The Future Of Internet Cafes

Amid the neon, rush and hustle of Times Square, nestled right next to Madame Tussaud's Wax Museum on 42nd Street, is a unexpected sanctuary of quiet: the world's largest Internet cafe, a home to vagabond surfers from around the planet, 24 hours a day. It may also be a vision of the future of cyber cafes: a global grassroots phenomenon suddenly facing new challenges.

When I heard about a giant Internet cafe at the crossroads of the world, I instantly imagined a cyber version of the old Thorn Tree Cafe in Nairobi, a few decades ago. The Thorn Tree was built around an old acacia bearing a message board that every backpacker passing through town simply had to check. And while you usually didn't have any messages tacked up on the cork, in the course of checking, you'd meet lots of new people and end up with all sorts of new travel ideas. (The acacia tree, by the way, is no more, although the cafe is still there; fittingly, Lonely Planet borrowed the name for their travel Website's bulletin board.)

The Times Square easyInternetCafe, however, is the disembodied opposite of the noisy old Thorn Tree. The big, open, two-story space feels like a hushed university library, filled with dozens of rows of long wood grain laminate desktops. There are minimal dividers between stations: just one LCD monitor after another, with mouse and keyboard below--650 in all. Surfers sit two feet apart, utterly oblivious to those around them.

Ironically, the room is festooned with posters from online dating service Lavalife--big advertising banners hang from the ceilings depicting fetching guys and gals eyeing one another, although below no one is eyeing anything but their LCD. Soon, however, partitions will be built between stations: not for privacy but because the store was initially a magnet for pickpockets and purse-snatchers. "People sit down," says Andrew Croft, vice president of business development, "and completely lose all awareness."

EasyInternetCafe is the largest of what may be as many as fifteen thousand Internet cafes in at least 171 nations--no one knows for sure, since this constitutes unquestionably the most disorganized industry sector on the Internet. While there have been several efforts to start national or international Internet cafe organizations, none has really taken off. There are at least half a dozen companies selling software that lets cafe owners track usage and bill customers, but none of those is dominant.

Yet Internet cafe operators may soon wish they were organized, for the business is increasingly under attack. In Europe, Greece and Germany have led the way in efforts to require "gaming licenses" for Internet cafes, since it's possible to use computers for amusement and gambling. While the outcome remains uncertain, the cost of gaming licenses would almost certainly make cyber cafes a losing proposition-yet without a license, the proprietors could be arrested for tax evasion anytime a patron was discovered playing a game.

China shuttered 3,300 Internet cafes late last year for "safety reasons" after an arson fire killed 25 people in an underground Beijing joint called Blue Hyperspeed; the official position on Internet cafes remains murky. And earlier this month, a Los Angeles city councilman demanded a police investigation of cyber cafes after 300 incidents of violence--including a late-December brawl involving 100 teens--were linked to networked multiplayer combat games, when the online battles spilled offline.

Some of these challenges will sort themselves out--almost inevitably, locations that specialize in gaming will differentiate themselves from standard Internet cafes since multiplayer gaming requires more powerful hardware. As such game salons emerge they will become the lightning rods for licensing and crime concerns. Indeed, says Ernst Larsen, a Norwegian journalist who compiles a printed directory of Internet cafes (www.netcafeguide.com), some game-oriented cafes are already asking to be removed from his directory, as they don't want travelers dropping in.

But the quirky little coffee-and-broadband stands that supply access everywhere from Brooklyn to Belarus may soon face another threat: the technology at easyInternetCafe in Times Square. EasyInternetCafe is a subsidiary of easyGroup, run by a fleet-footed entrepreneur named Stelios Haji-Ioannou. Stelios has already parlayed a shipping fortune into easyJet, a wildly popular low-cost airline that is shaking up the European travel industry.

EasyGroup hopes to do the same with Internet cafes: the Times Square cafe has extremely low overhead and prices. At the front, customers line up to put cash into vending machines that give them credits for online usage. They then pick out any empty computer and log on. Depending on time of day, the price ranges from a maximum of $4 an hour down to-say, at 3:00 AM-twenty-five cents an hour, averaging about $1 an hour. In short, it's demand-based pricing that adjusts constantly, exactly the way airline seats are sold. You can even buy access, at a discount, for a date several months in the future.

EasyInternetCafe is also no-frills: no printers, for example. If you want to print, you email the document to yourself and visit a Kinko's. And no technical advice, either--while techs fix broken machines, no one will tell you how to insert a photo into your e-mail. But that doesn't seem to deter the cafe's 35,000 weekly customers. On a recent Friday night, the place was almost full, with everyone from men in business suits to European kids backpacking America. In my row sat a mother and two kids playing Sims online; a young woman examining a bartending school's site; a whiskered gent glaring at a game of online chess; a man copying a recipe for tofu soup; a teenager personalizing an online greeting card; and one elderly fellow typing away wildly in a Spanish language chat room.

EasyGroup, having thoroughly field-tested its automated model in London and Manhattan, will now roll out fifteen-computer versions that fit in two hundred square feet-basically "Internet cafes in a box"-across the US. They're aiming to put automated Internet access inside existing establishments such as McDonald's or Burger King, and also to offer it as a franchise opportunity. And they're looking as well at the developing world, where low-cost public Internet access is increasingly crucial.

So even cyber cafes, the last untamed remnant of the Internet boom, may soon face corporate consolidation. Or then again, maybe not. Perhaps there's yet some blend of coffee, muffins, access and friendly advice that can still compete against no-frills efficiency. Maybe, for example, you could start by putting a message board on an old thorn tree.