ST. LOUIS РNov 8th, 2005 Р As the sparring match between city dot-coms and traditional media continues to heat up, both sides seek new means to lure increasingly demanding advertisers. Brothers Michael and David Castello sat down with Associated Cities to discuss their rise and where the industry appears to be heading.

Associated Cities: When did you purchase your first city site, how many do you now own and why’d you enter this space?
Michael Castello: Those of us who started in the early 1990s got the names for free. In 1997, we had to pay for those names when InterNIC was assumed by Network Solutions and they retroactI’vely started charging $100 per name for two years of registration.

Many of the name holders from the 1980s and early 1990s scoffed at the notion of paying for something that was always free. That led to the second big domain land grab in the summer of 1997 when all names that were not paid for were released again. We really scored big that year and our portfolio swelled. We currently have more than 1,000 domain names.

Many people pretty much thought of the early Web as a fad. I felt the Web should imitate the real world as technology improved. I have always believed in the “I want it and I want it now” philosophy. When I would sit in my New York City apartment with rain coming down for days on end, I would yearn for a way to escape to sunny Florida.

The Web seemed like the perfect tool to create that vacation portal at any time and any place. That is why we put so much emphasis on having our city sites have the look and feel of the location. It helps draw the visitor into wanting to go there on their next vacation. It seems to have worked.

AC: PalmSprings.com has a different look and feel than many other city dot-coms. Please tell us about why you’ve opted against a more module-based design.
David Castello: I prefer to think of PalmSprings.com as more organic than modular. In a funny way, I’ve always compared it to the evolution of the Las Vegas strip. They started with one hotel and then built it up as the demand naturally increased. We didn’t start off saying: “Let’s launch PalmSprings.com by putting up 40 advertisers on the front page at $1,250 each a month.”

We started in early 1998 by signing hotels, restaurants and shops for $100 each a month. We’d write a page about them and then experiment with different ways of using PalmSprings.com’s inherent high traffic to generate revenue.

While some would stay at their $100-a-month listings, others called and asked: “How much to be on the front page?” At the time, we hadn’t ever thought about putting advertisers on the front page. Many of our clients – particularly those in hotels, real estate and golf – knew we were on to something. PalmSprings.com evolved and we evolved with it.

AC: What does your competition have over you and what do you have over your competition?
DC: When it comes to Internet marketing, there is no competition in Palm Springs for PalmSprings.com. That’s because we’ve concentrated on generating revenue for our clients since day one. Revenue will always be the most important thing to advertisers. Everything else is just smoke and mirrors.

I began actI’vely signing businesses to PalmSprings.com in March 1998 and immediately came up against other reps pushing their Palm Springs area magazine, newspaper, radio and TV Web sites.

These reps would tell business owners: “We get 1 billion page impressions, 1 trillion unique visitors and the average viewer spends eight hours a day on our site.” They’d then hand them a four-color, glossy press kit. I didn’t have a press kit and would tell them: “We generated more than $10,000 last month for the business next door to you. Here’s the owner’s phone number. Call him.” I signed 88 businesses in the first 90 days.

MC: PalmSprings.com has no competition on the Internet. I consider our only competition to be traditional media. It has always been the go-to place for advertising dollars in the past. In the future, I believe that traditional media will be absorbed by Internet-based portals once local citizens feel comfortable using that media in large numbers.

We have no competition from 100 miles out of Palm Springs. You just can’t touch the reach and popularity of the PalmSprings.com brand. The local businesses that advertise on our site would agree. Some hotels would promote that their reservations are upward of 50 percent because of us. Print media just can’t boast those numbers for the price.

AC: What do you love about the city dot-com space? What about it scares you?
MC: I love the fact that we are all starting to work together. I believe the Internet visitor is looking for specific information and is willing to buy into it. The more we offer similar functions, the more those visitors will feel comfortable going to us for their needs and their needs will grow. We want to help forge that relationship early.

I worry about whenever we start to move into someone else’s space that they will instinctI’vely try to fight to eliminate you from that stage. I do believe we need to move strategically forward and choose our fights sensibly. The more the city dot-com sites become relevant, the more we need to protect our interests. Associated Cities is a great model for us all coming together for common needs.

DC: Nothing about this business scares me. Before the Internet, my brother and I were in rock bands together. Ever play before a bar full of drunken bikers screaming for Lynyrd Skynyrd? Now That’s scary.

AC: How will this space drastically change in fI’ve years?
MC: In my opinion, everything is going toward smaller, modular, wireless, hands free and heads up. Picture the guy next to you on the train looking through his heads-up sunglasses and making voice command reservations through his high-speed wireless phone/computer. The less buttons, the better.

DC: Regardless of where technology takes us, the public will always dictate longevity. It was the same with radio and television and it will be the same with the Internet.

AC: What’s uniquely differentiating about PalmSprings.com?
MC: Though our front page is obnoxious with tons of local ads, we refuse to change it because it is a triple positI’ve.

Advertisers love to be there, visitors love to click on the special PalmSprings.com rates and we love the money we make from that page. Also, the site has lots and lots of static pages that all have a similar format. While it may take a lot more time to build, it pays off in many ways that can’t be explained here.

DC: In one word? Fun! PalmSprings.com is fun, colorful and deceptively simple. A lot of work went into making PalmSprings.com look that basic.

AC: Aside from your business passion, what else in life fires you up?
MC: Traveling, skiing, hunting, boating, family and music (not in that order).

DC: My fiance (Natalie), my dog (cavalier King Charles spaniel, “Annie”), archaeology, cigars, travel (I love Italy), writing and lots of wine.

AC: Down the road, what are your grand plans for PalmSprings.com?
MC: I personally would like to venture into more partnerships with local franchises. The idea of having PalmSprings.com partner with the city to create a free Wi-Fi cloud over the area is appealing to me.

DC: I tend to feel (rather than know) the next chapter for PalmSprings.com right before it happens. Like I said earlier, PalmSprings.com is more organic than modular and it has long started to take on a life of its own. All we can do is observe where it’s trying to grow and then quickly clear a path ahead for it.

AC: Do you feel there’s confusion between your privately owned city site and your local government’s city site?
DC: There is no confusion. PalmSprings.com generates revenue for Palm Springs businesses and the local government city site promotes the mayor, city council, boards, commissions and departments. We both do our jobs quite effectI’vely.

MC: If there is confusion, I’m not sure that confusion is bad for either of us. The global visitor is getting what they are expecting. I always believed the entrepreneur could create something much more interesting, profitable and enduring than a bureaucracy ever could. Governments aren’t good at making money; they’re just good at spending it.

AC: How have hurricanes affected your businesses?
MC: For us, Wilma would have been the hurricane to do damage to our WestPalmBeach.com area. What we found in respect to 9/11 and the 1997 hurricane of Acapulco is that those areas need us more in times of crises. The world tends to come to us after the bad newscasts have subsided and we lend a positI’ve view to what was and is good in the affected areas.

The local businesses have to pick up and keep moving. The minimal expense of Web city portal advertising is a great way for businesses to stay in front of those travelers. We only saw a one-week drop in statistics after 9/11. Travelers are resilient and want to keep exploring this world. It doesn’t take much to get them back out to the next adventure.