September 7, 1999 Web posted at: 11:40 p.m. EDT (1540 GMT) by Derek Slater

From...

(IDG) -- Don't tell Daniel Sleator the membership model doesn't work for online gaming sites. Sleator's site admittedly isn't the usual venue for preteens wielding swords, spells or space blasters in the latest multiplayer shoot-'em-up extravaganzas. But perhaps that's precisely the reason for his success. Instead, Sleator's patrons play a game that's, oh, about 2,000 years old. And they spend $49 a year for a relatively low-tech experience in Sleator's Internet Chess Club (ICC), despite the availability of free chess services elsewhere online.

What's most unusual about the ICC (www.chessclub.com) is that it's growing—with 20,000 paying members at last count—and it's profitable. Other online game sites have tried unsuccessfully for years to support themselves with membership fees. In fact, the model has worked for only a handful of businesses, says Seema Williams, an analyst in the consumer e-commerce group at Forrester Research Inc. in Cambridge, Mass. One such business is Ultima Online (www.ultimaonline.com), the multiplayer fantasy world run by San Mateo, Calif.-based Origin Systems Inc. Most other gaming spots rely on ad banners for income. ButICC's formula—offering unlimited online play in exchange for an annual membership fee—seems to be working just fine.

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The club's chess servers enable players to find opponents anytime and to play games at any speed, from slow games that last several hours to "lightning" contests in which each side has one minute for the entire game. The ICC software tracks players' results and ratings (a number that roughly indicates a player's chess ability), enforces rules and even allows for a number of variations on the traditional regulations, such as rearranging the pieces' starting positions.

The club started life—no one is quite sure exactly when—as one of several free Internet chess servers, with players logging on via telnet sessions. Sleator, a professor of computer science at Carnegie Mellon University in Pittsburgh, started fiddling with the code on a CMU-hosted chess server in 1992, adding features and enhancements that at least doubled the size of the original code base. In 1995 he and cofounder Eric Peterson, a retired geophysicist, started kicking around the idea of converting the server to a membership-based club, a suggestion that met with players' predictable wailing and gnashing of teeth.

"At the time, there were a few [online] subscription services, like The Wall Street Journal, but [the concept] was still pretty outrageous," says Sleator, now ICC president. The pair persevered, working for a year without pay to set up the service, moving the code to a new host at an Internet service provider and adding more features. For example, the ICC now maintains a small database for each player, tracking his or her recent and all-time-favorite games. The servers also hold automated tournaments daily, and players can improve their skills by walking through lessons run by "lecturebots."

The ICC's other remarkable achievement is its success despite competition from other sites providing many of the same features free of charge. Yahoo Inc., Lycos Inc. and other well-known portal sites offer free chess games to their millions of visitors. And the Burnsville, Minn.-based Free Internet Chess Server is based on the same core code from which the ICC was built; it even advertises pointedly that "We do it for the game—not the money."

So why do ICC members pay to play? For starters, the free services have less-controlled atmospheres. Profanity and innuendo seem much more common on free sites than on the ICC, where members risk getting booted for such behavior. But it's player quality that seals the ICC's allure. The general-purpose sites clearly appeal more to casual players; tournament-caliber opponents are hard to come by. In contrast the ICC's clientele includes numerous internationally titled players, all the way up to grandmasters—the black belts of chess.

Grandmasters not only compete on the ICC but also use the club as an advertising venue for chess lessons, lectures and other activities. Sleator calls those opportunities distinctly beneficial to many professional players who might otherwise find it hard to get by on chess alone (especially in the United States). Michael Rohde, a grandmaster who earns his living as a tax lawyer in New York, paints a somewhat less rosy picture of the ICC's value to pros. "You reach a lot more people, but so does the competition—and so the price of what you offer goes way down." However, Rohde plays a number of games on

the ICC each month just for fun. "The ICC has become part of the mainstream for U.S. chess, so it has won that war," he says. The possibility of playing against grandmasters like Rohde, as well as lesser-titled players, provides a powerful draw for other ICC members. The site's home page, which alerts arriving visitors to the number of games in progress, also lists the chess stars online at the time.

The club has even experimented with creating a little in-house economy with a basic unit of currency, the chekel. Buying chekels is easy; the ICC already has most players' credit card information from their membership fees. Players can redeem chekels for services such as online lessons from grandmasters.

To continue building its player base, the ICC also maintains a cozy relationship with the United States Chess Federation in New Windsor, N.Y., the country's organizing body for the game. The ICC advertises in the USCF's print publication, Chess Life, and has linked banner ads on the U.S. Chess Online Web site. The ICC pays a small bounty for each new member who comes from the U.S. Chess Online site; the federation similarly pays the ICC for each ICC member who joins the national federation.

Sleator and ICC employees also attend the biggest real-world U.S. chess tournaments, where they set up promotional booths and broadcast the moves of the top games in real-time over the ICC. The Internet's worldwide reach is key because chess has a much higher profile and much greater popularity in other nations, particularly Russia and Europe. In fact, the ICC, which draws its membership from more than 70 nations, has created Spanish and Swedish versions of its home page to further increase its international appeal.

But despite the ICC's success, chess games probably won't attract multimillion investments from venture capitalists. Even with close to 20,000 paying players, the ICC is smaller than one-tenth the size of Kali Inc., which hosts multiple online games of the swords-and-blasters type and claims to be the Web's largest gaming site. Still, how many other such sites can boast of turning a profit? The ICC benefits from a good deal of free labor: Its system administrators, who moderate disputes and provide informal technical assistance to the membership, are unpaid volunteers. "I think what they get out of it is they are important members of a very big community," Sleator says.

As for those no-cost competitors, Sleator seems relatively unworried. "We keep an eye on Yahoo; we can learn from them," Sleator says of the Web's dominant search engine and portal site. "Those other chess servers, if we use them properly, can be a big bonus for us" both in terms of increasing general interest in chess and in helping the ICC learn to make it easy to play online. Meanwhile, the ICC's staffers are continually working on their site's interface. Their goal, Sleator says, is to match the free clubs' ease of use while offering a more robust service. "We want the complete newbie to be able to jump in and click one button and be able to play."