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The two-year-old Internet radio site aims to profit by offering a service for companies to broadcast to employees and the world
In the past two years, BlogTalkRadio has become one of those curious Internet sensations—millions rave about it, but few understand how it'll make enough money to survive. The company offers a free, eponymous service that lets anyone with a telephone and a computer host a live radio talk show that's broadcast over the Internet—no downloads or special equipment necessary. Some 3.2 million people listen in each month to amateur broadcasters and guests, who have included movie star Brad Pitt, author Salman Rushdie, and U.S. Presidential hopefuls Barack Obama and John McCain.
What's less well-known is that BlogTalkRadio is working increasingly with businesses, an effort that may be the key to its financial future. Companies are licensing BlogTalkRadio's technology to broadcast to employees and the outside world. Among the first to sign up: Intel (INTC), Sun Microsystems (JAVA), HarperCollins Publishers, Hachette Book Group USA, and Golf Magazine. BlogTalkRadio co-founder Alan Levy, a 49-year-old telecommunications entrepreneur, says the service is like an audio form of blogging and "every company is looking to be a part of the conversation."
Helping Companies Connect
It works like this: BlogTalkRadio sets up branded Internet radio stations for companies for a fee of $7,500 a month and takes care of the technology side of things. The companies create and run their own shows, which are streamed live on their Web sites and on BlogTalkRadio's Web site at the same time. Once a show is over, it's automatically recorded as a podcast so people can listen later on a computer or iPod.
Companies are just now sorting through the different ways they can use the service. Time Warner's (TWX) Golf Magazine uses it to connect with readers who call in for discussions of recent tournaments or podcasts of past shows. Chipmaker Intel sees it as a tool for developers to communicate as a group, even when they're scattered around the globe. Sun Microsystems has one BlogTalkRadio show on emerging technologies, so employees can hear experts discuss topics such as the future of digital archiving and the Java programming language. It has another show in which its Chief Gaming Officer Chris Melissinos talks about developments in that space with a general audience.
Even the Defense Dept. has tried BlogTalkRadio. Its shows cover everything from veterans' health issues to current military operations in Iraq and Afghanistan. During an Aug. 6 broadcast, Colonel John Cuddy discussed how his staff is mentoring police in Kandahar and gave updates on the progress of the Afghan National Police. Roxie Merritt, the Defense Dept.'s director of new media, calls BlogTalkRadio a "great tool." She says it's particularly useful for engaging young people who may not read newspapers or magazines. "We want to have two-way dialogue," she says.
A "Really Big" Idea
Levy took a circuitous route to becoming an Internet radio entrepreneur. He started his career as an accountant and ended up working for a number of telecom startups, including Viatel and Destia. After the dot-com crash, Levy began buying up telecom assets on the cheap with the proceeds from one of his companies that had been acquired. He started blogging after his father fell ill with cancer to keep his friends up-to-date, and was surprised by the size of the blogging community. He thought if people could use their phones to talk on the Internet, it could open up the discussion to a wider community. So using some of his existing telecom assets and technical staff, he set out to create the service.
BlogTalkRadio isn't profitable yet, but it's making progress. In June, the Lakewood (N.J.) company raised $4.6 million in a round of financing led by the Kraft Group, the owners of the New England Patriots. The company plans to use the money to expand its operations, adding video capabilities and offering service internationally.
The consumer side of the business brings in revenues too, though it's through advertising instead of the fees that corporations pay. Individual broadcasters can sign up for BlogTalkRadio's advertising program, which gives the company the right to insert commercials into radio shows. Hosts get a cut of the revenues—35% if BlogTalkRadio finds the sponsor and 50% if the host does. Though Levy has signed up such advertisers as Deutsche Telekom's (DT) T-Mobile and LifeLock, he concedes no consumer is making decent money at this point. Still, he's optimistic about the future. "If we have 1,000 shows about parenting, we are able to pitch this to a company like Procter & Gamble (PG)," he says
Internet radio remains small potatoes compared with traditional and satellite radio. Still, Mark Mulligan, a new media analyst at consultant JupiterResearch, expects steady growth, in part because the medium allows flexibility and capability beyond those of existing offerings. The key question for BlogTalkRadio may be whether businesses decide its technology offers a valuable service or interesting novelty. Levy, for one, is convinced of the potential. "We are helping businesses of all sizes do a better job reaching their audience," he says. "I am convinced this is going to be really big."