The organizers of the festival have formed a company dubbed the Digital Club Network, which is using this week's four-day event as a precursor for the September launch of their business. The company's plan is to stream live performances from emerging bands and then archive them for fans to download for a fee.
The bands and the venues for their performances will receive royalties for each download or live stream, and the Digital Club Network will keep the rest, the organizers said in an interview.
The idea is to own the live Web feeds and archives for bands that haven't hit the limelight. The company first wants to sign on as many club-level acts as possible. Though only a tiny percentage of these bands hit it big, the company believes that if it signs on the next Beastie Boys or Offspring, it will have a viable business.
Digital Club Network installs the media streaming connections in the clubs and then manages the streams from its Manhattan office. Web audiences must use Macromedia's Flash and RealNetworks' RealPlayer to view or listen to the performances.
Thus far, company executives said this year's festival broadcasts have reflected real performances in that they have had their share of color and mishaps. On Monday, for example, an overzealous singer performing at Tramps tore out some wires while trying to climb the club's rafters.
"It's good to set up relationships with bands that want to be superstars," said Ted Werth, Digital Club Network's chief operating officer. "We want to make it more economically viable to be a small band."
Werth declined to disclose how many bands the company has signed so far. But the company has signed 12 venues to Webcast and archive performances, including the Knitting Factory, the Wetlands, Arlene Grocery, CBGB, Brownies, and Tramps in New York; Maxwell's in Hoboken, New Jersey; the Great American Music Hall in San Francisco; the Showbox in Seattle; Legends in Las Vegas; the Metro in Chicago; and the 9:30 Club in Washington, D.C.
The festival flourishes
The festival was started in 1995 by former club owners Michael Dorf and Andrew Rasiej, now the chairman and president of Digital Club Network, respectively. It began as the Macintosh New York Music Festival and then became the Intel New York Music Festival in 1997. This year it is using its own name as a marker for the business to come.
Adam Grossberg, an Intel spokesman, said the festival has grown to support more multimedia features since Intel began its sponsorship.
"The first year, we had minimal video and all audio," Grossberg said. "Last year we had much more video complemented by audio."
Digital Club Network joins a list of start-up companies trying to make a mark in the online music space as it continually expands. An array of companies is putting forward a variety of business plans aimed at capturing a Web audience, from providing downloadable music files as MP3.com and EMusic.com do, to creating destination sites for individual artists as ArtistDirect does.
The major record companies also are beginning to embrace the Web as more than a marketing tool; some are experimenting with offering downloads, among other strategies.
In addition, video and audio streaming has begun to take off as the promise of broadband access gains momentum and streaming technologies improve. For example, Yahoo this week completed its acquisition of Broadcast.com, which it plans to use as a means to broadcast aggregated content to its users.
Plus, America Online recently acquired Internet radio company Spinner.com; Lycos launched Lycos Radio; and MTV is developing a music hub site that will incorporate technology it got from its acquisition of Imagine Radio.
The bandwidth barrier
Still, analysts and observers have pointed out that streaming still has a long way to go before it is a good enough experience to be attractive to the mass market.
The biggest barrier is bandwidth; although high-speed access via technologies such as cable has made a lot of headlines, most home Web users still access the Web through relatively slow dial-up connections.
And figures show that broadband has a long way to go. Market research firm the Yankee Group estimates that only 4 percent of online households will access the Web through broadband connections by the end of this year. That percentage is expected to grow to 18 percent by the end of 2003.
However, in a kind of chicken-and-egg conundrum, analysts have said the percentage will increase only when Web companies begin integrating more multimedia features for users.
Werth acknowledged that success is predicated on having more broadband penetration in households. "I don't think there's anybody who has a slow modem who's expecting to get great video on the Internet," he said.