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Net Losses

Scott Stafford hopes Alpha Radio stays alive.
Jonathan Castner

Despite the deadly hits that dot-com stocks have taken of late, no one's ready to declare the Internet revolution an overhyped flop -- if only because the basic technology works. Nevertheless, it is easier to create a whiz-bang site these days than it is to make money from it, as GoGaGaDenver.com, a high-profile Web radio outfit, is learning the excruciating way.

A product of Boulder-based Eclectic Radio, GoGaGaDenver.com sports an exceedingly impressive pedigree. Its president is Ray Skibitsky, who was instrumental in launching both KBCO and the Peak and helped shape the sound of the Adult Album Alternative format across the country via his partnership in the influential consulting firm SBR Radio Company. Moreover, Skibitsky hired some intriguing talents to help him realize his cyber-vision, including John Hayes, the program director at KTCL during some of the station's most interesting periods, and Jim Musil, the man who launched CU-Boulder's KVCU/AM Radio 1190. He also forged an affiliation with the Denver Post, in which Post reporters discussed the big stories of the day on the site and the paper's longtime pop-music critic, G. Brown, worked as the morning-shift disc jockey for its "eclectic rock" channel.

Yet somehow, this seemingly can't-miss combo managed to do so anyhow. On January 10, GoGaGaDenver ceased streaming audio -- the equivalent of a standard radio station shutting off its transmitter and turning out the lights. The Post had originally touted its relationship with GoGaGaDenver in Aldous Huxley terms; the June 12, 2000, headline announcing the pairing read, "Post Adds Online Audio Link: Newspaper, Radio Pairing Opens New World."

Now, the Old World has gotten its revenge.

While Skibitsky is understandably downhearted about this turn of events, he hasn't become a born-again Luddite. At present, he's actively seeking new financing to help revitalize and expand on the GoGaGaDenver notion, even going so far as to authorize the publication of Eclectic Radio's phone number (303-402-9353) in the hope that investors will ring him up. He'll likely tell those who do that in a little over half a year, GoGaGaDenver drew a considerable audience (about 30,000 unique visits per month toward the end) and was "gaining traction" regarding advertising revenue, in part, Skibitsky believes, because of its Denver-centric focus.

But if all that's true, why is GoGaGaDenver currently as silent as Marcel Marceau? Skibitsky is forthright about the problems. "Three things happened to us. One, there's been a big downturn in the Internet. Two, Internet radio has not generated the kind of advertiser support we needed. And I also have to say that we got caught up in the JOA."

The existence of the JOA -- the just-approved joint operating agreement chaining together the business components of the Post and the Rocky Mountain News -- raises some intriguing questions regarding the publications' Web equivalents. If the sites are determined to be primarily editorial in nature, they will probably remain under the control of the individual newspapers. But if they're deemed business assets, they will almost certainly fall under the authority of the Denver Newspaper Agency, the entity created to oversee non-editorial functions. As such, they might be stripped down, altered or perhaps even combined in order to save a few bucks.

Speculation about the latter prospect accelerated on January 6, when the Rocky announced that Jack McElroy, its general manager of new-media Internet operations, had been reassigned to the newsroom to handle "special projects."

But right now, no one at either daily is eager to talk about it. McElroy forwarded inquiries to marketing vice president Linda Sease, who's leaving the News for an executive position at Clear Channel. A representative for Sease then directed questions to Rocky editor John Temple, whose assistant actually laughed in response to a request for an interview with her boss. (I'm guessing that the only way Temple will ever phone me back is if I get photos of him necking with Dean Singleton.) Likewise, Tom Botelho, spokesman for the Post regarding the JOA, says that no one at his paper can comment until January 22, when a so-called quiet period ends and the agreement becomes official -- a position echoed by Michelle Wells, speaking for the Denver Newspaper Agency.

That leaves Eric Grilly (son of Post publisher Gerald Grilly), who serves as vice president of interactive media at MediaNews Group, which owns the Post. He declines to chat about the outlook for the Web sites as well, but he's considerably more open to discussing what happened at GoGaGaDenver. Grilly expresses affection for Skibitsky's baby and doesn't rule out the possibility of working with Eclectic Radio down the line, but he concedes that "unfortunately, GoGaGa didn't have the funding it needed to prove that its model worked. Even with the help of one of the biggest media vehicles in town, you can't achieve critical mass to support yourself in six months. But that's not to be negative toward either Ray or his model. We'd just started to launch our sales campaign, because we needed to have an audience to sell before we could start selling it, but we'd only gotten to make one or two presentations when the plug came out."

 

Skibitsky is trying his damnedest to shove the plug back in. "We have a very strong concept, especially when you consider the newspaper industry today. For the 18-to-34 age group, newspaper readership is very low, but Internet use is very high, so you put two and two together. That's why we've had so much interest in this from papers around the country." He adds, "We wanted to prove the concept in Denver, and we were proving it. We just needed a little more time."

More Web spinning: The folks at two other prominent Web Radio purveyors in the area -- Westwind Media.com and Alpha Radio -- should be able to sympathize with GoGaGaDenver's plight, since they've been suffering through variations on the same theme.

Consider the cautionary tale of Sam Stock, who earned a reputation for pushing standards until standards pushed back while he was working as a DJ at the Peak. This approach returned to chomp him in February 1999, when he decided to give away a $300 snowboard provided by Coors to the first person who committed an amusing act of road rage -- a stunt that led to a court sentence of a year's probation, forty hours of community service and his dismissal by Mike Stern, who began working as the Peak's program director the day after the incident. However, Stock wasn't unemployed for long. Westwind Media.com scooped him up and made him program director for the alternative channel at Lycos Radio, a musical addendum to the Lycos search engine. When interviewed for a column about the local Internet radio explosion ("A Tangled Web," September 30, 1999), Stock vented some spleen about the Peak ("They just sort of snuck away, and I took the blame for them"), but mainly concentrated on highlighting the superiority of Web stations over their terrestrial counterparts. At one point, he declared, "Let's all work together to bury traditional radio. It's time for the industry dinosaurs to step aside."

Well, maybe not. Last October, Stock was among more than two dozen employees let go by Westwind. But the ever-resilient Stock has come back strong, albeit in an unexpected arena. On January 8, he debuted in the 10 a.m.-3 p.m. weekday slot on (get ready for it) the Peak, where he'd been working part-time for several months under (you knew this was coming) program director Mike Stern.

Unlike GoGaGaDenver, Westwind isn't mute; its operations continue during a period of transition to a new master. Specifically, Denver's GETGO Inc. announced last November that it would combine Westwind with Vail's Radio One Networks, a company specializing in technology that allows a single DJ to program multiple shows on multiple stations from a remote location. What this means for Westwind remains unclear. Kevin France, Westwind's executive vice president (and the closest thing it's had to a CEO since last year), initially agreed to a dish session with Westword only to declare himself "unavailable" owing to the state of the merger. In the meantime, plenty of Westwind's features have been radically scaled back. Most employees in the news, sports and sales divisions are gone, and the various music channels, which were once team undertakings, are now one-man bands. For instance, "The Alternative Edge," Westwind's alt-rock component, used to feature shows starring Stock and former KTCL jocks Mike Makkay and Dave Granger, among others, but now only Granger remains. As a result, Granger concedes, "I wear a lot of hats around here."

The reason for these cutbacks was, for the most part, a lack of moolah. Makkay, who also served as director of promotions for Westwind, says the company cut a number of bad deals, including the one with Lycos, and frequently stirred up resentments with advertisers who'd been either "overpromised or underpromised" in regard to what Westwind could do for them. Finally, "the bottom dropped out," taking him with it. These days he's subsisting doing voiceover work and hints that without a better gig, he may have to hit the road. "New York's a kickin' town," he says.

Scott Stafford's feet aren't as itchy as Makkay's, but his situation is still awfully unsettled. In 1999, Stafford decided to leave his position as a technical producer at KOA and KHOW to concentrate on Auxiliary Radio, a Web radio creation based in his home. Before long, he'd developed a cult following for imaginative specialty shows. Then, in March 2000, he was contacted by representatives of First Entertainment Holdings Inc., a Denver company whose properties include the Comedy Works in Larimer Square and assorted radio and Internet properties. Shortly thereafter, Stafford agreed to help First Entertainment launch a Web radio station under the moniker Alpha Radio. A temporary pact led to a six-month contract, inked on July 15, with Stafford moving all of his programming from Auxiliary Radio to Alpha Radio, at alpharadio.com. Included in these offerings was Pop Autopsy, a weekly show helmed by John Reidy, the instigator of the distinctive Denver zine The Hooligan.

 

But unique offerings assembled by smart people weren't enough to keep either Alpha Radio or First Entertainment in the black. On December 21, First Entertainment announced that it did not have "sufficient cash funds available with which to pay payroll, operating, consulting, general and administrative, and other expenses" -- and one of the first casualties of this crisis was Stafford. Like many other First Entertainment employees, he'd been paid in stock whose value was roughly equal to his salary; if he made less than he was owed after selling it, First Entertainment made up the difference. But that method of compensation ended before the year did (he was paid this week for the previous two months), and Stafford eventually withdrew from his full-time duties at Alpha Radio. Because his contract with First Entertainment expired January 15, he decided to move his programs back to the Auxiliary Radio site, auxradio.com, one week later. But at press time, First Entertainment was in negotiations with unnamed parties who might either delay or prevent its demise, prompting Stafford to hit the hold button on his plans. "Doing it myself is basically an expensive hobby," he says. "But there are more expensive hobbies, and I love doing radio. So one way or another, I'll be back."

Likewise, Web radio in general won't be going away, but its form could change depending upon new technology. Sirius Satellite Radio and XM Satellite Radio were recently licensed by the FCC to provide satellite radio receivable in motor vehicles; the competitors already have agreements in place with major auto manufacturers such as Ford and GM, and car-stereo makers like Alpine and Panasonic are busily perfecting the gear. Most of the programming would be commercial-free, with users paying a $10 monthly fee à la cable television to receive up to 100 stations. And while early content providers are mostly established cable veterans like CNN and BET, the scheme might also open up a steady revenue stream for those Web radio practitioners still in existence when satellite-radio delivery becomes more commonplace.

In the short term, though, times may be tough. Because of the proliferation of Web radio -- during his stretch at Westwind, Stock also programmed channels at (seriously) Mountaindew.com and Doritos.com -- advertising returns are being spread too thin to help anyone. Moreover, higher expenses loom on the horizon. This past December, the U.S. Copyright Office declared that standard broadcast stations simulcasting on the Internet will have to pay royalties for their Web components in accordance with the Digital Millennium Copyright Act of 1998. This ruling, which is being fought by the National Association of Broadcasters, would be good for performers but has sent a shiver through those in the Web radio community. Their paranoia is exemplified by the title of an article about the situation in the January 11 edition of the industry publication Radio Ink: "The Death of Streaming."

Stock isn't nearly so gloomy; he still expects great things from Web radio. But until its potential is realized, he's happy to be back at the Peak. Last July, when he was working part-time for the station, he got Peak staffers kicked out of Red Rocks during a Tattoo the Earth festival the outlet co-sponsored after daring fans to hurl things at him on stage -- something they were more than happy to do. But since the Peak switched from a hard-alternative sound to an "'80s and Beyond" tack closer to its original approach, he's been a good boy. "I love being here the way I used to do," he says. "This is a great environment for me."

What -- no proclamations about burying traditional radio? Stock laughs before admitting, "This has been a real lesson in not burning your bridges."

The next big bang: In this space last week, I wrote that mayoral spokesman Andrew Hudson could have claimed that a million people attended the city's New Year's Eve fireworks extravaganza and the eager-to-please media would have believed it. His response? The next day, he sent Westword a bogus press release declaring that revised crowd estimates put the actual attendance at four million people -- a total that included "every citizen in the State of Colorado as well as Nebraska, Kansas and Wyoming." He concluded with a quote of his own: "Maybe next year, we can convince Westword to help sponsor the event and even generate more positive publicity!"

 

In truth, Hudson reveals, city types sent out sponsorship proposals to pretty much every major media outlet prior to the festivities and received a flood of disinterest in response; the Denver Post and Clear Channel stepped up, but no television stations participated, and channels 2 and 7 didn't even bother to broadcast the display. Afterward, Hudson asked Channel 9 honcho Roger Ogden why his station had demurred, and Ogden replied that the public's response to the previous Denver-sponsored New Year's celebration, the non-alcoholic, family-oriented bash dubbed First Night, had been so underwhelming that he had been unwilling to take the risk. But the success of the most recent gala changed Ogden's mind; he's already had one of his assistants contact the city to explore sponsorship possibilities for the next New Year's Eve party, and Hudson says he won't be surprised to hear soon from other heavy TV hitters -- even channels 2 and 7. With their help, he says, "maybe we'll get five million people."

Sure -- if the city shuttles people in from Times Square...


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