Microsoft Makes Play for Concert Webcasts
MSN becomes a force in Net video distribution via a deal with a startup that has broken with founders AOL and XM.
By Chris Gaither
Times Staff Writer
September 27, 2006
SAN FRANCISCO — The media landscape is shifting again: Network Live, a Beverly Hills startup devoted to broadcasting live music over the Internet, said Tuesday that it had parted ways with such high-profile backers as AOL and struck a deal with Microsoft Corp.
In July 2005, fresh off its successful broadcast of the benefit concerts known as Live 8, Time Warner Inc.'s AOL created Network Live with XM Satellite Radio Holdings Inc. and concert promoter AEG Live. With Live 8 executive producer Kevin Wall as chief executive, Network Live shot 59 shows during its first year, including Madonna and Bon Jovi, and shared the advertising revenue when AOL and XM broadcast the concerts.
But the companies said Tuesday that the partnership had not worked out the way they had hoped. Wall bought out his partners for a sum that surpassed $6 million, a person familiar with the negotiations said, and signed an exclusive Web distribution deal with Microsoft's MSN Internet business. Network Live also changed its name to Control Room.
The new alliance highlights how quickly executives will switch loyalties in seeking a digital-media foothold.
"It's a little bit like a marriage that didn't work, but we'll be great friends leaving," Wall said. "We took the house and they got the dog."
The deal also signals Microsoft's emergence as a player in online video distribution. Once seen as a laggard behind the likes of AOL and Yahoo Inc., Microsoft has launched a flurry of recent activity, including creating a video-sharing site, teaming with TV producer Ben Silverman to create original Web shows and buying the online syndication rights to the former Fox show "Arrested Development."
"I would give Microsoft some credit for pushing the envelope on video, even more than some of the other big guys," Jupiter Research analyst David Card said.
AOL was riding similar momentum in the summer of 2005 after it gained widespread praise for its online broadcast of the Live 8 benefit concerts, which took place in 10 cities across the world. While MTV Networks had to cut from one performance to the next, sometimes awkwardly, for the TV broadcast, AOL let Web users decide with a mouse click which performance they wanted to see. Five million people tuned in to AOL to watch during the show.
The online broadcast of Live 8 was designed to promote a strategic shift for AOL, as it began to offer free services to counter its declining base of dial-up Internet subscribers.
A week later, AOL used that goodwill to announce the creation of Network Live. AOL streamed the concerts on its music site and offered archived clips. XM broadcast the concerts to its radio customers. And AEG — an Anschutz Corp. unit that owns the nation's No. 2 concert promoter and owner of Staples Center — agreed to let Network Live film concerts and comedy shows in its venues.
At the time, Card and other analysts cautioned that the online concert business would be tough going. Some of Network Live's former partners said Tuesday that those concerns were valid.
"The model Network Live was looking to pursue certainly made sense on paper," said Erik Flannigan, vice president of programming for AOL, adding that the company still planned to offer its own concerts live. "The parties, a year into the venture, were seeing that the roadmap wasn't playing out how we had imagined."
XM was "pleased with the content, but it didn't ultimately make financial sense for us," said spokesman Nathaniel Brown.
AEG Live CEO Randy Phillips said his company retained the rights to the Network Live name as part of the agreement with Wall and planned to start its own online concert venture.
Wall said that Microsoft was the right distribution partner for Control Room, which has 45 employees. Financial terms of the deal were not disclosed.
Microsoft has two advantages, Wall said: its 465 million global Web users and its connection to the TV screen. Microsoft said it planned to make concert footage available on the company's TV-connected devices, including the Xbox 360 game console and Windows Media Center computers, as well as on mobile devices such as the Zune portable music player.
"When we looked at Microsoft and the depth of the technology they're working on and how they're delivering it to different places, we thought it could put us ahead of the curve," Wall said.
The revamped venture is kicking off Monday on MSN with a concert featuring singer John Legend in London.
"We've got this great portfolio of assets we can bring to deliver this great content," said Rob Bennett, general manager of entertainment and video services for MSN.
