AudioNet: Pioneers in Web Broadcasting

AudioNet regards itself as THE Broadcast Network on the Internet because the site delivers more live and on-demand broacasts with more listeners and viewers than any other company in the world--190,000 per day, at last count.

Todd Wagner, CEO and co-founder, likens AudioNet to a cable multiple system operator like Cablevision, or a satellite distribution service like DirecTV or Primestar. The site doesn't create content, but provides a way for all content creators to distribute their audio and video on the Net.

Wagner says that two key factors have contributed to the company's success: "First, AudioNet was the first company to capitalize on audio and video streaming technology by aggregating the most multimedia content of any Web site. Second, we have built the network and infrastructure to support the largest audience on the Internet."

The Web site is one of the most popular Web destinations, ranking 15th among all content sites (i.e., news, information, and entertainment), and beating out such major media brands as the New York Times and NFL.com (which ranks 6th in the very valuable Web demographic of men aged 25-49).

AudioNet's popularity has paid off in sales of traditional Web banner advertising and "Gateway" ads--15- to 30-second spots at the beginning of audio and video programming that also launch browser windows linked to the sponsors' information. The site gets a $30 CPM (cost per thousand viewers) on the banner ads and up to $.50 per viewer of the Gateway ads. (That's a whopping $500 CPM.)

The site is 17th among Adspend's Top 40 Web Publishers, based on advertising revenue, ahead of HotWired and Disney.com. Advertising makes up 50% of its revenue--the rest comes from business services.

AudioNet broadcasts a vast selection of live and on-demand content to Internet users around the world, including:

• Live continuous broadcasts of over 220 radio and television stations
• Play-by-play of thousands of college and professional sporting events
• Live music, including concerts and club performances
• On-demand music from the CD Jukebox with over 1,000 full-length CDs
• Live and on-demand shows and Internet-only "Webcasts"
• Live and on-demand corporate and special events

AudioNet has produced special programming for many large-scale events, including Super Bowls XXX and XXXI, the 1996 Major League Baseball World Series, the NHL Stanley Cup Finals, and the NCAA Final Four basketball tournament.

The site's coverage of events related to Super Bowl XXXI attracted over 500,000 listeners worldwide, making Internet history as the largest audience ever on the Web.

It's produced and delivered live audio and video for many other events, including:

• Intel CEO Andrew Grove's European Tour
• Microsoft CEO Bill Gates' keynote address from Comdex/Fall'96
• C-SPAN daily broadcasts, Presidential Inauguration, and State of the Union
• Live Coverage of Spring Internet World '97 with Pat & Mike of TuneUp.com
• Howard Stern's Private Parts Premiere Party from E! Online

The only type of content AudioNet won't handle is sex. The site doesn't have anything against porn, but it doesn't want to distribute it. This was a strategic decision. AudioNet didn't think it would be able to achieve the necessary comfort levels with companies like Disney and NBC if it was asking them to share listings and bandwidth with "Debby Does Dallas."

Otherwise, it makes no distinctions about content, hosting personalities and content as diverse as Howard Stern, Ross Perot, Bill Gates, and Christian radio.

What kinds of deals does it strike with content providers?

Wagner told me the site didn't sell distribution "by the stream" as many Internet service providers do. Rather, it sells a whole package to a content provider, which can include many things besides simply serving a stream of data. AudioNet does everything from taking a radio or TV signal off the air, converting it to the proper formats, listing it on its site, and promoting it along with all the other programming it offers.

In exchange, it reserves the "Gateway" spot at the beginning of every program and the right to sell banners on any of its own pages that link to content. The site also takes payment directly from content providers in the form of cash or barter. In barter relationships, it'll take radio and TV station advertising spots from stations and use them to promote AudioNet or to resell them for cash. It will also accept web promotional space in exchange for its services.

On a cash basis, it charges about $1,500/month to host an hour of archived video and up to $5,000/month for each hour of video. It will host a live corporate radio station for between $5,000 and $25,000 per month.

On the technology side of things, AudioNet has over 300 servers at 60 locations around the country, and it is expanding into Canada and Europe. Experience has taught the site that a widely distributed system of servers gives it more load balancing capability and better overall reliability. At its main location in Dallas it has the equivalent of 10 T3 lines (i.e., 450 Mbits/sec of bandwidth).

With regard to streaming audio and video servers, AudioNet has used almost all of the various products, ranging from RealMedia and VDO to XingStreamworks, VXtreme, and Microsoft NetShow.

Wagner says "We're software agnostic. We realize that there's a real dogfight taking place among the vendors of streaming media servers, but we don't take sides and try not to pick a winner. We do whatever serves the needs of the client."

Todd Wagner was previously a partner in the Chicago-based law firm Hopkins & Sutter and an associate at Dallas-based Akin, Gump, Strauss, Hauer & Feld, where he handled a wide variety of corporate transactions ranging up to $1 billion in value. He is also a licensed CPA in the state of Texas.

Mark Cuban, AudioNet President and co-founder, has long been a high-tech entreprenuer. He founded MicroSolutions and developed it into one of the leading systems integration firms in the U.S. He sold it in 1990 and later became president of Radical Computing, a venture capital and investment company specializing in high technology.

AudioNet's equity partners include Motorola, Premiere Radio Networks, one of the five largest producers and distributors of network radio programming and services to the U.S. radio industry and Host Communications, which owns radio broadcast rights to a number of colleges and universities.

Will AudioNet be serving all the network prime-time programming over the Web in the high bandwidth future? It would like that to happen, and is now developing strong relationships with all the major networks. It's developed the capacity and the expertise.

As with most areas of business on the Net, the pioneers gain a great advantage over latecomers by learning the pitfalls and benefits of the new techologies and new audience behaviors.

Send e-mail to gary@welz.com to let me know what you thought of this column and what you'd like me to focus on in the future.