26 March, 2001 iM Networks ©2002 “The Third Antenna” David Frerichs Founder, CTO, President iM...

26 March, 2001iM Networks ©2002

“The Third Antenna”David Frerichs

Founder, CTO, President

iM Networks, Inc.

iM Networks ©2002

iM NetworksWe add value for content providers and CE companies

• Consumer Electronics Companies– Power on, turn the knob tuning– Quality, low-cost, value added feature– Reliable global infrastructure

• Content providers– One-stop shop for reliable distribution across multiple vendors– Reach beyond the PC– Revenue infrastructure– QoS monitoring, reporting

iM Networks ©2002

Global ReachBeyond the PC, Beyond the US

EUJapanNorth

America

iM Networks ©2002

iM Radio, The Third AntennaInternet radio will be profitable

• Historical context– Nothing we are dealing with is fundamentally new– AM mirrors FM mirrors iM

• Consumer Reach– Key issues to make the next leap

• Consolidation– How is the 3rd antenna different?– What positives can we learn?

• Our path forward– What are the real costs– Is there a model that works?

iM Networks ©2002

Some Highlights of Radio HistoryModern is ancient, ancient is modern

• Unicast audio news feed. Telefon Hirmondo, 1901

• “Every auto will be provided with a portable wireless telephone.” Modern Electrics, August 1908

• “the day which I believe is not too far distant, when … any individual on Earth will be able to communicate directly by the spoken word to any other individual no matter where he may be.” Major General Squier, US War Department Annual Report, 1919

• DeForest ANTI-AD muting device, 1930

iM Networks ©2002

Some Highlights of Radio HistoryNothing new under the political sun

• “Don’t get the idea that the ether is free, for Uncle Sam has police powers even over the ether, if he cares to exercise them.” Electrician and Mechanic, January 1909

• “Advertising by radio cannot be done; it would ruin the radio business, for nobody would stand for it.” Radio News 1922

• Transmitter patent licenses and performing rights fees. c1924

• “The American Plan – advertising financed private radio stations.” c1926

iM Networks ©2002

A Pattern ExistsNew technology adoption curve

1.Amateur experimentation

2.Venture exploitation

3.Government regulation

4.Big business excitation

iM Networks ©2002

Consumer ReachDon’t go and try to change me…

• PC listening is not radio.

• My choice, where and when I want it.

• Power on, turn the knob. FM is a baseline.

• Give me something I can’t get on FM.

• Don’t try to charge me for the basics.

(I already pay a big broadband bill!)

iM Networks ©2002

Broadband PenetrationBig enough and growing

0

5

10

15

20

25

30

35

40

45

2001 2002 2003 2004 2005

Mill

ion

s U.S.

Asia

Europe

iM Networks ©2002

Consumer ReachConsumers want Internet radio

• 63 Million Americans listen today (Arbitron)

• Internet radio devices are second only to DVD in 2001 consumer demand (IDC)

• 94 Million Americans want to purchase Internet radio devices (Arbitron/Edison)

iM Networks ©2002

Reach beyond the PC resultsBetter experience = increased listening time

PC Device

hours/month

• The idea: The further people are away from the PC, the longer they will listen.

• The proof: iM Radio device monthly TSL per user is 4x PC listening monthly TSL

Source: iM Networks

iM Networks ©2002

Radio Industry Consolidation

“Fragmentation means that radio can’t deliver the kind of concentrated audience reach that advertisers want. Current regulations limit radio’s ability to compete and to return to profitability.”

– Micheal McCabe, CAB President, 1997

iM Networks ©2002

Radio Industry Consolidation1996 Telecommunications Act

• Radio was a $20B market in 2001, here is why…

• Pre 1992: 1AM, 1FM

• Pre 1996: 2AM, 2FM, 20 national limit

• Now: 3+5 (AM, FM), no national limit

• Clustering created economic efficiencies

iM Networks ©2002

Radio Industry Revenue GrowthMore dollars in the hands of fewer groups

$0$2$4$6$8

$10$12$14$16$18

1995 1996 1997 1998 1999 2000

IndustryRevenue(Billions)

iM Networks ©2002

Models for the Third AntennaThe math for the model

• Raw Costs– 64Kbps station = 28.125MB per listener hour– @ $0.004 per MB = $0.1125 per listener hour– RIAA, 13 songs per hour = $0.0182 per listener hour– ASCAP, BMI, SESAC ~= 0.01 per listener hour– $0.1407 per listener hour

• Revenue– 10 30 second spots per hour at net $20CPM ($28CPM gross)– $0.20 net gross per listener hour– $0.0593 raw net per listener hour

iM Networks ©2002

Models for the Third AntennaVariables to solve

• Facts– We can’t get the revenue we need without impressions– We can’t get to the impressions we need without cash

• Internet advantages– We have no geographic transmitter limitations– We can aggregate demographics nationally, across stations– We can time shift and target ad delivery

• Solution– Co-op, also known as collectives, networks…– Build the ultimate cluster!

• 800K @ 15 hours per month = 120M impressions per month = $711K per month

26 March, 2001iM Networks ©2002

Stay Tuned®[email protected]

Sources: Thomas H. White, FCC, NTIA, BIA, CAB, iMN, Clear Channel

26 March, 2001 iM Networks ©2002 “The Third Antenna” David Frerichs Founder, CTO, President iM...

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