 |
BY KURT HANSON
 Given
the past few days' worth of debate in RAIN triggered
by GlobalMedia.com's
recent acquisition of Magnitude
Network, GlobalMedia CEO Jeff Mandelbaum called
in yesterday and volunteered to explain the firm's business model
-- and why he believes his firm can thrive where OnRadio
and Magnitude apparently didn't.
Mandelbaum explained to RAIN, "GlobalMedia is the only
company that integrates revenue generation
concurrently with the streaming of content. And we have
always tightly linked the two, because it causes a business model
that scales on the basis of traffic
-- the more traffic that's served, the more revenue that's generated
for both our broadcasters and ourselves, who we revenue-share with."
In other words, every hour that the consumer is listening
to a client's audio stream using the GlobalMedia player, there
are revenue-generating activities going on in the player window
-- e.g.,  sponsored
games and trivia contests, "webmercials," and so on.
Magnitude Network, by contrast, asked its clients for some broadcast
avails and kept rights to a "gateway ad" (the short audio
ad that precedes the actual stream of the station's webcast). If
the station's listeners listened for extended periods of time, Mandelbaum
explained, Magnitude's costs of providing
streaming went up but their revenues didn't.
 Mandelbaum
added, "And we've been able to achieve critical
mass with the  acquisition
of assignable contracts from both Magnitude and OnRadio, which makes
our network of stations highly attractive to advertisers because
of our reach."
So...what's the revenue-sharing deal for Global's clients?
Mandelbaum was happy to explain.
"It varies from contract to contract," he said,
"but in general we share advertising and e-commerce 50/50 after
the costs of streaming are covered -- and because of our scale,
we can pass along very comepetitive costs of streaming."
He added that, currently, "Our advertising revenues
more than cover the cost of streaming, so that the station is seeing
revenue with every minute served -- interestingly, just as they
do in the offline world!"
As for observations by some RAIN readers that the GlobalMedia
player may be difficult to use -- requiring a recent version of
RealPlayer, Flash, and  possibly
a change of settings -- Mandelbaum responded, "We do require
RealPlayer, but more than 135 million unique users have registered
for it -- and the vast majority of Internet users received the Flash
plug-in with their browser.
"So our player could not be easier to install.
It takes one click the first time the user enters any of the GlobalMedia
properties -- a one-time plug-in for all of our hundreds of properties."
 The
question that began the conversation in RAIN was this:
"Will Magnitude Network clients be
forced to switch to RealAudio?"
Mandelbaum responded, "We have put together a very detailed
conversion and implementation plan for Magnitude clients -- and
will be offering them a very aggressive and compelling package for
them, especially considering the new revenue opportunties that GlobalMedia
offers them."
And if they're fans of the Windows Media format? "The
clients will not be afforded the opportunity to support dual  formats,
because the support of dual formats does not improve the consumer
experience, and in effect doubles cost without doubling revenue.
Since our clients are focused on the best consumer experience and
generating maximum revenue, we believe they will find our approach
to be the most effective."
The Magnitude contracts apparently do not speak to the streaming
format that will be provided (and do not have out clauses). "But
I would emphasize that GlobalMedia is a customer-centric company,
and we will work with each and every Magnitude customer until they
are satisfied," Mandelbaum said.
According to the firm's website, "Mandelbaum joined
GlobalMedia.com in January, 2000. Prior to joining GlobalMedia.com,
Mandelbaum was VP/Media Systems Sales for RealNetworks,
where he had line responsibilities for the Americas regions and
drove strategic opportunities worldwide, according to Global's website.
Finally, Mandelbaum clarified that the Magnitude purchase
price (in the all-stock deal) was $6 million woth of stock in U.S.
dollars, not in Canadian dollars as reported in some other trade
publications.
Vist the GlobalMedia.com website here.
| Discuss
this topic in the RAIN message boards here.
(Note that there's a link for helpful instructions at the
top of the page.) |
From their press releases: "Excite@Home
today announced participation in the trials of bluematter,
 the
new digital download format from Universal
Music Group. Part of a unique trial to give Internet users
a legal way to download music, Excite@Home's participation will
provide feedback on consumers' music experience. As an affiliate,
Excite@Home will feature digital music and enhanced multimedia content
to music fans to download quickly and legally...
"Bluematter
tracks will be available at select affiliate sites: Alliance
Entertainment's "thestore24"
 sites,
ARTISTdirect; audiohighway.com;
LAUNCH.com; Lycos
Music; Music.com;
and RollingStone.com...
"'Universal
is embracing multiple digital music strategies, beginning with
our multimedia download product, bluematter,' said Heather
Myers, Executive Vice President and General Manager of "Global
e." "The bluematter trials are part of several options
that we are developing to open Universal's vast library of  music
to the digital music consumer.'
"The
trials will begin with tracks from a variety of Universal Music
Group artists including Blink 182, George Benson, Live, Luciano
Pavarotti, 98 Degrees, Marvin Gaye and SmashMouth, with
more tracks to be added weekly as the trials roll out. All bluematter
tracks can be immediately downloaded at music.excite.com
for Excite.com users and home-music.excite.com
for @Home subscribers for $1.99...
Read the UMG press release here,
and the Excite@Home press release here.
And read an interesting essay on labels' pricing strategies in yesterday's
RAIN here (second story on page).
|
 We'll
send you RAIN's e-mail news updates on a regular basis,
plus bulletins when important news breaks. (In addition, we'll
appreciate knowing that you're reading our efforts -- and
you'll hopefully appreciate reminders to read RAIN.)
You should be receiving
a confirmation e-mail from us shortly.
Thanks!
|
Yesterday,
RAIN reader John Sutton of WarpRadio.com wrote, "Since
both OnRadio and Magnitude didn't charge the stations for streaming,
those stations need to start to pay or stop streaming,
and it is highly unlikely they will want to pay or stop..."
He
then recommended his company's solution.
Other readers responded...
 |
"Barter
can cost a station tens of thousands of dollars in ad revenues...
"
|
I am surprised that you would publish such an out and out endorsement
of Warp. That is not journalism, it was a thinly veiled advertisement
for one of your sponsors, negative selling no less.
The comment by WarpRadio trashing StreamAudio, OnRadio, Magnitude
and Global was nothing more than a  sales
pitch. The reality is that Warp's model of barter can cost a station
tens of thousands of dollars in ad revenues. You do the math: $600
units x 7 days x 52 weeks is $218,400 of lost advertising revenue
and lost commissions for local sales people.
Warp is selling their clients a bill of goods. I can see why
Streamaudio is cleaning their clock.
| |
Rob
Drucker
Director, Business Development
MediaAmerica, Inc |
| Actually,
Sutton's letter wasn't meant to be journalism! It
was a letter from a reader -- clearly identified, including
his affiliation. (Incidentally, they're not a sponsor.) I just
thought it was an interesting perspective that others, like
Rob, could respond to. |
| I
wrote Rob to explain this, and he generously e-mailed back,
"Kurt, I do enjoy the effort you are putting out, but this
issue is coming across very one-sided with half-baked observations
from Global's competition and it was pissing me off. It would
be great if you can interject your thoughts. If you went to
GlobalMedia.com
to listen to one of their streams, I don't think you would find
it too difficult to manipulate. Keep up the good work." |
|
"Sure,
WarpRadio works on barter, but...
"
|
John Sutton's bash on OnRadio/Global/Magnitude hid some details:
Sure, WarpRadio works on barter, but the station must provide equipment
and connectivity.
| |
[No
return address provided] |
Add your comments
via e-mail here,
via our feedback form below, or on the new RAIN
Message Boards here.
 Thanks
to RAIN interns David Don and Qianqian Zheng (top row, center,
in photo), you can now search through RAIN's News Archives
more quickly and efficiently than ever before!
To get started, simply enter a search term in the box below
and click "Search." (Our engine supports wildcards ("*")
and "+" and "-" inclusion/exclusion commands.)
Click
here for more detailed information on RAIN's
search capability.
| xxx |
 |
|
Try it
out! Explore
the wide world of Internet audio by clicking the screenshot above.
Miss an issue?
Visit the RAIN News Archives here.
|
|
