by José Alvear
February 15, 2000
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LAUNCHcast is a big endeavor because it’s also a community site. Users can become “DJs” and influence your station, plus you actually see the usernames of people that like the song you’re currently listening to. You can even “instant message” them and chat with other users. Goldberg says that his goal is to replace traditional radio. It’s not just hyperbole, however. He is serious, although admits that it’s a pretty big goal.
LAUNCH was co-founded in February of 1994 by David Goldberg and President Bob Roback. Prior to LAUNCH, Goldberg was director of marketing strategy and new business development at Capitol Records.
I spoke with Goldberg to discuss the official launch of LAUNCHcast. But we also talked about the fate of its LAUNCH CD-ROM magazine, the MP3.com court case and about the LAUNCH’s fight with MTV over music videos.
Streaming Media Newsletter: So give me a rundown of LAUNCHcast and how
you envision it.
David Goldberg: LAUNCHcast is really the next generation of music experience on the Internet. At first people started off doing Internet radio people took the idea of radio stations as they exist on broadcast and translated it to the web. But we believe LAUNCHcast is what people want on the Internet from a music experience--the best radio station you ’ve ever heard because it learns your tastes over time. And so the basic concept of LAUNCHcast is to sign on, tell us a little of what you like, then LAUNCHcast starts playing music and you start rating the music you hear. LAUNCHcast gets smarter and smarter so over time it really plays music that you like.
Q: So it plays music that you rate?
A: Not only music that you’ve rated, though. It will play things that will surprise you. And that’s the greatest feeling; that feeling of serendipity. That feeling of “Wow, I don’t know that song but I kind of like it.” That’s a great feeling when listening to regular radio but it ’s a lot more likely to happen in LAUNCHcast. Plus you’re going to hear songs you like so that mixture of things makes it a great experience.
Q: And every now and then it plays a random song?
A: Right. And it’s a good way to figure out ratings on new songs. And you want that random thing in there as well. So you never know, you might catch a random song that you really like too. The other thing that’s very unique about LAUNCHcast are the community features. You can find other users who like the same kind of music that you do. You can see who’s a fan of a song. And you can sign up other users and have them help you build your station profile. Basically you can subscribe to them and make them your “DJs” so things they like will get played in your station. That’s a very cool feature as well because maybe you don’ t want to spend the time to build up a huge ratings profile, but if you sign up DJs, you can leverage off their experience.
Q: But having too many DJs might dilute the programming, a bit. Is
that why you have a limit of just 10 DJs per station?
A: Yeah.
Q: I call LAUNCHcast a music community site because it lets you
communicate with other users.
A: And we’re adding even more community features to the site over time. We also feature some of the top DJs. We’ve got some people that have over 3,000 other users that subscribe to them.
Q: So tell me how many users you have now. I like to separate between
registered users, and active users, though.
A: We’ve got over 100,000 people who’ve set up stations at this point. You can actually go and see on the site how many people are listening right now. We’ve streamed close to a million songs last week. And the average user spends over 45 minutes per session and that’s growing over time. And at peak we’re hitting close to 500 simultaneous listeners. I don’t know how many of those 100,000 signed up and never come back; I don’t know that number.
Q: Is it the same people who have registered at Launch.com?
A: No, those are people that have specifically built LAUNCHcast stations. No, we have over 2.8 million registered users of Launch.com.
Q: In order to listen to a station, you have to sign up and register?
A: Yeah.
Q: That’s a good little trick, get them to register and get them to
enter some personal info to listen to stations.
A: Yeah but the kind of information we’re getting from people, it’s very anonymous information. We don’t want your address or credit card number--we don’t want any of that stuff. It’s more so that we can get some aggregate information about demographics, and we have zip codes basically to understand where people are, more than anything else. But it’s really just so we can tag somebody so we can help them built their profile.
Q: You have some audio ads, I’ve heard a couple of them. Is that part
of the deal? To have targeted music and targeted ads?
A: Yeah. Essentially. We haven’t had enough of the audio ads. We’re trying a new thing right now, which is when you start LAUNCHcast there’s a Flash animation that’s a promo for Launch.com. But that’s also something that we’re probably going to sell. The audio ads are something that if there isn’t enough variety they get irritating. We’re working on getting some more in there but we may wait until we’ve got a much larger audience. Selling radio is a very different thing than selling banner ads or TV spots--both of which we currently sell effectively. But radio ads tend to be very locally driven, so unless you’ve got enough of a local audience that you can target with the radio ads, it’s less effective to try to sell those on a national basis.
Q: So now you’re just broadly doing the same ads for everyone?
A: Yeah exactly. We have the ability to target them, we just don’t have enough people that it makes sense to target them at the moment. It ’s something we’re working on going forward, but I’d say the advertising component of LAUNCHcast is not at its full extension and it won’t be until we get more users.
Q: What’s your goal for number of users?
A: Millions. I think the potential of LAUNCHcast is really to replace the radio experience for people, in the home and the office. And I think we’re seeing people substituting LAUNCHcast for radio in those locations. Clearly we’re not going to replace radio in the car or portable environment--today. Though we do believe that eventually there will be wireless data access and we will be deliver LAUNCHcast via wireless. And at that point we really can replace radio. Why listen to traditional radio when you can listen to your LAUNCHcast station? So that’s the goal. That’s a pretty big goal, taking on the whole radio business for music. And on the same side, we’re waging a battle with MTV on the video side. We have a lot of challenges ahead of us. The users that we’ve had the longest, spend the most time on it. So it says to us that it’s really working for people. And now the trick is to get it out there to as many people’s hands. I have what I’d like to see, but I don’t say we expect to hit X number at such date. I’m ecstatic that we’re over 100,000 during our beta period. That’s fantastic. We’ve done literally no marketing for it.
Q: Will you start an ad campaign?
A: We’re starting some things this week and then you’ll see more stuff in March and we’re going to--we were nervous before that the beta release wouldn’t handle the volume of users, but now we’ve pretty much tested the usage and are very confident that we can handle large volumes of users.
Q: Do you know when your peak times are?
A: It’s interesting, peak usage time for LAUNCHcast as well as for our site is about 5:30 to 6:00 west coast time. Which is interesting because it’s not what you would think of. I know Spinner and NetRadio, their peak times are more work-based times. People are using [LAUNCHcast] at home, as well as at work.
Q: What about breakdown between high and low bandwidth users?
A: Well we have three different data rates [High Speed, 56K and 28K] and we’re seeing it split right now, it’s about a one third, each. One of the issues is that people with 56K modems sometimes shouldn’t listen to it at the data rate, because they’re not really getting a high enough connection. But clearly the broadband users have a fantastic experience.
Q: Yes, I listen to it at broadband and it sounds very good.
A: It is essentially CD-quality, 64Kbps Windows Media which is really the equivalent of a 128Kbps MP3 file. Obviously LAUNCHcast is very innovative in lots of ways but one of them is taking advantage of Windows Media and the quality of the audio codec, which is pretty incredible.
Q: I guess that why you didn’t use MP3 because it takes up more
bandwidth for CD-quality.
A: MP3 is not good at low data rates. But our biggest challenge is obviously to get as much music encoded as people want. We have over 50,000 songs in the database right now, but clearly there’s well over a million songs that we should have in the database. We want to give people access to whatever kind of music people want.
Q: So what’s missing? Do you need more deals with the major labels?
A: No it’s not deals, it’s just time to encode it. We have a compulsory license just like anyone else that’s doing Internet radio, so we can use whatever music we want, it’s just a matter of getting it all encoded as soon as possible.
Q: Obviously you do the current hits first.
A: We did as much as the current popular stuff as we could, because that’s what most people want. But people also request stuff, so those are the first things that get prioritized. It’s sort of being driven by users. We hope to have everything encoded by the end of the year. But it’s a pretty massive undertaking, no one’s ever encoded this stuff.
Q: Are you doing it all yourself?
A: No, we’re working with Sonic Foundry.
Q: Are you thinking of adding music downloads to LAUNCHcast?
A: Now that’s something that’s a more complicated thing. That requires the cooperation of the labels and I think it really depends on what the labels decide to do with SDMI and how they want to sell them. We’re not going to be in the business of selling the downloads per se--I think the labels are going to sell it themselves. But we know what people like. So we’ve got a “Buy” button so people can buy CDs. If the labels enable us to direct people to them to download a song, we could do the same kind of thing. You want people to click on buy and get the CD, but even better would be to download it. So we’re just waiting for the infrastructure to be in place on the label’s side to work with them on it.
Q: What about the e-commerce? I honestly haven’t had a need to buy any
of the songs I’ve been listening to on LAUNCHcast, but how does it work?
A: Well it hasn’t really been hooked up. It’s getting hooked up now. We did a deal with Checkout.com (http://www.checkout.com) two weeks ago and you will be able to click and buy the album that you’re hearing the song from. We think it’s going to be quite popular for people.
Q: I think the big question for many in the streaming media space is,
how can you handle all the streams? You mentioned a million songs last
week. How do you handle the bandwidth, especially if you’re looking to
get more users?
A: Well bandwidth is there and the Windows Media architecture is pretty bandwidth efficient. On the technical side, we’re using iBEAM (http://www.ibeam.com) to stream the audio. We’re serving the most popular songs from their edge servers. So that’s the best way to deliver it: a) it improves the quality for the end user because it doesn’t have to travel over the backbone and b) it actually reduces the cost dramatically. The bandwidth costs have gone down and [iBEAM] tells us today they’re capable of serving a million simultaneous streams.
Q: Just for you or for all of iBEAM’s customers?
A: No, iBEAM in general. So obviously we’re not even close to tapping that out and they’re going to build more capacity. I think that there’s going to be a couple of people like iBEAM that are going to be very successful in that space. It makes more sense to partner with them rather than try to build out that capacity ourselves.
Q: It seems that LAUNCH is turning more and more to streaming.
A: Yep, we’re very bullish on streaming. It’s where we see this stuff going. People want to download because they want it to be portable. But if you can stream it, it’s a lot more efficient for everybody and also it’s safer for the copyright holders. It’s a lot easier to track and to get paid. So eventually what will make streaming more successful than downloading for music will be portability--wireless. And at that point, you just won’t need to download it all, there’d be no point because you leave everything on the server. The same thing is true at home. Why download all this music and store it locally, when if you have a broadband connection you can just stream it off the server and have a LAUNCHcast experience or you could just stream your CDs or your CD collection. I have 3,000 CDs at home and I can’t find what I’m looking for. I don’t know where anything is. I would love to have it all on a server, and say “Yeah I want to hear that REM album and then that one”. Over time, it’s always proven true that the network based models make a lot more sense for everybody than the local storage model.
Q: I too would love to have my CDs encoded and accessible on a server.
MP3.com (http://www.mp3.com) is doing something like that.
A: Yeah, the only problem with MP3.com’s model is that it probably isn’t legal. But it’s a good idea and we would love to do that too. We looked into it and felt that it was not probably legal. But I’m very interested to see what happens. If they win, great. There’ll be lots of people doing it. If the court says it’s not legal then they figured it out. So I’m glad they’re pursuing it. I think it is a value-added service for the consumer but it’s just a question of being legal or not.
Q: But what makes it legal? Is it just that they don’t own the music
they’re encoding?
A: Well the point is, you the consumer can record anything you own. But in this case you’re not actually recording it. If you recorded it and stored it on MP3.com’s server that would probably be legal but that’ s not actually what’s happening.
Q: It looks like that’s happening.
A: Well, but it’s not, that’s the problem. It recognizes your CD but doesn’t record it to the server—they’ve already recorded. So you’re playing the recording they’ve already made. So that’s part of the problem. You’re not actually making a recording of it.
Q: But you’ve done that too. You’ve pre-encoded all these files--
A: Right, but I’m doing it under the rules that were set up by the DMCA, that’s why it’s legal. But without those rules, it probably wouldn’t be legal either.
Q: OK, well you distribute a LAUNCH CD-ROM magazine. Will you continue
to do that?
A: No, actually we’re also in the process in making that streamed. And we have it up at the site. It’s called LAUNCHcity. It is only available for those with high bandwidth connections (300K streams) which is really what CD-ROM is. We’ve adapted it to take advantage of other stuff on the site, but it’s going to be a front end to all the content in our database. It’s a rich graphical interface that users really like, but it’s really successful for consumers and advertisers. But we’re going to phase out the CD-ROM because we can now stream that content to people over high bandwidth connections. We get rid of the costs of physically sending out the CDs to people. And we charge people $20 a year for the CD, but it’s free on the web. It’s still not an official launched product (pardon the expression).
Q: You mentioned earlier about the MTV music video issue. Tell me more
about what’s going on with that and music videos.
A: What we’re doing is trying to do for people what MTV was during the 80s when they used to play music videos. A lot of people don’t realize that MTV doesn’t play music videos anymore. They play half hour shows like “The Real World”. That’s worked really well for them. But the reason they did that was because people weren’t sitting through to watch a half hour show of music videos. They were watching music videos like they were listening to the radio which is changing the channel when a video comes on that you don’t like. As a result they don’t play music videos anymore. But people still want to watch them. But they don’t want them in a linear program format. They want access to videos they want, when they want it. So the Internet is a much better way to deliver the music video content to the consumer. So that’s what we’ve done.
Q: You’ve made some deals with the labels, right?
A: We’ve struck deals with three of the five majors already (Sony, Warner, EMI) to get access to their entire music library. We’re working on deals with BMG and Universal as well. We’ve got the largest collection of music videos. We also have original video like interviews and live performances. And it’s proven to be incredibly popular. In December, we’ve streamed over 2 million videos. And a lot of those are at low bandwidth. It’s not as good as seeing it in high bandwidth but it’s better than not seeing them at all.
Q: So people really want to watch videos they like, when they want to.
A: Exactly. You don’t have to sit through something you don’t like. We’re very much about the consumer pulling the information they want. Our job is to help them to figure out what they like, but not to force them to listen to stuff they don’t like. Which is very different from traditional radio and television programming which pushes and tells you you should like this. And I think that’s the power of the Internet for music, is to give people a much better experience because its what they want to hear.
Q: As I understand it--is there some litigation between you and MTV?
A: No there’s no litigation. We view them as our major competitor. We ’re ahead of them on the video side on the Internet. But they will get there and we expect them to do a good job of it. There is some issue that the record labels have sought help from the Justice Department which is investigating MTV. Part of that investigation has to do with MTV trying to leverage its monopoly in the cable world to gain unfair advantage in the Internet space.
Q: That’s right. MTV owns many properties in the cable space.
A: Exactly. They control all of the music video content. With the CBS merger [with Viacom] they’ll also own the Country Music Channel. They’ re trying to leverage that monopoly control in getting better deal terms and eventually try to create a monopoly in the Internet space. The labels went to the Justice Department to complain about MTV’s high-pressure tactics. So they’re investigating. There’s no word on what the outcome will be, but the labels want to make sure it’s a level playing field. Then people like us have a chance to succeed and prosper and MTV doesn’t win just because they have this cable channel.
Q: Are you guys involved in the investigation at all?
A: No, this was initiated by the record labels.
Q: It’s good for the labels because they want broad distribution of
their videos.
A: Right. MTV, even if they don’t play many videos, are the only game in town. So they can dictate to the labels, “Your artist must be here by such and such date and maybe we’ll play their video”. They just get complete control of the situation, whereas if there were two major players it’s a lot better for everybody. For the consumer, labels, and advertisers--I mean it’s a much better situation when there’s competition.
Q: So when will we see LaunchTV? [Laughing]
A: Oh, well. We’ll see. [Laughs] No comment.
