Nashville Online a case study: has the internet changed anything at all? For all the hype, the Internet sometimes seems like just another California hallucination. So we went to Nashville to seek the truth. After three weeks with health-care entrepreneurs, online truckers, and yes, Reba, it's clear that it's the users, not the Net itself, that deserve the attention.
(FORTUNE Magazine) – I've come to Nashville to find out if and how the Internet has changed life for normal people--for folks who aren't programming for Microsoft or writing columns for FORTUNE. I'm thinking of the city as a guinea pig, America in a nutshell. At least, that's how I explain it to the people I'm interviewing.
The usual response is a funny look. That's what I get from J. Bransford "Jake" Wallace. "I am one of the most technology-illiterate people you'll find," he warns over the phone, as we're setting up our meeting. "My son can't get me out of kindergarten on the Internet."
What I'm looking for from Wallace is a starting point, a sense of Nashville history. Wallace--tall, dignified, patrician, 66 years old--is a fourth-generation native and chairman emeritus of a Nashville insurance brokerage founded more than a century ago. He has a kind of cordial ease that I've always thought was quintessentially Southern. And he's hooked into the right schools, the right clubs. If anyone can show me where this town is grounded, I figure, it's him.
"My father died in 1970," he tells me over lunch. "But I've often wondered what his reaction would be if he saw Nashville today. He'd do a double take, I think." Where conservative banks and insurance companies used to reign supreme, Wallace explains, now health-care entrepreneurs, country musicians, and an assortment of other business types call the shots. Players in Nashville aren't white, or male, or even Southern anymore. (Well, they aren't necessarily white, male, and Southern anymore.) The city's insanely popular mayor--who's brought both the NFL and the NHL to town--grew up near Rochester, N.Y. "To someone my age, it's striking that Nashville has changed the way it has," Wallace says. "It used to be who you know. Now it's what you know."
Did the Internet drive that change? In a word, no. Nashville's health-care and music businesses were up and running long before most people had even seen a PC, and the civil-rights movement happened on city streets, not online. What's more, you can't call Nashville a super-wired place. According to Find/SVP, a research firm in New York City, 128,620 people in the Nashville area are online. That's about 12% of the population. In the San Francisco and Washington, D.C., areas (the regions with the heaviest Internet usage in the country), about 26% of residents are online. Austin, Texas, boasts 24%; New York City is at 19%; Phoenix, Grand Rapids, and Columbus, Ohio, are at 15%; Louisville's down around 10%. A March 1998 study published in Yahoo Internet Life, which looked at both Internet usage and network infrastructure, ranked Nashville the 38th most wired city, behind places like Tampa and Kansas City, Mo.
It's a bit ironic that one of the most sought-after Internet gurus on the business-speaking circuit lives here. Professor Donna Hoffman co-directs the Electronic Commerce Program at Vanderbilt University's Owen School of Management. The four-year-old program, the first of its kind in the country, has attracted a lot of attention, not to mention a lot of students. In 1998, E-commerce students represented 18% of Owen's graduating class; in 1999, they will make up 24% of the class. Hoffman doesn't track Internet usage in Nashville but says that her program's runaway success has come despite, not because of, the city. "It's interesting that we've done this in Nashville," Hoffman says. "We didn't need Harvard, or whatever. It didn't matter where we were. All we needed was the Internet."
Most of the people I meet in town don't travel in Hoffman's techie circle, and they're under the impression that Nashville's ahead of the curve when it comes to the Net. They remind me that Tennessee had widespread ISDN--a high-speed access line--early in the game, and that it was the first state to wire all its public schools to the Web. They point to Nashville's budding Net startups and to the fact that the city is one of the first 20 markets in the country to have cable-based Internet access, through the @Home service that's sold by local cable provider InterMedia.
It makes sense that Nashville likes to think of itself as highly wired. After all, the Internet has come to embody all that is democratic and hopeful--and lucrative--about our times. The Net is supposed to "set information free." It's supposed to open new paths from businesses to consumers, allowing small-time operators (for example, struggling musicians) to compete head to head with the big guys (like Garth). It's supposed to jump-start failing schools by giving kids one-click access to infinite knowledge and resources. It's supposed to create fortunes for young, smart entrepreneurs. It's supposed to get rid of annoying middlemen and labyrinthine bureaucracies.
And it's supposed to do all that everywhere, not just in California and on the Eastern seaboard. That's exactly why FORTUNE chose Nashville--because it's a growing, medium-sized (just over a million people) city that isn't already steeped in technology. Still, Nashville residents seem to believe in the promise of the network. On one small block I visited in the Nashville suburb of Smyrna, I met three couples who log on all the time and have even worked from home via the Web. The Internet is here.
Jim Jordan, a Nashville writer who covers recording technology, rolls his eyes as he points to what looks like about ten people listening to a presentation on Webcasting technology. We're at the second annual MINT (Music Industry & New Technologies) Conference, put on by the Country Music Association in Nashville's new hockey arena. Webcasting tools let you broadcast an event, such as a concert, live over the Net. "I'll bet the talk with the copyright lawyer is packed," Jordan cracks.
At MINT, Stetsons and cowboy boots are scarce. (Just the week before, I'd had breakfast with Jeff Green, the CMA's senior director for new business development. At his recommendation, we linked up at Noshville, which boasts a sassy New York-bred wait staff and tasty $9.95 lox-and-bagel platters. "This place has saved my life!" exclaimed Green, who's from Minneapolis.) MINT has drawn a slick industry crowd, a bicoastal bunch from the big record labels, CMA, and rights organizations like ASCAP and BMI.
Jordan's right. The copyright sessions are packed. The industry is worried about protecting its intellectual property online. Consumers spent some $37 million in 1997 buying music (CDs, cassettes, and LPs) over the Web, a number that's forecast to shoot up to $1.1 billion in 2002, according to Jupiter Communications. It's expected that someday buyers will make their own CDs off the Web, picking and choosing the tunes they really want and chucking the rest. (A few custom-CD sites already exist, but you won't find too many big-label recordings available on them.) So publishers and labels are in turf-protection mode.
At MINT there's some talk about the upside in Websites and electronic commerce, but most of the suits seem wary. "I want to be on the cutting edge of it," says MCA Chairman Bruce Hinton. "But it's hard to quantify impact. We haven't hit critical mass yet."
Tom Kimmel, a singer-songwriter who has lived and worked in Nashville for 20 years, is not waiting around. Kimmel made two rock albums for PolyGram back in the late 1980s but lost his recording contract because, he says, he wasn't generating million-copy sales. "I was at the top of my game, but I'd gotten past the age where record companies wanted to promote me," he says. Kimmel adds he couldn't make money from those records anyway. His contract stipulated that PolyGram would receive all royalties until the albums' hefty recording costs (which he says came to about $1 million for both) were paid off.
Today the Web helps Kimmel fly solo. He's holed up in a friend's home studio, making an album for what may end up as little as $10,000. His promotional costs should also stay under control, because he'll market the CD himself on a Nashville Website called songs.com. Since he's selling the CDs himself, he'll keep something like 70% of the revenues generated. So he won't need a million-record sale to make the money flow. Kimmel just needs to tap his still-loyal fans. "I get mail from all over," he says. "I got one note that said, 'Good to see you online. We thought you were dead!' "
Kimmel is part of a growing set of artists and producers--both fledgling and aging--who are counting on the Net to revolutionize the economics of the music business. They hope the Net can do two things: first, help them attract a niche following; second, help make that niche profitable enough that they can extend their careers. Smaller venues, like the famous Bluebird Cafe, and offbeat music festivals, like the Nashville Entertainment Association's Extravaganza (a showcase for Nashville's booming pop scene), are already Webcasting in an effort to attract new audiences. Larry Lee, whom I also meet at MINT, wrote and sang the song "Jackie Blue" for the Ozark Mountain Daredevils and played with Jimmy Buffett; he has also produced albums for acts like Alabama, KT Oslin, and Juice Newton. Now he's starting an online label called Vestige Records. "I got fed up with manufacturing records for good-looking people," he says. "Now musicians who never stood a chance at a deal will be able to make it."
Reba McEntire, of course, is good-looking. She's also in a totally different league from Lee, Kimmel, and the others. She's sold 40 million records, which makes her the best-selling female country recording artist of all time. (Remember the megahit "Whoever's in New England"?) She's won four CMA Female Vocalist of the Year awards and two Grammys. She's acted in three movies and is beginning work on her second book. She does not need the Net.
But she's turning to it, nonetheless. McEntire's new album is If You See Him. This is no plain old audio CD. It's a full-fledged CD-ROM, a multimedia experience. In addition to 12 new songs, If You See Him offers a screensaver, JPEG photos, and even a Reba Browser, a special version of Microsoft's Internet Explorer that includes links to Reba's Website and to RebaNet, McEntire's "online community." Reba's site gets 3.5 million hits per month. According to Media Metrix, a research firm in New York City, baywatchtv.com, clinique.com, and texasmonthly.com get about the same number of viewers as reba.com does.
When I meet McEntire, she's curled up on a hotel-suite sofa. Her entourage--a stylist, two publicity people, and her manager-husband Narvel Blackstock--has just left the room. Unlike the MINT people, McEntire actually has a country accent. She begins talking about the new album, and I have to remind myself that I'm not hearing a software marketing pitch.
Or am I?
"This is going to be no more expensive than a regular CD," she tells me. "But the people who have access to a computer will be able to play it in their CD-ROM. They'll be able to log in to the Internet from the CD, if they already have access to AOL or whatever. I think the neatest thing is that you can be in the arena with me. You get to visualize the arena from my point of view onstage, and you can pan around to get a 360-degree view!"
McEntire uses the stuff she's pitching. When she has a down moment at home or on the road, she says, she'll go on her laptop and answer E-mail from fans. Her techies in Nashville post her replies on RebaNet. "I got on the computer before Narvel did," she remembers, "but now we fight for the laptop. When one of us is done, we go ahead and log in for the other one.
"Our son Shelby has been taking computer classes since he was in kindergarten. He E-mails me when I'm on the road. When he has a problem with the computer, he usually figures out how to fix it himself. It's amazing. He's in the second grade. He's not like me. When I first started on the computer, I was afraid of it. I thought the thing was going to start crawling out and talking to me or something."
McEntire says that when her company, Starstruck Entertainment, built a new headquarters three years ago, the Net was already on her mind. "We were doing research with top-of-the-line people, saying 'What's gonna be the future? What can we expect in a building five years from now? Let's put it in there now.' " Starstruck has ISDN lines, fiber-optic lines, "the kit and kaboodle," McEntire says. "We do teleconferencing, satellite feeds all over the world." McEntire can even do real-time remote recording, singing over ISDN lines while her session musicians and producer are in the Starstruck Studios back in Nashville.
McEntire thinks it's great that her fans are buying CDs and cassettes online. "It's like the Home Shopping Network," she says. "It's so convenient."
How do you think the record company feels about it? I ask.
"You'd have to ask them, but I'd think they'd be excited." I'm not sure about that, I say. Wouldn't downloading music straight off the Net be a threat to them?
McEntire pauses. "Well, things could be taken away from them. There are going to be big changes over the next ten years. But, you know, things aren't the same today as they were ten years ago. Sure, we worry about people ripping off our music. But what can you do? Everyone's got the same problem."
To people on the outside, Nashville's all about country. Most people who live here, though, aren't hooked into "the business." They're working regular jobs, caught up in the same everyday concerns as everyone else. Like the weather. On April 16, publisher Rex Hammock and his Webmaster, Will Weaver, stood at the plate-glass window in Hammock's office and watched two tornados plow toward their building from downtown Nashville. "That probably wasn't so smart," Hammock laughs.
The two men snapped some digital pictures, waited for things to calm down, and then hopped up the street to grab a few shots of Nashville's Parthenon (a full-sized replica of the real thing in Greece), which had been damaged in the storm. Hammock and Weaver then posted the photos on their corporate site, along with phone numbers for the Red Cross and other relief organizations. MSNBC and CNN found the snapshots almost immediately and linked to them. Within a week, www.hammock.com had a million hits. (Hammock Publishing's site usually gets about 3,000 a month.) "When I took my daughter to school the next day," Hammock says, "I had little kids telling me they had seen my pictures on the Net."
Hammock Publishing has been creating Internet content for five years now. Business is chugging along: Revenues should go up 25% this year, to $4 million. Even though he's 44 years old, Hammock's part of what passes for Nashville's Internet community. He knows the guys who run the city's handful of Gen-X Net startups. He works with Telalink, an Internet service provider started by a couple of Vanderbilt University grads in 1993. (The company's principals, now 28 and 29, still work out of the condo they lived in when they graduated. Their dress code: shorts and inline skates.) Hammock also teaches night classes about the Net at Montgomery Bell Academy, Nashville's tony boys' school. Most of his students are budding hobbyists in their 50s and 60s who want to use the Net to read up on gardening, fill in family trees, or find that perfect ski resort in Colorado. Jake Wallace was in Hammock's class for a little while.
Hammock doesn't think Nashville's quite there yet, when it comes to the Net. "We haven't had our defining moment," he laments. The tornados could have been it, he thinks, had any of the official disaster-related organizations taken full advantage of the medium. They could have used it to match volunteers with people in need of help, he thinks, or at least to build a sense of community after the calamity. "If it's something of importance, of immediacy, people reach out to the Web. I don't think the media here, or the government, understand what a useful tool this can be."
Phil Bredesen, Nashville's mayor, began his career as a software programmer. He buys books at Amazon.com. He has spearheaded Internet development initiatives for the city. But when I ask Bredesen about Nashville and the Net, the mayor mostly agrees with Hammock. "We're still in the 'gee whiz' stage," he says. The mayor says he plans to make some public documents available over the Web, but he doesn't spend much time trying to convince me that the Net can change the way he runs the city.
The mayor's few critics gripe that he spends too much money on sports teams and too little on schools. That hasn't stopped the students at Hume-Fogg Academic High School, a Gothic stone building just south of downtown. Hume-Fogg is the oldest public high school in the Nashville system. It's also the most prestigious. You need a B average in middle school to participate in the entrance lottery. Then there's a lot of pressure to keep high grades. Everyone goes to college. Walking through dark-wood, high-ceilinged halls during the last week of school, I see a wall lined with seniors' names and their college selections. There's Boston University, Princeton University, the University of California at Berkeley.
In Marty Robinson's social-studies classroom, students pound away at keyboards. Robinson likes to go to the Web to introduce her kids to primary-source research. Economics students rely on Net resources like Yahoo Finance or the New York Stock Exchange site to learn about markets; comparative government students read Internet editions of foreign newspapers to get a feel for different political cultures. "I'm so turned on," exults Robinson. "I could throw away all the textbooks. This has energized my teaching. It has freed me from structure."
Hal Martin, a junior, is one of Robinson's students. He's also something of a hacker, and Robinson has called him to fix a frozen computer. The two of them fiddle around with the system configuration. Unlike the businesses a few blocks north of here, Hume-Fogg does not have a big staff dedicated to this kind of thing. I ask Martin if he minds chipping in like this. "I try to avoid it," he says. He tells me about a bunch of techie students who check in with librarian Tracy Smith, keeper of a list of IT problems around the school. The students fan out to make the fixes.
Thanks to the state of Tennessee, Hume-Fogg, like every other public school, has a fiber-optic link to the Internet in its library. But a single access point does not a useful network make. You've got to add more stations, and you've got to service the thing once it's set up. Smith tells me that getting the school's network in place has been a slow-going, grass-roots job. For three years she led a soda-can drive, collecting enough to fund the purchase of five hubs. To get the wire the school needed to link all its classrooms, Hume-Fogg took scraps left over from big corporate installations. Teachers and kids used their free time to pull the wire through the building.
These limitations seem tolerable enough at Hume-Fogg, given the school's overall success. But what happens in poorer schools, where students arrive with lower expectations? Aren't these the schools that are supposed to benefit most from PCs, a fast network, and easy access to the Web?
The Jere Baxter Middle School is just a few miles from Hume-Fogg, but it's a world apart. It looks nicer--it has a two-year-old, brightly painted building with new grass outside and a row of gleaming computers in each class. Jere Baxter's library even has a slick-looking server room. A full-time consultant keeps the equipment in working order.
Tracie Pennington and Jim Whittle, who teach fifth grade, try to take advantage of the Net whenever they can. They have spent weekends attending Internet seminars run by Vanderbilt's Peabody College of Education. Pennington has paid her own way to the Macworld trade show. On his own time, Whittle has installed network wiring in several schools. Jere Baxter's problem isn't equipment, these teachers say. Its problem is too little training on how to use it.
By and large, students arrive at Jere Baxter already lagging in reading and math. Pennington and Whittle try to use the Net to boost reading skills--the school has set up comprehension quizzes on its intranet--and to give the kids experiences they might not have otherwise. Pennington tells of a frog-dissection project their classes undertook last year. Poised over formaldehyde-soaked frogs, the kids got to "consult" with medical students at Cornell on an Internet videoconference. "Our kids lack communications skills," says Pennington. "For them, this was a great experience. You can't measure that on an achievement test."
I talk to Will McKelvey, 12, about a special project he did last year. He and a student at another school videoconferenced with the staff at an aquarium to get information on corn snakes. Was it interesting? "No," he says. "I'm not really into animals." McKelvey has a computer at home. He says the thing he likes most to do on the Web is look up his favorite bands, like the Christian group Reality Check.
Mayor Bredesen says he's "jaded" when it comes to the Net's potential in the schools. "It may be a technology looking for a use," he says. And he has a point. A lot of these kids can't read.
But Whittle says the mayor is wrong. The technology can help kids learn to read; it's just that it's implemented very poorly: "They come in here and dump computers on teachers' laps--teachers who have never seen computers before. So what do you think the teachers are going to do with the technology?"
Bobby Frist, 31, is also frustrated. His company, NewOrder Media, is having a time of it selling Internet-based technology into Nashville's massive health-care industry. "I've been funding pilots at my own expense to try to shortcut the learning curve," he says. "But the old guard is hesitant to use technology."
Now, there's nothing surprising about a startup struggling for a break. But Bobby's uncle is Tommy Frist, CEO of Columbia/HCA, the preeminent health-care power in Nashville. The younger Frist says that he once almost sealed a $500,000 Internet contract with the health care giant. But he says that evaporated when the elder Frist resumed the helm at Columbia/HCA in the wake of the firm's legal problems. "Some might think, Frist is back in, so Frist technology will do well," Bobby tells me. "But my uncle's being back is viewed as a return to the old-world way, which is popular in health care."
Bobby Frist's complaints are not completely off base. Just look at the facts. One, Nashville's health care community is booming--its 25 publicly traded companies had 1997 revenues of $20 billion. Two, in health care, everyone--HMOs, hospitals, doctors, pharmacies, insurance companies, you name it--is buried in time-consuming, expensive paperwork. Three, people are pretty much convinced that using the Internet could reduce that paperwork.
But Nashville's health-care companies seem reluctant to buy into it. They say the Internet is simply not a secure environment for medical information. "Most of the big health-care companies are scared of the Internet," says Paula Eleazar. She should know; she was CIO at OrNda, a big Nashville hospital-management company that's now part of Tenet, a national health-care service provider. Today Eleazar is president and CEO of Vger Technologies, a startup that promises to safeguard medical information transmitted via the Net.
Few of Nashville's health-care Internet entrepreneurs have gained much traction. Jeffrey Landman's operation, InPhact, is an exception. Landman, an M.D., isn't selling the Net as a cost-cutter. Instead, he's using the Net to deliver X-rays to radiologists. A clinic on Martha's Vineyard, Mass., for example, has an X-ray machine and a technician to run it but no doctors around full-time to interpret the images. Traditionally that clinic would print out film and hold it until a roving radiologist paid a visit. Now the clinic instead digitizes the X-ray, encrypts it, zaps it over the Net, and has an InPhact doctor check it out lickety-split.
Quick turnarounds are not the only advantage. If an X-ray image is difficult to read on traditional film, a doctor's out of luck. But if Landman has trouble reading a digital image that comes into his office, all he has to do is fiddle with the contrast, focus, and so on, and voila! there it is. Digital images, which are stored on platter-like optical disks, are also far less bulky to store than film. What's more, they're easily archived. If a patient has already had X-rays read by the InPhact system, Landman--or any doctor linked to the InPhact network--can pull up that patient's old digitized films and view them alongside the new ones. It's a far cry from sorting through bulging hard-copy files.
To be fair, the bigger, established companies have a slew of tech headaches just now--year 2000 anxieties, impossibly complex internal IT systems, and budgets that have to take other big-ticket technology purchases into account. ("Which would you rather have at your hospital?" asks Columbia/HCA spokesman Jeff Prescott. "A Website or an MRI setup?") And they are taking some first steps. PhyCor, a physician-practice management company, is setting up an intranet that lets its doctors learn about new treatment options and measure their patients' success against all outcomes in its network. Columbia/HCA does that as well, and also uses its intranet to track purchase orders and post jobs. And it is giving some hospitals digital cameras so that new parents can post pictures of their babies on the Web, allowing faraway relatives an early peek.
So Bobby Frist will keep plugging. He's working to get outside funding, and he hints that revenues may be on an upswing. "People are beginning to pay for our work," he tells me hopefully.
For other entrepreneurs, the Net has already paid off. Allan Ewart and Nedra Headen are truckers, a married couple who log some 150,000 miles a year. In the course of their career together, they've hauled Fed Ex parcels, fruit, empty fuel canisters, and the Cirque du Soleil. The Ewarts don't own a house, just their rig and a 45-foot sailboat ("Blythe Spirit") moored in San Diego. Their respective kids are strewn across the states. On the average day, Allan and Nedra spend 12 to 18 hours driving. They seldom leave the confines of their cab but have somehow remained blissfully in love after five years of marriage on the road. They met online in 1991. In Nedra's previous incarnation, she worked as a software consultant. Her first husband was a pediatrician.
I meet up with the Ewarts at a Travel Centers of America (TA) truck stop just outside downtown Nashville. In the back of their rig they've set up a sweet system--including a GPS satellite mapping system, a scanner, a printer, a digital camera, cell phones, and a 200 Mhz Pentium notebook. They've also got Windows 98 fired up. They're beta testers for Microsoft. "They've fixed the problems with Windows 95, but that big browser can get in the way," Nedra says.
Typically, one spouse tackles the bookkeeping or writes E-mails while the other drives. They wait until they reach a truck stop, like the Nashville TA, to upload messages. They plug their laptop into the phone lines in the restaurant booths and let 'er rip. The Ewarts have hand-made a special adapter to let them do this. Nedra says that truckers who don't have such adapters have been known to tear telephones off truck-stop walls to get to the line jacks they need. Others plug into the Net right from their parked rigs, using outlets installed in the asphalt by a Florida company called Park 'N View. Walk through the parking area of another Nashville-area TA, and you'll see phone cords trailing out of closed cab doors, straight into the pavement.
It seems a little bizarre at first--Allan will be the first to admit that truckers and truck stops have a "perception problem"--but being hugely wired is a potent antidote to the isolation of life on the road. "Communication is a huge part of our lifestyle," says Nedra, who has a slew of E-mail buddies and also keeps in touch online with business associates. "We're constantly having other truckers come up to us and ask, 'How can I get online?' "
I met a lot of people like Nedra while I was in Nashville, all of them friendly and hospitable. Everybody who could was happy to offer their take on the Net, and those who couldn't gave it a good-hearted try. "I personally miss a lot of things about the way it used to be," Jake Wallace said to me during our lunch, "But I realize we have to be competitive." He mused, "I wonder how Nashville will use the Internet to stay competitive?"
I don't think anyone knows, just yet. But I'll bet when the Net's all grown up things won't seem that strange at all. It'll seem like just another day in Music City U.S.A.
Whatever that means to people, that week.