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Ops Get Musical to Drive Broadband

2/03/2002 7:00 PM Eastern

Content providers and cable operators are singing the praises of music as a means of differentiating high-speed Internet service from its dial-up counterparts.

Cable overbuilder Knology Inc. this month will begin promoting music downloads via the BroadTuner audio service developed by broadband-technology start-up Incanta Inc.

Following a limited-market trial last year, Knology deployed Incanta's broadband music application to all of its high-speed-data customers as a free, value-added service, said Knology vice president of operations, sales and marketing Tony Palermo. Its cable-modem markets include Southeastern cities such as Charleston, S.C., Knoxville, Tenn., and West Point, Ga.

Unlike most music-over-Internet services, BroadTuner was specifically designed for broadband delivery. It has no built-in features that would also allow it to operate via narrowband connections.

To be compatible with dial-up, online music services must compromise on sound, navigational features and delivery quality, Incanta vice president of marketing Tom Barnes said.

At present, Incanta's music player has a library of 100,000 songs available on more than 80 virtual audio stations, each of which is commercial-free and dedicated to its own musical genre.

Knology provides the virtual stations for free, as a value-added service for broadband customers.

For a fee set by participating record labels, consumers will also be able to download songs or albums and burn them onto a CD-ROM. Palermo hopes the music download option will help Knology recoup the costs of the BroadTuner technology.

Along with the recording artist and label, Knology will share in the revenue from each digital download a customer makes from BroadTuner.

Knology also hopes to sell advertising and take a cut from sales of related merchandise, such as local concert tickets, Palermo said.

"[The overbuilder] has been a wonderful partner in terms of embracing the idea of broadband as more than just speed for their customers," said Incanta CEO Maggie Bellville.

'DOUBLE-DIGIT LIFT'

Late last year, Comcast Corp. partnered with Gateway Inc. and MTV2 to promote broadband in markets where the MSO's footprint overlapped with the computer maker's Gateway Stores.

In a promotion held during one weekend last November, Comcast sent direct-mail pieces to potential cable-modem customers in several markets — including Florida, Pennsylvania, New Jersey and the mid-Atlantic corridor — offering a free MTV2 Spankin' New Music
compact disc in exchange for visiting a participating Gateway store.

"The goal certainly was sales," said Comcast national retail marketing manager Chris Dolan. "And we experienced in those Gateway stores a double-digit lift in sales over other days in November."

Comcast also wanted to leverage the cache of a top programming brand to help drive sales for one of its retail partners, Dolan said. Gateway was eager to participate in the promotion because music is a key driver for sales of broadband-capable PCs, he added.

"Downloading audio is highly demonstrable in broadband," he said.

Through the Gateway promotion, Comcast gave out 5,000 MTV2 CDs in two days. In all, MTV2 distributed 20,000 CDs through 200 cable affiliates across the country, including AT&T Broadband and Time Warner Cable systems.

MTV2 supported the affiliate promotion with a TV spot that touted the network's cable and online programming.

"It also promoted the quality of [broadband] and how the experience wouldn't be all it could without high-speed access," MTV2 general manager David Cohn said.

MTV2's promotion targeted 18-to-34-year-olds — the same demographic that watches the network.

"Our audience is downloading music like crazy, perhaps more than any other demographic," Cohn said. More than 60 percent of MTV2's audience is online while watching the network, he added.

Incanta also encourages MSOs and programmers to find ways to enhance traditional television shows with broadband content in order to create a richer experience for subscribers.

YOUNG MULTITASKERS

Broadband content should hold special appeal for younger consumers who've embraced the practice of multitasking, Palermo said.

"In today's world, people aren't satisfied doing one thing at a time," he said. "At times, if you're single-tasking, you're not getting enough stimulus."

Subscriber response to the Knology BroadTuner has been overwhelmingly positive, Incanta and Knology executives said. The service was relatively easy to market using electronic-mail and promotional messages on the ISP's home page.

Bellville is convinced that consumers are not only willing to pay a premium for broadband content, but that they're looking to their cable providers for services they can't find on their own.

"Nobody knows how to bundle tiers of service better than cable operators," said Bellville, adding that going forward, broadband content could be a "very significant source of revenue."

Incanta plans to enable cable operators to deliver other types of broadband content, including video games and electronic-learning materials. Because subscribers can remain within the provider's network to access the content, parents may feel more comfortable allowing their children to conduct research on their computers using such a service, Barnes noted.

"E-learning has a huge opportunity, because parents want to know their computer is safe," Barnes said.

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