Internet Broadcasting

CASE STUDY

In May 1999, Kai Hansen hired an MBA student, Amanda, to focus on business development for DataBoost. With an increase in consulting work in June, Kai Hansen was able to hire another MBA student, Paul Lee, to help out with technical as well as business issues. Kai Hansen intended for Amanda and Paul to focus on the development of the PunchTechnics™ concept and the consulting practice. However, after seeing a demonstration of the TuneTime concept, which was based on PunchTechnics™ technology, both Amanda and Paul recognized the potential of this product to succeed in the market.

TuneTime is a hardware and software solution for traditional radio stations that wish to broadcast their live signal and bring their brand equity to the Internet. TuneTime is based on the PunchTechnics™ platform of multimedia streaming. Several years of development of streaming technologies in the university sports market led Kai Hansen to a broader application of the technology. Kai Hansen recognized an opportunity in Internet radio and created a turn-key solution that adapts to the popular multimedia players available (e.g., RealPlayer, Windows Media Player), allowing for the simultaneous streaming of audio and interactive content. The following are two key benefits of TuneTime to radio stations:

(1) the ability to add multiple, secondary channels, thereby promoting brand equity; and (2) the ability to manage content and gather demographic information on listeners, thereby facilitating targeted e-commerce and advertising. Benefits to the Internet radio listener include the ability to interact with the radio station directly, via computer, without waiting for an open telephone line (including song voting, quizzes, purchasing of CDs, etc.) and the ability to receive a greater variety of information from a favorite radio station than would be possible through conventional radio transmission (“one-stop shopping”).

TuneTime will allow a radio station to quickly, easily and inexpensively add secondary channels to its Internet broadcast, in order to service a wide variety of listener tastes and manage mandatory programming requirements.

The content management feature of TuneTime will place the radio station in charge of the content that is streamed over the Internet, and the “push” aspect of TuneTime will create a “sticky” environment for the end-user.

Listeners will be compelled to stay on the site by the TV-like fashion in which information is presented to them. However, unlike television, TuneTime will allow the end-user to interact with the radio station and become a participant in the broadcast. For example, if a radio station uses TuneTime to play a Rolling Stones CD, the end-user, in addition to interacting with Rolling Stones trivia, quizzes, etc. will have an opportunity to submit additional content for a site that he or she has found which relates to the Rolling Stones.

Additional content could include a Uniform Resource Locator (“URL”) that identifies the Web address of a site. The content manager, or program director, will consolidate and screen incoming URLs, monitoring listener habits, and be able to “push” applicable sites out in future Rolling Stone broadcasts. In addition to attracting people to the site, the gathering of URLs will present a powerful information opportunity to the radio station that can be used for targeted e-commerce and advertising. The end-user may also submit quizzes, photos and movies.

The Internet Radio industry had become a “hot” area, and DataBoost would have a chance to take advantage of the current interest among radio stations for such a product. Only half of the 12,000 radio stations in the United States had an online presence (a Web site), and a fraction of those stations engaged in Internet broadcasting. Amanda and Paul spent the summer working on a business plan to obtain capital investment so DataBoost would be able to produce, market and sell TuneTime to radio station owners in America and Europe. Amanda had connections in Paris that she was eager to explore, once the product was ready.

After two months of market research and a continuous evolution of the TuneTime conceptual design (and back-end development from Mark), Amanda and Paul completed the business plan. As of September, they were ready to begin contacting venture capital firms and “angel” investors. DataBoost estimated that it would require approximately $1,000,000 of initial investment to bring TuneTime to market. Amanda and Paul felt this money could come from a venture capitalist, a group of angel investors or a potential customer –a large radio station company who would absorb DataBoost and all of its technology.

Mark knew that raising this type of money would not be easy. DataBoost was a young company with no prior external financing, and the risks to the investor would be significant, given the early stage of product development. In addition, DataBoost was still heavily committed to consulting contracts, and Mark’s time would be divided until a better solution could be reached.

On the evening of September 3, Kai Hansen gathered Eric, Amanda and Paul into the discussion room for an important staff meeting. Kai Hansen began by reflecting upon the last few months and all of the changes that had recently occurred at DataBoost. Within a period of three months, DataBoost’s focus had changed from exploring market opportunities for PunchTechnics™ to searching for investment capital for TuneTime. As TuneTime technology was based on the PunchTechnics™ platform, Kai Hansen felt that both products were important and developments to one would enhance the other in the long run.

The important issues were competition and the accessibility to customers in each distinct market. Both Paul and Amanda felt that, given the company’s current limitations with respect to resources, DataBoost should focus on the development and marketing of TuneTime, as TuneTime represented an immediate growth opportunity for DataBoost. However, Kai Hansen was hesitant to abandon his first development effort completely, believing that the university sports market would soon be ready for a quality product such as PunchTechnics™. The four-year contracts signed by many universities with other vendors would soon expire, and perhaps these universities would begin to seek alternative solutions to meet their Internet broadcasting needs.