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Psst! BlueLight Headed Toward the Black

Kmart's successful free ISP venture with Softbank now plans to get gossipy with <I>The National Enquirer</I>.

SAN FRANCISCO -- So e-tailing's dead, right? Don't tell that to Mark Goldstein, president and CEO of

, the



online venture with

Softbank Venture Capital


Goldstein impressed onlookers here at the

Robertson Stephens Internet Conference

Wednesday with his vision of how e-tailers will operate in the future, and how his company plans to win the hearts of bargain hunters everywhere. (For a conference calendar,

click here.)

One of the ways is to give them the juicy gossip they want. The company is partnering with

The National Enquirer

to deliver free gossip to its users.

"I've gotten a lot of grief for this, but when you think about the Kmart shopper,

TheStreet Recommends

The National Enquirer

is their


," Goldstein said. He then poked fun at the well-to-do conference attendees here by asking how many had looked at the tabloid in the last month. His question was answered by a nervous silence as several investors stared at their shoes.

On Oct. 1, the site will launch its free gossip center, which includes an email service.

But wait, there's more. Goldstein said BlueLight is now the fastest-growing independent service provider for Internet access in the country. With 4 million users so far -- the company launched last December -- BlueLight wants to have 6 million users signing on to the Internet through its free ISP by the end of this year.

That free ISP has already started paying for itself, Goldstein said. Because of its link with Kmart, BlueLight is able to distribute


-type disks at Kmart's 2,164 stores across the country. Those stores, which are on average 15 minutes away from 85% of the country's population, draw in 30 million shoppers a week. Those kinds of numbers look awfully attractive to advertisers and manufacturers that want their products in front of the Kmart -- or BlueLight -- shopper.

"We've monetized it because we've gotten people to pay us to be on that disk," Goldstein said. "Basically, our free ISP isn't costing us anything."

Well, it is costing a little bit -- just less than a dollar for each person the company brings online. And of the users who are signing on through the

BlueLight Totally Free Internet Service

, 35% are experiencing the Internet for the first time.

Other highlights from Goldstein's presentation include a planned rollout of physical BlueLight stores in high-traffic areas like Manhattan and San Francisco's Fisherman's Wharf. The company will add BlueLight kiosks in 1,600 Kmart stores during October, basically computer terminals that will allow shoppers to browse the site. And it will get free advertising in Kmart's TV spots and weekly circulars.

He said the company's immediate goals are to have $100 million in sales per year (Kmart has $36 billion in sales) and to be profitable by the end of its second year. While those numbers might sound aggressive, Goldstein certainly wasn't sounding any traditional e-tailing chords in his presentation.

"The days of having $150 million to build an e-tail site, those days are over," Goldstein said. But he seemed to think that the days of selling $150 million a year at an e-tail site -- namely his -- are still to come.