TCI hears the music
The cable giant seems to be getting into the music business in a big way, a curious move for a company that said it would concentrate on its core cable operations.
In January, the cable giant formed its TCI Music division to
provide digitally delivered music services through the Internet, television, and other methods. Then, in July, TCI Music in turn acquired Digital Music Express, a company that delivers commercial-free, CD-quality music in dozens of channels to cable and satellite customers for a fee.
This week, TCI Music and The Box Worldwide signed a binding letter of intent to merge. Under the deal, The Box Worldwide, which operates The Box interactive music video cable channel, will become a wholly owned subsidiary of TCI Music. The resulting company will offer video and audio services through various distribution methods, including the Internet.
Now, the merger of TCI Music and Paradigm Entertainment, which operates popular music sites SonicNet and Addicted to Noise along with video programming site Streamland, is on track to take place December 30, according to Wayne Rosso, director of corporate communications for SonicNet.
The deals mark the reentry into the Internet business for TCI, which only a year ago said it was scaling back its Net efforts to focus on its core cable services after jumping at new technology interests such as the Internet and cable-enabled telephones. In November 1996, it withdrew a $125 million investment in the Microsoft Network.
SonicNet and Addicted to Noise provide music news and commentary along with live Internet concerts. Paradigm also is involved in music distribution through its independent record label businesses and in the creation of syndicated radio and online music programming.
The merger is an unlikely marriage, given TCI's conservative programming approach. The company's cable interests include the Family Channel and the Discovery Channel.
TCI spokeswoman Vivian Carr said the company is using the merger with Paradigm as a way to "round out" its music interest.
"We're looking to be a full-service music company," she said. "This [merger] is a way of rounding out our music business, not our way of trying to get into the Internet."
"The assets of Paradigm are a natural fit for TCI Music and, in particular, offer compelling cross promotion opportunities with The Box and DMX. Paradigm's strong Internet presence, with its music news and content development business, together with its grassroots independent and archive label businesses, broadens TCI Music's role as a provider of original music programming and music-related content across multiple distribution platforms," Robert Bennett, president and chief executive of Liberty Media Corporation, said in a statement. Liberty Media is the programming unit of TCI, which manages TCI Music.
SonicNet combined with The Box has the potential to make for a good match in the future, as television and the Net continue to converge. Though the Web site for The Box presently is not very active (on the site, the company says requesting videos via the Net is still inferior to using the phone, but promises vast improvements in the future), it could be a valuable property as television sets and PCs begin to cross each other in their uses.
A report released yesterday by International Data Corporation predicted that 1998 will see 100 million people on the Internet, mainly because of lower-priced, easier-to-use appliances. One product already helping to bring about this influx is the digital set-top box--or the set-top computer, as some call these next-generation devices. The cable industry is leading an initiative that will result in digital set-top boxes that will have computerlike functions, such as the ability to send and receive email, browse the Internet, and even make phone calls.
"You can already see the synergies" between TV and the Net with Streamland, Carr said. Streamland gets some of its videos from The Box.
On Paradigm's part, the upcoming deal on its face is good for the smaller company, given TCI's vast resources.
"If anything, it will make things better, because TCI will provide more branding for us," Rosso said. "We're going to be following the MSNBC model--an entertainment version of MSNBC. It's going to be a network."
However, ever since camera operators on the Ed Sullivan Show were instructed to film Elvis Presley from the waist up only, larger companies have kept controversial artists from distributing their racier work to appeal to the conservative nature of the mass-market audience.
Paradigm could run into trouble with its programming ventures, such as Streamland, when deciding its policy on whether to broadcast controversial works such as the recent song "Smack My Bitch Up" by techno band the Prodigy. The song's lyrics and video have come under fire of late because many say they promote domestic violence.
Carr said TCI has "very strict guidelines against objectionable material. And that includes gratuitous violence and hostility toward women." She said no property of TCI would play Prodigy's video, and pointed to rapper Ice-T's work "Cop Killer"--which came under scrutiny in 1992 because many felt it encouraged violence against the police--as another work to be avoided by TCI's properties.
"We try to provide more wholesome entertainment," she said.
Nicholas Butterworth, president and editor in chief of SonicNet, said the company was planning "areas for mature audiences with age verification" before the merger with TCI Music became imminent.
"It's part of maturing as a content provider," he said. "We're mainstreaming our content in general, not just because of TCI. It's all part of growing up on the Web."
He conceded, however, that the merger caused SonicNet to pay "a higher level of attention to standards and practices."
Rock music, rap, and more recently pop and electronic/industrial music historically have been openly rebellious, which holds a great appeal to young fans. If TCI is able to exert its influence on SonicNet and its sister sites, those sites could run into trouble competing in the already flooded online music business.
Already the established online brands face stiff competition from the myriad music content sites on the Net. More and more offline content players, such as Rolling Stone and Billboard, are coming online or increasing their Web presences in an effort to squelch the upstart Web brands. And a search on a band or music genre yields any number of fan sites, often with music samples, pictures, tour information, and community--all the features sought by music fans online.
It remains to be seen how much wired music fans will embrace another corporate-backed music presence on the still-somewhat wild Web.