Viacom's dot-com play

Viacom has given a huge boost to its Internet business, announcing two major initiatives in the music and children's spheres. But for all the fanfare, both the music and children's projects remain unfinished. For example, the music project lacks a complete roster of e-commerce partners to build out its self-described virtual shopping mall, CDnow is slated to sell CDs, but no one has yet been named to sell tickets, and the music site also lacks a name.

Viacom has given a huge boost to its Internet business, announcing two major initiatives in the music and children's spheres.

Viacom also confirmed its purchase of Brisbane, California-based Imagine Radio, as reported previously by The Standard. In addition, Viacom announced it bought San Mateo, California-based Web developer Nvolve. Purchase prices were not revealed.

For all the fanfare, both the music and children's projects remain unfinished. For example, the music project lacks a complete roster of e-commerce partners to build out its self-described virtual shopping mall. CDnow is slated to sell CDs, but no one has yet been named to sell tickets. The music site also lacks a name. Internally, the site had been dubbed "The Buggles Project," a reference to the band that created the first video ever aired on MTV, "Video Killed the Radio Star." The moniker SMN, or Super Music Network, was also used in mock-ups for the site.

"It does seem new media begets new brands, and we recognize that," said Matt Farber, senior vice president of program enterprises for MTV/VH1. Farber said the site's official name would be unveiled in a few weeks.

Meanwhile, the children's site, nicknamed "Project Nozzle," is not scheduled to debut for another seven months. Viacom executives were skimpy on details about what kind of content it will carry, or how that content will differ from the already popular Nickelodeon site, but promised it would deliver just-for-kids community features such as bulletin boards and instant polls created by the newly purchased Nvolve.

"There will be characters and properties from outside of the Nickelodeon world," said Nickelodeon senior Vice President and General Manager Chris Bagwell, hinting at coming content deals with third parties.

The music site, which is scheduled for a soft launch in June 1999, will eventually offer consumers a wide range of listening and music video choices. Initially, though, as a beta version Viacom shared with The Standard demonstrated, the site will deliver only audio, using the existing capabilities from Imagine Radio and RealNetworks Inc. to offer more than a hundred Web radio stations within a variety of genres and subgenres. Eventually, music videos will be available on demand, though MTV officials said they could not estimate the ultimate size of the site's video library. "The main draw to the new site will be personalization," said Farber.

Imagine Radio already allows listeners to create their own customised stations using a variety of means, one of which is hitting the "skip" button to bump a song out of rotation. The skip feature is unpopular with record label executives, and should prove challenging for MTV Networks in winning music industry support.

A question during a press conference about the politics of such customisation drew a vague response from MTV Networks Chairman Tom Freston. He said that MTV is in "ongoing talks" with the labels to arrive at a compromise on the level of customization the radio feature would offer. A demo of the product during the press conference drew snorts of disgust from at least one record label executive in the audience.

The new music site will also invite listeners to create profiles upon site registration in which they rate musical genres and individual bands on a scale from "love it" to "not for me." Based on consumers' reported tastes, the company will then target-market CDs. For now, Viacom said it would not offer digital music downloads through the controversial MP3 format.

The site plans to sell advertising, as well as offer concert tickets, CDs and merchandise. Viacom estimates that its "worldwide promotional support" to the music site will be worth US$150 million over the next five years. But the ability of MTV and VH1 to draw a mass of cable-television viewers to the Web remains an open question.

Although the music site is being developed in-house with the team from MTV Online, staffers there acknowledged that Viacom's existing properties were too narrowly focused to function as Web music platforms. "Because of the breadth of music we want to make available -- the wide variety of choices -- it wasn't really logical to use the MTV or VH1 brand," said Rick Holzman, VP of programming and promotion at MTV. "When you add country and jazz and classical, it becomes clear that (the project had to be done through a separate company.)"

Viacom will continue to operate MTV Online and VH1 Online as separate Web sites. The company also announced the creation of a new Internet division, which will have a satellite office in San Mateo, California.

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