The Sound of Money

Netcasting attracts investor interest. In 1996, The Navarre Corporation acquired an initial 50-percent ownership of NetRadio Corporation in May for $1.5 million. How much did NetRadio founder Scott Bourne pay to create his station? $250,000. Also, Bourne did not have to deal with Federal Communications Commission license fees, radio transmission towers, and other costs. Netradio's profitability increases in stature especially considering the last FM radio license fee in Minneapolis went for $22.5 million.

In addition to Netradio's story, Sportsline recently syndicated its program, The Drive, a daily sports program airing from 3-7. What's so special about that? The Drive originated on the Internet and has now been picked up by terrestrial radio stations. In addition to The Drive's success, Sportsline, formerly called Sportsline USA, formed a strategic alliance with CBS. CBS received 22 percent of SportsLine USA's equity in exchange for advertising and promotion on the CBS Television Network and CBS sports-related content. Broadcasting on the Internet has opened up a whole new arena for negotiations. In addition to movie, television and book rights, there are now Internet broadcast rights.

TheDJ.com, which bills itself as the leading Internet-exclusive music broadcaster, announced on November 3rd that it secured a second round of financing and it acquired RadioCo, an Internet radio venture. Although this news is not on the level of Sportsline or Netradio, TheDJ.com started broadcasting only 16 months ago. One of TheDJ.com's big success stories has been its retailing business. TheDJ.com offers users a chance to purchase CDs directly from retailers. The company reports more than 1.3 million users have tuned in--and CD sales have doubled in the last six months.

Like consumer on-line services, Internet Radio stations generally create revenue by charging subscription rates, charging for premium services, advertising and receiving percentages from on-line shopping.

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