March 4, 1999 10:45 AM PST
Spinner paces itself amid music chaos
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Spinner, which launched in 1996 as TheDJ.com, is one of the better-known Net radio firms, with an estimated audience of 2.5 million. After NetRadio's announcement yesterday that it is going public and Imagine Radio's recent acquisition by Viacom, Spinner's future has been the source of much speculation in the ever-changing online music industry.
The company itself was a buyout candidate for Viacom's MTV unit. Viacom is planning to integrate Imagine Radio into a music hub site venture with the working title the "Buggles Project." Talks with Spinner broke down when the firms failed to agree on a price.
Josh Felser, president of Spinner, said that "we don't really feel the pressure to go public," adding that it wouldn't do so "until it makes sense in our growth cycle."
"We have been approached by some investment banks about going public," he said. "But it's a big change for any company."
Scott Epstein, senior vice president of marketing for Spinner, noted that "there is a ton of momentum" at the company.
"We want to grow the site in terms of both audience and revenue," and "we are working at a furious pace to realize the maximum value in this company in the shortest amount of time possible," he said, adding that the goal is to go public quickly, but not to jump the gun by doing so before Spinner is able to realize its full potential as a public entity.
Felser noted that Spinner recently received $12 million in financing from Sony Music Entertainment, Intel, and Amerindo Investment Advisors, an infusion that has bought the company some time to decide its long-term future.
Others, however, don't see things as that simple. Spinner "had a lot more visibility six months ago," said Forrester Research senior analyst Mark Hardie, "but right now there's a lot more activity around competitors that weren't even around before."
And that could raise questions about the company's pace of change. "If Spinner is taking a steady-as-we-go approach, it seems kind of odd given the pace in that space right now. Their time to act is now--I don't know how long they can wait," Hardie added, noting the typically fleeting window of an initial public stock offering.
Analysts also have noted that the offline radio companies such as Chancellor Media and the CBS Group have been notably quiet on the Internet front. In an earlier interview with CNET News.com, Hardie said, "I'm surprised television properties like MTV are scooping these companies up. I would have expected one of the big radio groups to buy [a Net radio firm]."
Felser said Spinner had been approached by offline radio companies, though he declined to name them. He said the problem many of the companies face is a lack of support for an online venture by the individual radio stations the firms operate.
"The radio station business has traditionally been a mom-and-pop business. Consolidation has changed that somewhat," but the firms still face an internal struggle, as the offline radio stations consider Internet radio a threat, Felser said.
"What makes us work as a company is all the things that are different from traditional radio," such as greater choice, interactivity, fewer interruptions, and the like, Felser said.
Looking ahead, Felser said Spinner is concentrating on maintaining what he describes as its "steep trajectory for growth." He said the company is working on "converting that growth and traffic into revenue" through distribution deals like one it recently announced with portal Snap. Spinner will provide its player to users of Snap's "Cyclone" portal, designed for higher-speed Net connections. (Snap is a joint venture between NBC and CNET: The Computer Network, publisher of News.com.)
Felser said more distribution deals with "top 25 sites" are forthcoming in the next few weeks; he declined to elaborate.
Spinner also is taking a cue from traditional radio stations by offering record labels promotional packages that bring in revenue and give the labels' artists exposure. In exchange for a fee, Spinner offers strategic placement of the artists' music, measurement of the audiences' response to the music, and other promotions that "can lead to a sale," Felser said.