Internet Video

Striking New Media Chords

9/23/2005 8:00 PM Eastern

Last month, when Yahoo! Inc. launched the full commercial version of its Yahoo! Music Unlimited service, cable music channels perked up their ears. Like RealNetworks Inc.’s Rhapsody service and the Napster Inc.’s new iteration, Music Unlimited offers Internet subscribers access to more than a million songs for a small monthly fee.

“We’re not doing this because we think it’s cool,” says David Goldberg, vice president and general manager of Yahoo! Music. “We think we can make money on it.”

Goldberg says that while Yahoo! currently isn’t planning any forays into television, he can’t rule out adding video fare to the service at some point.

For TV music outlets, Yahoo!’s revamped service is one of the latest in a long line of loud clues that the music media business is undergoing a revolution.

Entrenched music channel players — as well as a litter of young pups like Russell Simmons’ DoD (formerly Def on Demand) and indie service Your Music Network — are gunning to create simultaneous TV and Web communities that will be able to compete with established Internet players.

“At the end of the day, it’s hard to say that they’re going to be able to catch us unless they do something dramatically different,” says Goldberg.

MTV: Music Television president Christina Norman begs to differ. “My big advantage is 80 million households,” she says. “The Googles and Yahoo!s of the world have great ambitions as well, but I think there’s room for us all.”

It’s no longer enough for music channels like MTV to generate new revenue by spinning off countless international services and niche networks.

The infinite-choice mantra that cable executives recited years ago is no longer the end game. “I don’t want 500 channels,” Norman says. “I want more control. It’s not necessarily about mass.”

Music services old and new are increasingly integrating on-demand features through broadband Internet connections, video on demand on cable or through portable devices such as multimedia-ready cell phones, MP3 players and new “media center” devices that store audio and video.

Most of the industry’s multifaceted strategies target the 18-34 demographic that advertisers love. According to the music brands, those consumers are demanding it. “It’s the way that our audience wants to interact with our content,” says Norman. “They want to touch it in ways that go outside of television.”

But what are the very best touch points? Fritz Messere, chair of the communications department at the State University of New York-Oswego, notes that companies steeped in the world of television and large Internet providers are experimenting like mad to find out the answer to that question.

MTV has placed its bets on MTV Overdrive, a “hybrid network” that launched in April. It offers both linear and on-demand broadband video, including music videos, news, artist interviews, live performances and original short-form content. But it aims to be more than a rehash of television content.

For example, on the heels of the Video Music Awards in August, MTV launched the “MyVMAs” channel within Overdrive that allows viewers to “remix their VMA experience” by combining video clips and bonus segments to essentially edit together their own version of the show.

“We view Overdrive as part of the additive experience of MTV, but also a destination of its own,” says Norman. MTV has also introduced more exclusive VOD content for digital-cable customers, even premiering new series Nike Battlegrounds: King of the Court on VOD before it hit the linear network. “We see VOD as a great platform and a strategic platform,” she says.

Other musical genres are also entering the interactive sphere. The Web site of Scripps Networks-owned Great American Country, for example, includes a music-video search function so viewers can access their favorite artists on demand. It also offers a link to popular country-music ringtones and even an e-commerce tie-in to Scripps’ Shop-At-Home channel.

MTV’s country cousin CMT plans to launch its own broadband service in early 2006, and will highlight “performers who don’t get exposure on the mother ship,” says Martin Clayton, CMT vice president of digital media and general manager of CMT.com. CMT shows like Studio 330 Sessions and New Voices No Cover will be available online and on VOD.

“It’s a great opportunity to do things we’ve always wanted to do but can’t afford to do on the air,” he says, noting that advertisers will help drive adoption. “We need the advertising support,” he says. “This stuff costs a fortune.”

Adds Norman: “The smart advertisers are looking at this as a great opportunity.”

VH1’s VSpot Internet broadband service is already attracting some ad clients. “The advertisers are coming along,” says network general manager Tom Calderone. “They see the value of it. They see that they can hyper-target the audience.”

Viewers, meanwhile, just want the freedom of choice that comes with an on-demand platform. “You can be the master of time and space,” he says. “It’s the on-demand feel. The extra features get you in, and then you’re hooked. It becomes part of your routine.”

VSpot content is also available to mobile devices through Verizon Communications Inc.’s VCast mobile video service.

DIFFERENT STROKES

With all that activity coming from Viacom’s music services, it’s extremely important for their competitors to add new features that will differentiate themselves. For example, music network Fuse not only offers broadband music videos but also gives users the ability to subscribe to audio podcasts, download video clips to portable media-center devices and even buy song downloads.

Fuse is trying to extend the brand at the same time it incorporates viewer input into the content.

“They give us a lot of guidance as to what they want,” Fuse senior vice president Joe Glennon says. The network’s Web site offers online comment boards and polls that act as a constantly evolving focus group for the channel. “Youth culture is not afraid of technology,” he says. “They’re not afraid to hit a button.”

Adds Lisa Owens, Fuse vice president of business development: “Our demographic is the ideal for interactivity. They’re sending text messages to Bono at U2 concerts. Our viewers want to watch what they want when they want it.”

Even traditional audio services that have built up a good business broadcasting music streams over cable are looking to add interactivity to the mix. Music Choice, for example, is working on interactive VOD services that will allow viewers to customize their own music channels.

“Consumers are headed this way,” says Music Choice president David Del Beccaro. “You’ve got to give them more control. We have to evolve this way. We have to look at it as an extension of our channels.”

One upcoming service, dubbed My Music Choice, will allow consumers to specify genres — even mixing several into one channel of audio or music-video programming. Music Choice will even break with its own tradition and sell ads on the music-video portion of the service. (The customized audio channel will remain ad-free.)

“We expect that revenue stream to be much bigger than our audio-licensing stream,” Del Beccaro says. In addition, Music Choice is working with Comcast Corp. to synchronize on-demand cable programming with broadband Internet services so that viewers can watch the same customized music streams on either platform. It’s all about pleasing operators.

“The reward is that you get the contract,” Del Beccaro says. “We have to do all we can to be the ones that they pick. So we come up with a product that helps them.”

NEW PLAYERS

But even as established players jockey for position on the interactive speedway, the field is getting even more crowded. In September, TVN Entertainment Corp. announced a deal with karaoke soundtrack firm Sound Choice to offer karaoke selections on cable VOD platforms. And planned niche services such as the Washington, D.C.-based Real Hip Hop Network and L.A.-based DoD are hoping to capitalize on the explosion of urban music in recent years.

Meanwhile, religious programmer The Worship Network has started to add more music to its mix with an eye toward feeding an underserved market for religious music.

And Telemundo’s newly revamped Mun2 (and Mun2TV.com) now focus heavily on music that appeals to its Hispanic demographic. Peter Blacker, Telemundo senior vice president for digital media, says recent data suggests Hispanics listen to more music online than the general market. “With US Hispanics treating the digital experience as a core part of their entertainment options in 2005, it should reason that the comfort level with these new options will only become more central in the coming months,” he says. “The current comfort level with these new technologies, combined with the younger and larger family sizes in the U.S. Hispanic market, should only drive more and more Hispanic consumers to enjoy their entertainment through non traditional methods.”

Other niche genres could find homes after years of being ignored by the major music channels. Atlanta-based The Gospel Music Channel, for example, plans an Oct. 30 launch to hit the faith-based music audience. “The technology, for us, is very important,” says president and CEO Charley Humbard, whose goal is to make Gospel the main destination for gospel music. “We can’t do that by just being a cable brand,” he says. “Technology and the Internet will allow us to bring much of that on-demand.”

Some new services hope to capture the independent music wave that has grown in recent years, driven partly by the dissatisfaction with the increasingly homogenous mainstream music selections, and partly by increased selection online.

Los Angeles-based Music Plus TV, which plans to launch in January 2006, will showcase largely undiscovered talent. Seattle-based Your Music Network, an indie-music-centric channel that will launch on Dec. 1, has actually been soliciting CDs and music videos from indie talent around the world for months — all with an eye toward putting as much as possible on the air and on its Web site.

The channel will also sell CDs from featured artists on its Web site. (In fact, that’s a condition of getting on the air).

“We’re twisting things and doing things a little bit differently,” says Your Music Network president and CEO Lisa Smith-Putnam. “We’ll be driving people from the television to the Web site and back to the television. We’re trying to make it very interactive. We’re trying to make it a participatory thing.”

That community aspect may, in fact, become a key component of interactivity. “This is the whole evolution of where interactivity and the Internet is going,” says Susan Barnes, associate director of the Lab for Social Computing at the Rochester Institute of Technology. “I call it the socialization of media.”

Of course, such features tend to skew to younger demographics. Harold Brown, president and CEO of Venice, Fla.-based Southern Entertainment Television, says his older-target demographic (44 and over) wants more gospel and bluegrass fare, but won’t tolerate complicated VOD or Web-based systems. “I’m still waiting to see when the simplicity is going to come,” he says.

With carriage deals in the works, Brown says too many cable operators overlook older audiences and give up potential revenue from digital set-top boxes. “That group of 44 and above is being totally ignored,” he says. “We have to convince the cable operators that if you want to sell digital boxes, you’ve got to give them something to watch.”

Brown says some operators are pushing him towards VOD-only programming as a way to get exposure. “They’re trying to get me on what I call video of deceit,” Brown says. “I could get more exposure getting naked and running down the freeway.”

Although that option would earn Brown some needed publicity, interactive technologies seem here to stay. And they are becoming more TV-like with every passing minute.

Oxnard, Calif.-based NPOWR Digital Media, for example, recently launched a service called stimTVMusic that broadcasts short music video clips averaging seven seconds in length — all in rapid succession on its Web site. When a person clicks one of the clips, it expands into longer form programming and leads to other related fare.

Over time, the service learns the preferences of its users and starts beaming music they’re likely to enjoy. NPOWR execs say cable-music services and cable operators could someday offer such channel-surfing-centric navigation options to their viewers on the television platform.

“We’re not looking to put anyone out of business,” says NPOWR president and co-founder Bob Whitmore. “We’re not trying to replace anything. We want to do deals with the cable channels.”

Adds stimTVNetwork president Dwight Marcus: “We don’t regard anyone as competing. We think everyone is part of this big family.”

Whether the various music players consider themselves friends, competitors, or something in between, ultimately it’s the music consumers who will determine how powerful they become.

“The current generation demands instantaneous access,” says Marc Sherrod, academic director for media design at The Art Institute of California-San Francisco. “The winner is going to be that service or medium that meets that demand.”

September