The Danger of Hype

Well, Im back from my sabbatical, and I want to thank Karim Sanjabi for doing such a fantastic job of filling in for me while I took a breather from the pressure of writing a weekly column. There is a lot to talk about over the next few weeks, including some cool things coming out of Israel, such as Richfx and Gizmoz, but today I want to focus on the dangers of overhyping a market segment before its time. The target of my angst? Broadband.

In case you missed it, the broadband bandwagon has been heating up lately, fueled in large part by the impending merger between AOL and Time Warner. In the last few months, I have been to numerous broadband conferences and trade shows and even sat on a panel, as the rich media expert, to talk about optimizing broadband promotions. The problem is that there are no broadband promotions to optimize.

Here are the facts: There are currently 4.5 million homes nationwide that have broadband access. That number includes everything: cable modems, DSL, ISDN, the works. Of that number, cable modems take the lions share, with @home the hands-down winner with 2.5 million subscribers. For all the hype surrounding DSL, approximately only 500,000 homes have it.

Well, after all, you have to start somewhere. But, unfortunately, the near-term future doesnt look much better: According to a recent study, only 20 percent of those currently online say they will upgrade to broadband over the next two years, but only if it doesnt cost any more than they are currently paying. Add that to the more than 75 percent of the country that is still not wired for any form of broadband access (either cable modem or DSL), and the holy grail of a broadband mass market recedes further and further on the distance shore.

Not that we wont get there. It is 100 percent certain that distribution of broadband access will reach mass-market levels eventually. The question is how many of the start-ups currently staking out floor space in convention centers around the globe will still be left standing by the time the ship pulls in? After all, the shore is littered with the wreckage of ships that have sailed this way before. Take, for instance, Time Warner!

In 1994, broadband access was just around the corner, and the great experiment started with Silicon Graphics, then a powerhouse, joining forces with Time Warner to bring movies-on-demand to the household. The trial run in Florida was a disaster by any measure, and six years later Im still waiting to get Porkys on-demand. Silicon Graphics is a shell of its former self, and a company that people laughed at six years ago is buying Time Warner. In 1994, the hype surrounding the 500-channel TV was so high, folks would have thought you were crazy if you suggested that six years later the dream would still be just that: a dream.

So whats a person who wants to get on board with what market research company Forward Concepts calls a $30 billion industry by the year 2005 to do? Well, to start with, you could locate your company in a quiet, inexpensive part of the country to keep costs down while you wait out the ride: someplace like Maine.

Then you could quietly start signing up long-term contracts with all the major radio stations, putting them up on the Internet for free in exchange for promotions to your site and the ability to sell ads within the content. You could focus on developing clear channels of content, weighted toward streaming audio that can be delivered adequately over todays narrowband, but sign up CBS, NBC, ABC, and FOX affiliates to provide local broadcast TV news for business travelers on the road. In other words, you could be BroadcastAmerica.com!

In May, BroadcastAmerica.com knocked Yahoos Broadcast.com out of the number-one slot, without a lot of hype, by providing streaming content from more than 4,000 radio stations and hundreds of television stations. BroadcastAmerica has managed to sign exclusive contracts with 515 radio stations, 67 television news stations, the U.S. Air Force, Dick Clarks United Stations Radio Networks, Morley Safers American Review Series, Talk America Network, and more.

And it has done this pretty much under the radar. In fact, until I attended the Real Networks 2000 conference in San Jose last month and met Vince Ciampi, BroadcastAmerica.coms vice president of advertising acquisition, I had never heard of this start-up or, should I say, upstart, from Maine.

But its model is gold: Provide a way for business travelers who have access to high-speed lines to stay in touch with their hometown radio and TV stations; provide clear and compelling channels of content; sign people up early and for the long term; and enjoy some fresh lobster while you wait for broadband to catch up. Want to be standing tomorrow? Tone down the hype, plan for the future, deliver today. In other words, take a lesson from BroadcastAmerica.com.

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