BY KURT HANSON
There's a very real possibility that your market could soon have its own multichannel Internet-only radio station, with localized news and information content (including spots from local advertisers) -- and rather than being owned by one of the current radio operators, it may belong to your local newspaper.

That's part of the business model behind a new, Cleveland-based media company called Everstream, founded one year ago by entrepreneur Stephen McHale, who was joined by veteran Cleveland radio executive Lee Zapis last fall.

The Everstream network of newspaper-owned Web radio stations is already serving around 4,000 simultaneous streams during at-work hours, according to McHale -- making it one of the larger 'Net-only broadcasters. (By comparison, a typical major-market radio station's webcast may be streaming to a couple of hundred listeners during middays.)

I flew to Cleveland yesterday to visit McHale and Zapis (pictured, left to right) on behalf of RAIN, met some of the players, got a tour of the facility, and learned about some of their future plans -- including some upcoming opportunities for radio people who are looking for entrepreneurial opportunities in their market.

Everstream's current business model
The current Everstream approach -- although it is going to evolve soon -- is to build radio stations for newspapers' websites. According to Zapis, Everstream has already signed deals with 225 newspapers, and 170 of those currently have live sites up and running. (A directory of links to Everstream affiliates is available on their website, here.)

Why did Everstream target newspapers' websites? Because they're already drawing significant amounts of traffic compared to radio station websites, McHale said, and because they're in a position to sell spots locally. (Traditionally, McHale noted, local radio spots have always sold for more than national spots.)

According to McHale, that the addition of a branded radio station player has the potential to add a 25% to 100% increase in the site's revenues.

"And we've got an intricate, sophisticated sales training blitz starting ten days from now," McHale told me. "We'll have three guys doing three-day visits at each of our stations doing local training, so we'll have our top 20 markets covered in 30 days. We piloted this first in Phoenix and now in Corpus Christi, TX, where our guy is there even as we speak."

What's an Internet radio spot worth?
So, what are 30-second audio ads -- with accompanying visuals -- worth to an advertiser? McHale and I agreed that they should be worth several times more than a mere banner ad. (Typical banner ads sell for about a $20 CPM.)

"But we have to legitimize that," he said. "The national rep firms are telling us that the basement is an unwired buy" -- i.e., no geographical targeting -- "at a $35 CPM. What we're selling for in our local markets is a $45-55 CPM. We've gotten buys up to a $100 CPM -- a pretty big buy from one advertiser who really believed in our model."

With even a lower CPM than that, adding a newspaper-branded set of Everstream stations could theoretically add significantly to a newspaper website's revenues, as shown in the following chart:

"And that's for a website that might be only doing a million or two a year in interactive revenues right now," McHale noted.

Everstream's FUTURE business model
"We've built a sophisticated, massively-scalable Java engine which manages, schedules, and targets media on a local market level, a personal level, and a device level, totally interactive and on-the-fly," McHale told me. "And we just happened -- actually, we chose -- to pick a core market that would build a viable model out of and prove it out."

But being a radio provider for newspaper publishers is only half their story, he said.

In about 45 days, McHale revealed to RAIN, Everstream will release a new, personalized version of their player, written in high-performance Java, that will allow listeners to mix music from different genres (see photo), create a playlist on the fly, and mix in desired information elements such as local news, weather, and stock quotes from their personal portfolio.

At about that time, Everstream will make their package available to players outside of the newspaper site world. (Everstream's deals are totally non-exclusive, McHale explained; they are even on the verge of providing their service to competing newspapers in the same metro.)

This could, theoretically, be an opportunity for displaced radio people who want to build a local business. "We're saying, 'Here's a tool set. Sign up with Everstream and we'll give you all the tools you need to work with -- content, ad server, ad campaign manager, a sales training system, and more. All you need are four or five salespeople.'" And, of course, promotion.

Room for growth
Everstream's offices seemed to be bursting at the seams, with about 36 employees -- seemingly about half of them programmers -- crammed into a small suburban suite of offices. (Some employees, for example, had their desks in former hallway coat closets, with their chairs sticking out into the corridor.)

McHale explained, however, that in 30 days they're moving into a new 15,000=square-foot space with four full-time productions studios. And he said that their server farm in Virginia currently has enough capacity to feed about 40,000 simultaneous streams. So they've still got room to grow.



What do you think? Can each newspaper build a radio operation with an audience the size of a mid-level broadcast station, as they hope to do? Is radio missing an opportunity here? Do you have any questions I haven't addressed? Contribute your feedback using your own e-mail software here or via a form here.

From Radio Ink: "The Net is abuzz about a deal that would settle the dispute between MP3.com and the five major record labels. It's being reported that MP3.com would pay $75 million to $100 million, then have the right to use music in its my.mp3.com. The Dow Jones Business Report, Reuters, emarketer.com, and others are speculating that a deal is in the works and could be announced soon. The financial figures range from $15 million to $100 million.

"MP3.com CEO Michael Robertson told Streaming Magazine in a cover story interview to be released on Monday, that he has been in discussions with the labels for awhile, and a deal was the ultimate goal...

"But would a deal be fair? In the end, it would mean it's OK to break the law to get what you want. And, what would a deal mean for sites, like myplay.com, who seem to be following the letter of the law.?

Read the full piece by Radio Ink Editor Ed Ryan here.

Tell your colleagues about RAIN and... Radio & Records' "R&R Convention 2000" begins next Wednesday in Los Angeles, featuring a full track of Internet sessions organized by Webnoize -- and you could win a free registration simply by telling a couple of your colleagues about RAIN! The prize also includes an excellent dinner at the nearby Houston's Restaurant in Century City. All you have to do to be eligible to win is to send an e-mail to some of your industry colleagues that you think might enjoy RAIN, recommending RAIN to them. (Plus you have to "cc:" kurt@kurthanson.com on your e-mail.) To give you a head start, here's some sample verbiage you can cut and paste into your e-mail (an then edit as you see fit):   If you don't know about it yet, I thought you might enjoy reading a web-based daily newsletter called "RAIN: Radio And Internet Newsletter." It covers issues like streaming audio, website design, Internet-only webcasters, and more. It's free, and it's available daily at www.kurthanson.com.   If you send your recommendation e-mail to one colleague, you'll get one entry in the drawing. Send the e-mail to several people and you'll get two entries. And if you send it to a lot of people from your address book you'll get three entries. (Don't forget the cc:!) We'll have a drawing on Friday at noon from all qualified entrants to pick our winner. (Note: If you're already registered for the convention, your prize will be a free registration for a friend of your choice. Plus the excellent dinner at Houston's, of course.) Good luck! And thanks very much for helping spread the word about RAIN to your colleagues.

From Radio & Records: "Broadcastspots.com Signs WWW.com: Media buying and selling service Broadcastspots.com already has over 900 radio affiliates, but L.A.-based WWW.com -- which broadcasts 400,000 songs on over 230 originally programmed stations, all under signed copyright agreements -- becomes the first Internet broadcaster to affiliate..." Read more from R&R Online here.



Tuesday's lead story (here) was about a Chicago Sun-Times article (here) on WXCD/WMVP stealing away Q101's webmaster. (The RAIN reader quoted below took advantage of the "Kurt, this is deep background -- don't quote me" checkbox in the form above.)

"Keep it simple!"

The most important elements for a station website? Keep it SIMPLE!

This story of the Q101 webmaster just reminds me that the Q101 site is awful. It's way too busy, hard to navigate, and all that Flash is distracting!

I know radio folks think Flash is "cool", but there is a reason why top sites (Yahoo.com, and KPIG.com in radio) do not use Flash: it's too busy, and too thick to download.

Please don't quote me, and keep me anonymous, as I work for a Radio/Internet company. But you may be hearing more from me later on.

June 12-14	Streaming Media East 2000, New York City
June 14-17	R&R Convention 2000, Los Angeles
June 14-17	PROMAX & BDA, New Orleans
July 13-16	Upper Midwest Conclave, Minneapolis
August 3-5	Morning Show Bootcamp, New Orleans
September 20-23	NAB Radio Show, San Francisco
October 5-7	Billboard/Airplay Monitor Seminar, New York
November 5-7	NAB European Radio Conference, Berlin
Nov. 28-Dec. 1	Radio Ink Internet Conference, Santa Clara, CA

xxx

Try it out! Explore the wide world of Internet audio by clicking the screenshot above.

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If you're hiring for a position that's radio- and Internet-related this week, we'll post it -- free! Simply e-mail the job description here. If you're looking for new opportunities that involve the Internet, you can take a look at the first three available positions here.