Broadcast America Puts It All Together
Streaming Magazine October 2000
John Silliman Dodge
"We used to say '‘within 5 years people will use their cell phones to listen to global radio.' Forget that, next month you’ll be listening to a jazz station from Berlin off a Bluetooth connection to your cell phone with an earpiece." Carl Grooms, Senior VP of Corporate Strategy.
"In the last year and a half we’ve gone from ground zero to the largest Internet broadcasting company in the world. There’s Yahoo’s Broadcast.com and us. After that, the competition falls off considerably. Yahoo did great things for this industry and we have them to thank for getting it started. We do things differently and have surpassed them in every content category." John Brier, President/COO.
"We don’t do downtime." Bob Flagg, Senior VP of Engineering.
It all began with a little Dallas company called Broadcast.com, which was acquired and became Yahoo Broadcast. When broadcasters were just beginning to comprehend the implications of the Web but were too focused on their primary business to do much about it, the CFKA (Company Formerly Known As) AudioNet offered a painless way to get radio stations online and streaming the audio signal. But things changed. The market matured. Operators grew savvier and began to have second thoughts about sending their Web traffic off to be monetized at someone else's site. Big business, notably RealNetworks and Microsoft, began to embrace and promote streaming media. Wall Street observed Broadcast.com's swelling market value and particularly noticed its multibillion-dollar acquisition by Yahoo. One Portland, Maine-based entrepreneur sized up the competition and speculated that Goliath was ripe for a takedown. That was then; this is now.
Today BroadcastAmerica is the world's largest Internet broadcaster of live radio, talk radio programming, and TV newscasts. In less than two years, BroadcastAmerica has built an extensive online entertainment network with fully integrated primary content channels dedicated to sports, news, talk, music, film, movies, cartoons, weather and television stations. It has partnered to stream more than 600 radio and 70 TV stations, including Dick Clark's United Stations Radio Network of syndicated programs, which air on more than 2,300 stations. The company is logging more than five million audio and video accesses per month and adding radio and TV stations to its site each day. In addition to One-On-One Sports, the fast-growing online entertainment company also has exclusive agreements with SupeRadio, Citadel Communications, American Review Series, Talk Radio Network, Good Day USA, i.e.America and the U.S. Air Force. With offices in Glasgow, London, Berlin and Hong Kong, the company is expanding throughout the globe and adding radio and television stations to its site each day.
The Pilot
In August I spoke with BroadcastAmerica's President/COO, John Brier about the vision of the company. "From day one we knew the Net would become a mainstream broadcast medium that would allow millions of people to watch or listen to their favorite content. Within 3 or 4 years this will really change the way broadcasters broadcast. PC's, cell phones, wireless, hand-helds, net-in-car, all of these channels open up an entirely new way to listen for people all over the world. It's unclear how that will affect broadcasters. Some larger groups have sat back and waited to see how the economics shake out. Lots are still very angry and feel ripped off by Broadcast.com. Meanwhile, our weekly reach exceeds by great numbers any of the weekly reach of any of the largest broadcast networks in the world."
About BroadcastAmerica's value proposition: "We offer stations an economic alternative to streaming their own media over the Internet. There is no charge up front. We install a dedicated T1 line and the necessary hardware to stream. We impose no limitations and stations can have unlimited simultaneous users. We're the largest partner in the world of RBN (the Real Broadcast Network). We also look at ways of allowing stations to benefit by giving them local ad space inside their players. We create ads and put them in place for free. Stations can do whatever they want with these ads. There's a BroadcastAmerica player button inside the RealPlayer, and we're also one of the primary links with Microsoft. We use this to drive traffic. We don't force people to leave the stations' sites to listen, and we offer the ability to share revenue going forward."
About the market opportunity and his company's position: "We expect to have 1000-1200 radio stations within the next 12 months based on overseas growth. We're at 600+ globally with new clients signing every week. About 80 stations are pending here in the US. In Canada we expect 100 stations in 60-90 days. Started from zero there two months ago. Broadcasteurope.com has 40 stations and we're easily looking at a few hundred there. We're just getting going in Asia, no stations yet but we've only been open a few months. Broadcastlatin.com has just over 20 stations. Economically, we think we'll be generating $25M next year and up to $75M the year after that. And wireless and broadband will push this to a whole new level."
Who is the competition and how do you differentiate? "I can only speak to our plan and model. I feel very comfortable with where we stand on the competitive landscape. In the last year and a half we've gone from ground zero to the largest Internet broadcasting company in the world. There's Yahoo's Broadcast.com and us. After that, the competition falls off considerably. Yahoo did great things for this industry and we have them to thank for getting it started. We do things differently and have surpassed them in every content category. They're still out there trying to make it happen. We've never said we have to be the only one out there. Right now we are the number one group."
How is this strategy defensible when Yahoo has a billion in cash and 4-5 times the number of employees? "Anything is possible. All of our contracts are long term and exclusive, 3-4-5 years in nature. Could other groups copy our model? They could try. Time is important and we have a good head start. Remember, when we started we had zero. Yahoo had 400+ clients."
What are the threats to success? "I don';t think of it in those terms. We've come so far so quickly that we don't see any impending big threat. We're pleased about what the future holds. We've got a global footprint. We have over $440M of committed advertising. We're developing proprietary ad insertion technology. Over 200M people a week hear our commercials. We're in a decent position."
The Players
When John Brier called Mike McPherson looking for somebody with a solid broadcast background to help him pull off a new business concept, Mike figured his 17 years in the business qualified him for the challenge. So he recommended himself. Initially VP of sales and marketing, he negotiated with content providers and radio stations globally. Since then Mike's duties have expanded; he heads broadcastmusic.com and oversees convention/exhibit management and trade advertising as well as syndicated radio programs and radio stations domestically.
"In the beginning we concentrated on streaming radio stations. But after looking at how other markets were underserved, we expanded into international content, radio, television, syndicated content, whatever content attracts an audience. Now we have offices in Hong Kong, Toronto, Glasgow, and three offices in Germany. The company's content has proliferated across a wide variety of categories. Broadcastbible.com for example-Christian content has been underserved for some time. There's broadcastmovie.com, broadcastlatin.com...
We're the best at what we do. We're not just the streaming provider for partners. We have a very proactive engineering and customer service department. We monitor partners every day to make sure their audio is correct and they're streaming properly. We're usually the ones to find problems before the client is even aware that there is one. We call our core group of clients every week to see how they're doing. We send monthly newsletters to all of our content sites about new technology or sales education. We specifically stayed away from station site design because we thought it would slow us down. We provide low-cost access to the net; design is not part of our model."
Steve Moulton is the look and feel architect of BroadcastAmerica, the guy who heads the design team and takes John Brier's back of the envelope ideas and makes them happen. He studied art at the Parsons School of Design in New York but dropped out to become an actor. After working Off-Broadway and attending the American Academy in NYC, he returned to Maine and started a video production company, purchasing the first digital video editing system in the state. Today he oversees the design of the sites within BroadcastAmerica.
What do you bring to this company that nobody else could? "I think it's my ability to blend both art and visual design but also come from emotions, from my acting background. I know when to be logical and spell it out but I also have the ability to take the emotion and delight of seeing pretty things and make them practical." I asked about testing procedures, how he knows whether his decisions will work for the end-users. He replied, "To quote the CEO of Yahoo, 'we put it out there. If it doesn't work in a week, we take it down.' We really monitor email and feedback and listen closely to the 90 people in the company."
After graduating Magna Cum Laude from the University of Rochester, Mark Woods was a Navy pilot for 7 years flying missions in both Desert Shield and Desert Storm. Afterward he enrolled and graduated from Harvard Business School and joined Boston-area biotech giant, Genzyme to head an inside business development team. Today Mark's domain is BroadcastSports, the site that accounted for one-third of all BroadcastAmerica traffic in the first six months of operation.
"People are amazed at what we've been able to accomplish for $12M. We've built an incredible company in a short time. We're the largest Internet broadcaster in terms of television, radio and specifically talk radio programming. Over the next 12-18 months we'll increase our depth and breadth of programming. We'll go into new delivery vehicles, do original content either in-house or together with partners.
Content is still king, so to grow that would be the next logical step. That would include our own coverage of specific sporting events, interviews with players, etc."
How are you preparing for broadband and wireless? "We're talking with several companies in terms of distribution. We've talked with our partners and gotten terrific response to getting their permission to distribute wirelessly." Isn't bandwidth an issue? "You can still deliver scores, highlights, headlines, and brief textual info, but the ability to deliver audio-music, sports updates, is a lot of what our thinking is."
Brian Bickford worked for the State Department and helped with the privatization efforts in Eastern Europe and Russia. So it may have been his ability to handle difficult negotiations that caused John Brier to bring Brian on board. He's now senior VP of business development and oversees advertising and the management, acquisition and retention of all broadcast content.
So what's the approach? "We frame our entire service on the three C's=content, community and commerce. Exclusive content supported by external, terrestrial radio and TV. We're a broadcast company with holdings in both spaces. The second C is community. We have the cream of the crop, the streamies. They have the best gear, they understand how to download, and they have the highest spending power. The third C is commerce. With that reach we can monetize much like radio and television have done in the past. We have the ability to provide target advertising to the business community."
What about the effectiveness of Net advertising? "We're an Internet broadcasting company. Traditionally advertising on the Net has been about banners. That doesn't create the passionate visceral call to action that audio and video can do. Now we have little TV and radio and channels all over our site. Because of our world reach, we can give Ford, for example, a demographically, geographically targeted gateway ad."
(Never tiring of this question, I ask...) How did you bypass Broadcast.com? "They began with a simple model. But they forgot to involve the broadcaster. What's the return for them? They used to charge for the technology, didn't provide opportunity for the broadcaster to make money on the Internet. They took broadcasters' users away from the home site. We've won a lot of their larger customers. They either weren't listening or forgot to listen to what the customers were asking for. The customer service division at BroadcastAmerica is in contact with content partners on an ongoing basis. If Yahoo Broadcast wanted to put in a billion dollars to ramp up and compete with us they could. But for whatever reason they're not. There is no other competition that we spend a lot of time focusing on. We focus on the industry and the future."
Carl Grooms, senior VP of corporate strategy, participates in every aspect of the company in helping identify future paths. He's responsible for writing business plans for America, Asia and Europe. "Europe is going to be an incredibly large market in the near future. There are all-you-can-eat ISP services in Germany and the UK now. Government controls over the phone industry tend to slow that somewhat. Still, wireless models are moving to one-price unlimited access. We're a broadcasting company that uses the Internet as our medium. We're very interested in wireless, but we'll go after every device you can think of that gains access to content and distributes content. We need to always be the thought leader. There are big challenges ahead in next 18-24 months. Networks have to be built to support greater and greater traffic at higher speeds. But it's chicken and egg. Without content the network is unused. Without a network, content doesn't get created. There has to be a large enough group of business people who see far enough into the future to place a bet there.
It's our charter to continue to distribute our content providers in as many forward-looking ways as possible. We help brand them and help them to be found on those networks. We work very hard through our external advertising and through promotion to drive high value users to their content in order for them to be heard and seen. We continue to identify and build out new revenue opportunities for them and for us and share those revenues. We're very respectful of the fact that we're only as good as the content that we're able to attract."
On advertising: "Banner advertising isn't where it's at. We're not offering banners as a revenue generator. We're offering streaming advertising as our flagship vehicle. A small graphic strip doesn't create brand comprehension and recall. We believe that with a 15 or 30-second streaming audio ad, we can make a greater impression."
What makes a good content partner? "We look for any existing content that has a sizable audience already watching or listening. Our model is such that every time a new provider joins our family they bring a whole new Internet audience. Every new partner must have an external voice that helps add bodies to the total community."
Bob Flagg, senior VP of engineering explained how all this works on the ground. "We send stations an encoder box that takes the analog signal in and spits it out in Real or Windows Media. Stations get one flavor or the other, but we can support multiple formats. Unlimited streams are available 24/7. We don't do downtime. We remotely manage and monitor continually. We have a high level of quality of service. By managing all the hardware and telecommunications issues, we offload a tremendous amount of staff resources from stations. We handle all of the capital expense of encoder, monthly expense of line, additional equipment and server licenses. We send the stream into the VPN (virtual private network). That's the mechanism we use to move to the server, what the end-user connects to. We third party that server network to RBN (Real Broadcast Network.) They have about 250 edge servers available to us."
Your biggest challenges? "Day to day, we have the challenge of the last mile. Getting the signal into the distribution network. The ability of the telcos to keep their lines active 24/7. If we're using frame relay, we're dependent on the quality of service of the backbone providers. The other side is strategic. Because of the technology that's coming, we have to make sure that our decisions scale well and/or they'll last long enough to not force us to make too many expensive changes too often. I look at a three-year service life in technology. And that's way out in the future."
What's the coolest technology you're working on behind the scenes? "n March 1999, I recognized that ad replacement was very important. The demographics of a station are limited by the physical reach of its antenna. Somebody on the other side of the country needs a different ad. We need to figure out how to replace that ad. If we could target the appropriate demographics we can get a higher CPM from advertisers. End-users are more likely to buy. We're hoping to drive the ad insertion standard."
In addition to cheap, plentiful bandwidth, targeted live ad stripping and replacement (insertion) is one of the important gating factors to the success of streaming media. And regardless of the hype coming from companies large and small who claim to have solutions, live ad insertion into a live stream is no small challenge. Since the majority of stations simply encode their "terrestrial" mix, the ads are integral to the encoding. Separating them is like trying to take the egg out of the cake batter after its been blended. We'll have to wait and see how Bob Flagg's team chooses to tackle the problem. If they do "succeed in driving the ad insertion standard," things will get very interesting very fast.
And fast has been the operative word for BroadcastAmerica. Proof once again that the Internet makes its own rules, the first being "he who watches and waits takes the biggest risk of all." The second rule just might be, "You don't have to operate from Silicon Valley, Seattle, Austin or Boston to win." Portland, Maine seems to work just fine, thanks.