Broadcast.com Boosts Its Signal

Less than three years after its creation, broadcast.com is the leading source of streaming-media programming.

A taxi speeds down Fifth Avenue. Todd Wagner, 37, cofounder and CEO of broadcast.com, a Web company based in Dallas, sits in the back seat. Wagner looks harried, exhausted - and buzzed on entrepreneurial adrenaline.

Today's schedule is typical. He got up early to place a call to a company with which he has been negotiating. Then he spent two hours interviewing job candidates at his company's New York City office, located just above Radio City Music Hall. Then came a conference call with headquarters, followed by a high-stakes meeting with people from Arbitron, the media-ratings service.

Now Wagner is rushing to make a session with executives from Procter & Gamble. Dinner will be with investment bankers. And if tonight ends the way last night did, he'll return to the New York office at about 10:30 and spend two hours answering email and touching base (electronically, of course) with some of his strategic investors - which include Intel, Motorola, Yahoo! "This is not about business hours," Wagner explains. "It's about waking hours. You try to do as much as you can for as long as you can stay awake."

There are Web years. There are New York minutes. And then there is "the broadcast.com sprint."

"It's nonstop," says Mark Cuban, 40, cofounder and president of the company. "Early on, Todd and I asked ourselves a question: What price do you have to pay to win? That price is the 'sprint.' "

The "sprint" has already covered lots of ground. Wagner and Cuban founded their company (originally called AudioNet) in September 1995. Their vision was ambitious: to broadcast live programming (radio talk shows, football games, rock concerts) over the Net. Their headquarters was a spare bedroom in Cuban's apartment.

Less than three years later, broadcast.com is the leading source of streaming-media programming on the Web, with more than 400,000 unique users per day. By its own reckoning, it operates the second-largest satellite-downlink facility in Texas (only NASA's is bigger). In that facility, located at the company's 28,000-square-foot headquarters in the Deep Ellum section of Dallas, 22 satellite dishes receive content for more than 400 live events per day. About 580 multimedia servers digitize the content and distribute it to the Web. The network is capable of serving hundreds of thousands of simultaneous users. A staff of more than 80 engineers and technicians works to keep the operation running 24 hours a day, 7 days a week.

"You have to build your business faster than anyone else," Cuban says. "The 'sprint' doesn't have a finish line. There's never a point where you can say, 'We've made it.' You have to acquire as much content as you can, and to build as many barriers to entry by others as you can, as fast as possible."

It's easier to move fast when you know where you're going. The content distributed by broadcast.com is ever-evolving. But the company's business model has remained unchanged from its earliest days. Three aspects of that model stand out.

First, broadcast.com is not in the business of producing content. It's in the business of aggregating content. And content of a particular kind - programs, events, and information that listeners are passionate about. "We play to people's passions," Cuban says. "We want to aggregate content for which a strong demand exists. And we want content that's replenishable. That's why sports are so important. There's always another game to play, another play to debate."

Wagner and Cuban derived the idea for their company from a shared passion - Hoosier basketball. The two had been friends since their days at the University of Indiana. After graduation, Cuban moved to Dallas and started MicroSolutions Inc., a systems-integration company. By 1990, when he sold it to CompuServe, MicroSolutions had 85 employees and revenues of $30 million.

Wagner made his mark in Dallas as well. He became a hotshot securities lawyer with Hopkins & Sutter. He made partner at age 32. He had a big salary and a bright future. But for Wagner, as for his future business partner, something was missing.

"We said, there's got to be a way that we can listen to Indiana basketball even if we're in Dallas," Wagner explains. "And we figured that other displaced fans felt the same passion about their teams."

Thus was born AudioNet (which became broadcast.com in May). Today Wagner and Cuban control the rights to play-by-play Internet broadcasts for more than 350 college and professional sports teams. SportsWorld.com, a member site created by broadcast.com, offers the views of armchair quarterbacks from around the country. It broadcasts content from a Grateful Dead-only radio station and from a Jimmy Buffett-only radio station. It runs PoliceScanner.com, which does what the name suggests: It allows Los Angeles natives living in Atlanta to follow hostage situations in L.A. to their heart's content.

"In traditional media, you play to numbers," Cuban says. "We play to passions. We just put up a scuba-diving show, and it's taking off. People who are passionate about scuba diving find that show."

Wagner describes the new medium this way: "This is cable on steroids. This is not 50 or 500 channels. This is 5,000 channels."

But it's 5,000 channels with a difference - and that difference reflects a second key element in the broadcast.com model. TV and radio are bounded by some combination of time and distance. If you live outside New York City, you can't hear many of the radio programs that New Yorkers live by. If you're not home at 11:30 p.m. (EST), you can't watch "The Tonight Show" - unless you set your VCR in advance. Broadcast.com obliterates those barriers. On the Web, you can listen to New York radio, no matter where you live. And you can experience events whenever you'd like.

"We reach people where they are," Cuban says. "We reach more white-collar office workers during business hours than ABC, NBC, and CBS combined. Why? Few of these people have radios or TVs on their desks. But they all have computers."

Broadcast.com's peak-usage period is on weekdays between10 a.m. and 4 p.m. - prime time for knowledge workers logging on from work. Which is why big-name companies now pay Wagner and Cuban to broadcast announcements, product releases, and seminars to employees, customers, suppliers, and reporters. Such "business services" are the fastest-growing segment of broadcast.com's market. Sure, people are passionate about listening to sports. But companies are just as passionate about talking up their businesses.

Wagner and Cuban could not have seized this market without the third component of their model: Always be selling. "Sales is king," Cuban declares. "Sales is everything." Indeed, Cuban is a sales fanatic. Today about 60 of broadcast.com's 195 employees are salespeople. Cuban wants the company to have 100 salespeople by the end of 1998 and 200 by the end of 1999. He argues that sales - a blind spot at most Web companies - is a core competence at broadcast.com. "We want to build the most extensive sales force in our industry," he says. "When I'm evaluating an Internet company, the first question I ask is, How many salespeople do you have?"

Why is Cuban sold on sales? It goes back to the "sprint." The fastest way to block others from entering your market is to strike exclusive deals for programming and distribution. Today Wagner and Cuban control the rights to Web broadcasts of Major League Baseball, NCAA basketball, and NHL hockey. They have Web rights to continuous feeds from more than 310 radio stations. Acquiring those rights means striking lots of deals. And striking lots of deals requires lots of salespeople.

A top-flight sales force offers a second advantage: It lets a company respond quickly to unexpected opportunities. And on the Web, the biggest opportunities often come out of nowhere. It took Wagner and Cuban some time to embrace the market for business services. But once they did, broadcast.com was able to turn on a dime.

"If we didn't have a great sales force," Cuban says, "we couldn't have seized the opportunity. It was time to refocus. And we did."

Today broadcast.com is the 11th busiest news-and-entertainment site on the Web. It generates revenue in a variety of ways. Radio stations give broadcast.com the right to sell a few minutes' worth of over-the-air advertising per day; Wagner and Cuban bundle this air time into national ad packages. Its Web advertisers, who can buy traditional or multimedia banner ads, or special "audio tags," range from Citibank to IBM to Ford Motor Co. Its business-service customers, who pay broadcast.com to distribute their content, include Microsoft, CNN, and Dell. The company has grown fast. There's talk of an IPO. But there's no talk of slowing down.

"On the Web," says Cuban, "the people who think they've won are the ones who lose." Wagner agrees: "You can't even think about slowing down. You never know who's going to be gaining on you."

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