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Industry Standard

Entertainers use Web to reach audiences in new ways

March 2, 1999
Web posted at: 5:21 p.m. EST (2221 GMT)

MP3 technology rocking the music world

by James Ledbetter

NEW YORK (IDG) -- I don't spend any time on the Web, really," admits rock singer Rod Stewart. "I might, if I had more time, but I don't."

The fact that Stewart is no Webhead doesn't mean he has no Web presence, though. Just check out, one of the more elaborate fan-oriented sites around. There you can download Stewart's latest single, buy Rod-themed mousepads and magnets, check out an exhaustive discography, listen to live shows presented several times a year, get tour information and join his "CyberClub" for $29.95 a year.

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"I'm not sure of what the potential power of the Web is, but it is something that is here to stay, so it needs to be dealt with," says Stewart. "It's kinda cool, though, for the fans because it makes what is basically a huge worldwide venue into an intimate one-on-one. I don't know of many concert halls that can do that."

Though is one of the Web's more advanced "official" fan sites, Stewart is hardly alone in cyberspace. Thousands of performers and production companies are trying to fuse the star power of the entertainment world with the Web's convenience and worldwide reach. Of course, making money in the entertainment field has been a fickle goal almost since Aeschylus first put pen to papyrus and the expense involved in building and maintaining a Web site does not make the financial side any easier.

Nonetheless, constructing entertainment-related sites has grown into a sizable cottage industry. The architects of the sites argue that the medium offers unprecedented business opportunities in fan and customer relations, brand building and direct marketing.

Stewart's site, which debuted in May 1998, was developed by MediaX, a Culver City, Calif., firm that primarily develops video games. MediaX maintains that the site has helped strengthen Stewart's ties to fans of the Web and rock music. When, for example, Stewart kicked off his current U.S. tour in early February with a chat on AOL, hundreds of thousands of fans worldwide logged on to get information. Many of them had already seen and heard some of the live Webcasts on the site.

But the paradox is that the Web's very ability to attract a mass audience appears to work against the entertainment industry's traditional business model. The thinking is that every fan you attract to a free concert on the Web may equal one fewer concert ticket sold.

One possible way to harness a profit on these huge online Webcasts is through corporate sponsorship. The theory is that, just as Michelob and Reebok in the last 15 years have leapt into the business of sponsoring rock stars' concerts in America's hockey rinks, they should be similarly interested in sponsoring online concerts. That business, however, remains unproven.

The return on investment for entertainment sites, as with many other Web arenas, can be elusive., for instance, has yet to generate much revenue for anyone. The site, which carries no outside advertising, declines to provide specific traffic figures. MediaX, a small publicly traded company, operates in the red on minimal revenues; its SEC filings last year expressed "substantial doubt about the company's ability to continue as a going concern."

Rock promoters insist, however, that there's value in simply having an independent publicity outlet under an artist's control. Most music-industry publicity is handled by record labels, or firms they hire. If a band or artist falls off a label's priority list, or begins the often-lengthy process of switching labels, no one is there to keep cranking the star-making machinery. The official fan sites, by contrast, "work for the artist," says Valerie Hustwit, director of marketing for "We present the brand name for them, allowing [artists] to have a presence outside the label." By building a sizable database of Stewart's direct fans, the producers of can maintain direct contact with his most loyal devotees.

Brand-building is also central to the Web projects of theater-related ventures. New York-based T3 Media has been producing entertainment sites since the summer of 1995, when it created a homepage for Andrew Lloyd Webber's Really Useful Company. While one long-time employee admits now that "it was not a great site," the company's relatively early entry into the theater market won them a number of future contracts. T3 has since constructed sites for several highly successful Broadway shows.

At the official site for Phantom of the Opera, for instance, fans can listen to RealAudio snippets from the show's original London cast recording, buy Phantom-related paraphernalia and get precise information about the show's national tour. T3 has built similar sites for Miss Saigon, Sunset Boulevard and other musicals. Many other fan and entertainment sites now have an e-commerce component, but there are few that threaten or CDnow.

So why does a Broadway play really need a Web site? As Michael Diamant, T3's president, puts it, "To put butts in the seats of theaters. That's the only reason." This is another way of saying that other revenue sources have yet to prove themselves.

Some of the Web's biggest players are clearly banking on Web ticket sales to put butts in seats, as evidenced by America Online's recent $388-million purchase of MovieFone and the proposed merger of Lycos with USA Network and Ticketmaster Online. A spokesperson for says the company is currently "talking to" Ticketmaster Online, but as of February, fans could not purchase tickets to Rod Stewart concerts directly from the fan site.

T3's Broadway sites sell tickets, but fans are at least as likely to go to a central ticket outlet on the Web as to an individual show's site. Diamant explains, "The ticket sales process on Broadway is very complex, with the shows choosing between Tele-Charge and Ticketmaster for their ticket sales. Both of those venues have online ticket-buying services." He adds, "I don't believe that [e-commerce currently] justifies the cost [of building a show's site] as much as the brand-building and educational aspects do."

For companies, however, the return on an entertainment Web-site investment may come in the form of increased efficiency. One sterling example is the work that T3 did creating a site for the Rodgers and Hammerstein Organization. The organization holds the rights to all the composers' works, plus an impressive library of other popular music songs. Whenever a school or production company wants to use a Rodgers and Hammerstein script or stage a show, they must secure rights from the organization. Until very recently, the determination for each of the several hundred productions per year was often done through the mail, a tedious and time-consuming task.

In less than a year, the site went from handling zero production requests to handling more than two-thirds of them. According to T3, the Web's ease of use has also increased the overall volume of requests.

One way Web sites devoted to the entertainment industry try to drive traffic is to take maximum advantage of big, one-shot events. Sometimes sites are deliberately temporary, in order to enhance an event's publicity. A good example is the seasonal, a site active this year only from Feb. 9 the day that Academy Award nominees were announced to March 22, the day after the Oscars will be awarded. This year, the site attracted 400,000 visitors on its first day.

The cost of establishing such a site varies dramatically. Many entertainment sites are constructed for well under $100,000, especially if they employ only limited audio and video features. A database-driven site like that for the Rodgers and Hammerstein Organization can run in the "$250,000 range," according to its architects. Although MediaX won't quote exact figures for, its creators say it would cost up to $500,000 to build a comparable site.

As broader bandwidth becomes more widely available, Web surfers are increasingly likely to expect higher quality audio and video. That's created a multimillion-dollar market in encoding technologies. Christine Perey, a Placerville, Calif.-based consultant, estimates that the outsourced digitization-compression market will be $9 million in 1999, and as high as $300 million by 2003.

For an individual site, the costs can add up quickly: Seattle-based, which specializes in producing streaming media and claims to hold 50 percent of the market, charges about $10 a minute for digitization. And for a music, movie or theater site, audio and video are the wrong places to scrimp. To operate a successful entertainment site, there's a real need to be, well, entertaining. For these site, skipping costly multimedia to save money will be a false economy in the end, the number of bells and whistles on entertainment sites may well determine their financial viability.


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