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Muzu makes music pay
Sunday, August 24, 2008
A new music streaming site allows free downloads while advertising pays the bills. Catherine O’Mahony looks at the new TV kid on the block.

It was a stag party that did it. Ciaran Bollard had just wound up a long-term job as Irish country manager for Smartforce, the e-learning company founded by entrepreneur Bill McCabe.

Then he heard, in a car on a trip to a stag party, that Mark French, who had built a music industry career, was keen to set up some kind of online business. Bollard had just spent months negotiating a new senior job in technology marketing, but he never took it up.

Instead, backed by Enterprise Ireland, he started working with French on a business proposal inspired by the Texaco children’s art competition that initially envisaged an online network to enable school children across Europe to see each other’s creative work.

That project has since morphed into MuzuTV, a music video streaming website for artists and fans that provides a pragmatic solution to the revenue crisis that has hit the recording industry since illegal downloads began.

On MuzuTV, downloads are free, since revenues are being generated though advertising, and the system is underpinned by a carefully planned legal framework that protects the artists’ rights.

After two and a half years of preparation, the site went live to consumers in Ireland and Britain in the past month. But this is just the start, according to the team. With €6 million already behind it, 25 staff in Dublin and Waterford, and with more investment to be sought this year, the new site is, according to Bollard, ‘‘a global play’’.

‘‘It just makes sense,” he said. ‘‘Music appeals to everyone. After YouTube, and with the growth in broadband, there’s a big enough market for this.”

And the connection with the original children’s art concept? ‘‘They’re not actually very different,” said Bollard. ‘‘The thing I could see was that the consumer was becoming the producer. That’s what we have with Muzu as well.”

MuzuTV is certainly an impressive looking product. More than 200 music labels are providing content to the site, as well as broadcasters, management companies, artists, festivals and venues.

Its biggest ticket sign up to date is Sony BMG, one of the top four record labels in the world, and the corporate name behind acts like the Ting Tings, Kylie Minogue and Beyoncé. The concept, in Bollard’s words, is to be ‘‘artist-led, with record company support’’. But he concedes that he will need another major label on board.

For artists, the lure of the venture is that they receive a cut in advertising revenue every time their material is accessed on MuzuTV, something they don’t get when a fan watches their video on YouTube, or even on their own website.

Artists are encouraged to set up their own channels on the site where they can upload whatever material they want for their fans. Fans can also set up channels and exchange content with others.

‘‘Until now, fans might have had to go to YouTube for a video, and then to MySpace for artists’ information and then the artist’s own website for the tour diary,” said Bollard. ‘‘They get all that together now.”

For advertisers, the sell is the access MuzuTV promises to a core base of 15to 24-year-old music fans (although the site also has extensive retro and jazz content which will bring in older fans),plus the opportunity to target a particular grouping in this category.

MuzuTV is already running ads from brands like Converse, XBox, HMV and Sony.

Its format lends itself to more innovative online advertising options, such as in-video promotions. (An Avril Lavigne video shown on the site allowed users to click on featured clothes or a mobile phone to buy them through a branded consumer site.)

‘‘Brands like the format because it gives them freedom to engage with music without having to risk being linked with illegal downloads,” said Bollard.

‘‘They feel safe with that. They have been afraid to be associated with illegal content. The music industry has not made it easy for them.”

Bollard said it took him six months of constant negotiation to get Sony BMG to sign up. His strategy was first to get the backing of some of the label’s biggest artists, like Natalie Imbruglia and Kasabian. Once they were on board, he went to Sony BMG executives.

If its co founders can meet their own targets, Muzu TV should be heading for explosive growth. With its marketing drive yet to kick off in earnest, the site is attracting 1,000 new users a day, according to Bollard.

However, current growth pace won’t achieve the site’s targeted two million unique users a month by year-end. To get to this level, Bollard said the site would need a link-up with a major social networking site, and he said an announcement of that kind would be made shortly.

The economic downturn should work in the site’s favour, he added, because people should be even more likely to opt to download free, rather than go and buy music on the high street.

Last week Muzu TV announced a content deal with ITN which provides the site access to 80,000 hours of archive music industry material from sources like Channel 4 and Reuters, much of which has never been screened online.

Muzu TV also needs to broaden its scope into new markets. The plan is to launch in continental Europe by the end of this year and it will move into the US in the first quarter of 2009.

The company will need considerable further investment to manage this next step, and Bollard said he hoped the original investors - who include his former boss Bill McCabe via his investment vehicle Oyster Capital - would be involved in that.

The company is also poised to step up its marketing efforts in Ireland and Britain. Its plans include a link up with universities which will be able to set up their own channels on the site.

Bollard said the marketing emphasis would be on tactical below-the-line initiatives, based around much of the exclusive material that will be shown on the site which will be sent out virally. He said he’d been offered free TV advertising but had turned it down.

‘‘That’s not the right way to market to our consumers,” he said. ‘‘I want people to find out about us from a friend or to hear about something cool that’s on the site. I don’t ever want to advertise on TV.”

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