepare a room for the computers — a lot of money
for Plainfield, which ranks 161st out of the state's 169 school
districts in spending. "The board apparently made the decision that it
was worth the risk because we are so poor and needed the computers. Now
we're really in rough shape."
ZapMe says it has given millions of students access to the Internet in
2,000 schools nationwide; a total of 15,000 had signed up for the
service. At its height last fall, ZapMe's stock was worth half a billion
dollars; the company was emblematic of the new economy, a place where
good deeds, vision and commerce form a single elegant braid.
Now it has all unraveled: ZapMe says it is refocusing on selling its
technologies for high-speed Internet access and services via satellite
to business. It says, meanwhile, that it is trying to find ways to keep
the school network alive without forcing the schools to pay.
"We are exploring many opportunities," said the company's founder and
chief executive, Lance Mortensen, "including -- but not limited to --
partnerships, the outright sale of the network, joint ventures and
alternative options to schools that would allow them to keep the labs,
which means, obviously, for pay."
The story of ZapMe and schools like Plainfield shows the ripple effects
of the dot-com downturn that extend far beyond Silicon Valley and Alley.
To its founders, ZapMe had a noble vision defeated by a handful of
naysaying activists opposed to any commercialism in schools and ready to
jump to conclusions about the company's use of data about the students'
computer use. While schools were still eager to sign up, Mr. Mortensen
said, the bad publicity worried potential advertisers "about having an
association of their brand with our brand."
"It's heartbreaking for me," he said. "That opportunity we gave
America's schools was taken away" by "a few people."
To its critics, ZapMe represented a bad idea that collapsed under its
own weight. Gary Ruskin, director of Commercial Alert, a group
affiliated with Ralph Nader that opposes "excessive commercialism" in
society, was involved in a public relations war that Mr. Mortensen cites
as the key factor in his company's decline. Mr. Ruskin counters that
"their business model of violating the privacy of children and forcing
them to watch ads was a total flop."
Mr. Mortensen insists that he hopes to keep the service free to the
schools through subsidies from business, foundations and government.
"We're looking for people to adopt these schools," he said, but noted
that ZapMe still had bills to pay. He said the company was spending
about $3,000 a month on each of the smaller schools it served to pay off
the equipment costs — typically 5 to 15 computers — and supply
high-speed Internet connections.
"We personally anticipate, through a number of efforts, to get that cost
discounted down," he said.
At first, ZapMe, based in San Ramon, Calif., made an offer that
thousands of schools found too tempting to pass up: a complete computer
lab with PC's, teacher training and access over high-speed satellite
connections to a collection of 13,000 child-safe Web sites.
The company insists that while it reserved the contractual right to
track students' surfing habits individually, it never gathered anything
more than their age, sex and ZIP code — information it then shared in
aggregate form with advertisers. When the company announced a program
called ZapPoints, which would have given students points toward prizes
while gathering personally identifiable information about them, the
outcry was so swift and loud that ZapMe quickly discontinued the idea.
"The privacy thing is mind-boggling because we never took a student's
address, never took a student's phone number," Mr. Mortensen said.
But Nancy Willard, a consultant at the University of Oregon's Center for
Advanced Technology in Education, said the ZapPoints program was the
company's fundamental flaw. "The ZapMe model was going to fail because
of the level of commercial intrusion into the schools" required by the
ZapPoints program, which was an essential part of reaching
profitability, she said. "Once educators became aware of that, they
would end up saying `No, this is not appropriate.' "
Mr. Mortensen said the e-mail message that Plainfield received was a
mistake. "That's an action by one employee and not the corporation," he
said. He did not deny that the company might ask for money to keep the
program running but said "there would be no forced issue," since the
company could simply pick up the PC's.
"We never gave the computers to the schools" outright, Mr. Mortensen
said. And William R. Connon, a Hartford lawyer who represents the
Plainfield Township schools, said the ZapMe contract gives the company
the right to charge for its services or to take them back.
A half-dozen schools with existing labs contacted by a reporter said
they had not heard from ZapMe about the future of their programs. Donna
Unterreiner, a library media specialist for the Margaret Buerkle Junior
High School in St. Louis, said that the ZapMe lab had been "a godsend
for us," since the school district had not been able to pass bond issues
that would have otherwise paid for Internet access. The advertising, she
said, did not bother her or her students. "Can you turn on a computer
anywhere, and they don't have ads on them?" she asked.
Schools that have not yet received computers are also waiting to hear
what ZapMe has in store. William G. Smojver, director of technology and
information services for the school district of Waukesha, Wis., near
Milwaukee, said he called the company recently to ask about the pending
delivery of machines and was told that a letter would be going out soon
describing the company's new policy. "We are fairly pessimistic about
receiving anything," he said.
George Smith, director of technology for the Green Bay School District
in Wisconsin, said he had not yet heard from ZapMe about the 45
computers the company had provided. He did say, however, that technical
problems had limited the usefulness of the computer labs. "They can come
pick 'em up and take 'em back," Mr. Smith said. "Nobody will shed a
tear."
<-----article ends here------>
FOR MORE INFORMATION
See Commercial Alert's web page on the ZapMe Corp. at
<http://www.essential.org/alert/zapme/index.html>.
Commercial Alert opposes corporate exploitation of children and the
excesses of commercialism, advertising and marketing. Commercial
Alert's website is at <http://www.essential.org/alert/>.
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