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Education Reporter

ZapMe! Zapped!
Company Sells Stock, Changes Course
SAN RAMON, CA - In a dramatic move last month, ZapMe!, the company that offers "free" computers, satellite dishes and "netspace" to U.S. schools in return for advertising to captive students, announced it will sell the controlling interest to its satellite supplier. Gilat Networks Ltd. will purchase 51% of ZapMe!'s outstanding stock at a price of $2.32 per share and will steer the company in a new direction, away from an advertiser-based presence in schools.

"ZapMe! has raised the white flag and everyone who has fought advertising in the classroom had a hand in this great victory," said Jim Metrock, president of Obligation Inc., an organization that has worked tirelessly to remove ZapMe! and Channel One from the classroom. "Big Money has been clobbered," he adds. "ZapMe! went public at $10 per share in the fall of 1998, and the price fell quickly to $5. The company then hired a 'superstar' CEO, and the stock climbed to a high of $13-3/4." Less than a year ago, the stock sold for $12 a share.

Metrock explains what happened to cause such a turnaround. "ZapMe! ran into the unlikely alliance of conservative, liberal and progressive groups, privacy activists, academics, and child advocates. The stock recently fell to a low of $1-9/16. Then came news of the sale on Oct. 3. This is unquestionably a pivotal development in our effort to combat the commercial exploitation of schoolchildren."

ZapMe! is expected to immediately begin reducing its emphasis on providing free computers and internet service paid for by advertising. A joint ZapMe!-Gilat press release announced: "Currently served schools will continue to receive internet service, although going forward the company will discontinue the installation of free computer labs for schools."

Metrock extends his congratulations to all who raised awareness of ZapMe! in the press, among the grassroots, and on Capitol Hill. "This could have easily been another Channel One," he notes, "and we all had a part in dismantling ZapMe!'s plan to advertise in schools and track and profile children as they surfed the web."

ZapMe! contracted with schools to loan up to 15 computers and accessories free of charge, along with internet access to 13,000 ZapMe!- approved websites. In return, schools were required to have a student sitting at every computer for a minimum of four hours per day, although more recent ZapMe! contracts have not included the minimum usage requirement. "Banner" ads run continuously in the bottom left corner of each computer screen. If a child clicks on this "dynamic billboard," the whole screen becomes a commercial. Some ads become full-blown TV-like commercials.

Some of the earlier web sites accessible on ZapMe!'s "Netspace" web server contained inappropriate material such as advertisements for violent video games. (See Education Reporter, February 2000.) In addition, students' web surfing habits were tracked and sent to marketers, who use the information to target products directly to students.

"We'll have to watch developments with ZapMe!," cautions Jim Metrock, "but we can tentatively say: 'We won this one.' This news should send a shot across the bow of Channel One."

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