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Stream a Little Stream 

Or How to Succeed in Webcasting Without Selling Out

Wednesday, Aug 2 2000
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Beta Lounge was born in something of a bubble. When the independent Webcasting site began streaming audio of live DJ sets from its studio on 22nd and Mission streets in 1996, there were only a handful of entities on the planet doing anything similar. The concept was so groundbreaking that HotWired.com, the online arm of Wired, snapped up Beta Lounge after it had only been in existence three months, a blink of the eye even in today's buy-'em-before-they-can-announce-their-first-losses windstorm.

Unfortunately, the site was years ahead of its time -- both in terms of audience technology and accountant imagination. After six months, the magazine publisher released Beta Lounge from its contract, seeing no revenue potentiality in the foreseeable future.

Back then, the process of streaming audio to even a few Internet listeners required formidable effort: You needed to buy a special server from Seattle vendor Real Networks, find some serious extra Web storage -- which wasn't just lying around the way it is now -- and have the technical expertise to get the various fledgling technologies to work together.

Now, with equipment cheap and know-how plentiful, tens of thousands of Webcasting stations have sprung up. The vast majority fall into two camps: micro pirate sites run by enthusiasts with no commercial aspirations, and venture-funded operations hungry to lure ears away from commercial radio's $17 billion advertising market. Middle-range sites like Beta Lounge must navigate the dicey area between obscure personal sites and San Francisco-based giants like Spinner.com and Sonicnet.com (owned by AOL and MTV/ Viacom, respectively), which offer music from a wide range of genres.

The Network Syndicate -- the crew behind BetaLounge.com -- still streams live audio and visual content most Thursday nights. Its archive of previous broadcasts reads like a who's who of dance music's elite: Chicago legend Derrick Carter, British techno star Luke Slater, and German experimentalists Mouse on Mars have all stopped by the Lounge. "For us, it was always, "We're starting a business because we want an example of how we think businesses should be run,'" Beta Lounge's head conceptualist, Ian Raikow, explains. "It's kind of idealistic, it's maybe not the best way to run a business, but everybody has different gigs and does consulting, and this is what we hold up as, if the world was a perfect place, we'd all be creating the content that we want and we'd be able to make a living off it. It's not like we're looking to get rich, it's just a different kind of model. I guess it's just kind of a lifestyle thing for us. "

One of the few Webcasters that could conceivably turn a profit soon is Groovetech.com. The Seattle-based company, which opened a studio in San Francisco last year, broadcasts live DJ sets daily between 10 a.m. and 10 p.m. and provides on-location streams from clubs like Ten 15 Folsom. Started as an information site for Seattle's rave scene by Zack Jenkins and local DJ Brian Pember, the project wasn't treated as a business until M.B.A. student Jon Cunningham joined. He realized the live stream could be used to drive traffic to a retail outlet, especially one that focused on underground DJ culture and records.

According to Director of Communication Alex Hillinger, the shop has increased in revenue almost every month since its inception, and could possibly have already been profitable if not for the recent start-up costs of the new San Francisco studio and an upcoming one in London.

Groovetech's position is unique. Very early in its development, an open-minded European investor sought the site out and provided enough funds to establish its specialty shop. Similar Webcasters haven't been so lucky: American venture capitalists are almost exclusively interested in technology-based enterprises, and so far have turned a deaf ear on content-centered ideas.

"It's tough to find that middle ground," Hillinger says. "It's excellent if people want to [start an online station because they] love the music and don't care about making money. But the other route is going to require some start-up capital, if only because there are so many people already doing it. You have to find a way to rise above all the little personal Internet radio sites. There are ways to do it, but it's very difficult without some money to spend. I don't think going the route of accepting some just random ad on the site and you get some cost per click-through is really going to be enough for anyone to live on."

Tony Rose, founder of the non-funded Oakland site Technostate.com, concurs. "It was fine for the first 2 1/2 years being a labor of love," he says, "but I've always been looking for a way to make [Technostate] generate revenue. I'm pretty much unwilling to compromise on advertising. I consider advertising to be the lowest common denominator of ideas we could come up with to make money."

With their suspicion of ads and the limited audience sizes their underground programming attracts, sites like Beta Lounge, Groovetech, and Technostate are inherently less attractive to mainstream advertisers. Another threat to the midlevel sites' existence is companies like Foster City's Live365.com that offer novice Webcasters the chance to carve out a section of the online listener base for themselves. The year-old site provides technology that lets nontechnical users create their own personalized live streams. In a few months, it will even give them the option of putting ads into the mix, and offer them a piece of the proceeds.

"With things like Live365.com, live broadcasts aren't compelling," Rose says. "It used to be super-cool, but it's not enough to carry a site anymore."

John Jeffrey, executive vice president of corporate strategy for Live365.com, argues that his company's services essentially level the playing field for would-be Webcasters. "Think of the odds of breaking when you're a band," he says. "The odds are maybe even worse [for becoming successful with an online radio station]. But every year, somebody comes out of that cloud, and it's the most amazing thing you've heard. To some extent, there are lower start-up costs than starting your own band, and lower start-up costs by about 20,000 or 200,000 times than launching your own terrestrial radio station. And there are people out there that just love music, and they want to share it with people.

"So let's say that you don't become the biggest thing since sliced bread, you don't reach tons of people, but you share something you're passionate about with a few hundred or a thousand people," he continues. "There's something very positive about that -- is it a business model that's going to stay afloat and you go with for a long time? Maybe, if you're very careful and you build up a grass-roots campaign and you really work it for a long time. But certainly the industry isn't mature enough yet to make you completely viable out of the box."

Groovetech's Hillinger sees it this way. "A lot of companies are cooking up these Internet radio strategies in the conference room. And they've got a lot of money and their high-level partnerships, but the one thing they don't have is people that are really dedicated to the music."


Additional Links

www.groovetech.com
www.betalounge.com
www.technostate.com

About The Author

Darren Keast

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