I recently caught up with Radar Music Video’s Caroline Bottomley. I saw she’d teamed up with Rebecca Caroe to solicit some business strategy advice via Rebecca’s excellent blog. We realised we had some issues in common and decided to share our conversation on my blog.
Caroline Bottomley launched Radar Music Videos in March 08. It’s a matchmaking service for indie labels and DIY bands to commission music videos from a worldwide network of music video directors. I started Kinura in February 2007 (Kinura are specialists in live streaming, online events and Flash video applications) so both our companies have been taking off during times of massive growth in video and huge changes to business models and the way we talk to our customers. Both companies are in the online video space; we had a look back at what we were aiming for when we set up our companies, what we’re doing now and where we think we’re headed.
SP: What opportunities did you see for Radar Music Videos when you started?
CB: I’ve always liked business models that are about curating or editorial and I love talent spotting. Previous jobs I liked were in those fields. I was also tuned into the potential for disruption with old models, I like being outside the mainstream :) It seemed very clear that there was opportunity in the music video industry – the old school model was all about gatekeepers at nearly every level and very elitist. I think it helped that my background is in related businesses – promoting clubs & events and in TV production. If I’d have known people in the ‘proper’ music video industry too well I probably would have talked myself out of starting Radar.
I’d spent a year or so running UGC/made-on-spec music video competitions for some major and bigger indie record labels, so I knew it was possible for diverse and outsider director talent to create some great videos. It had been clear for a long time that more and more artist/bands were choosing to work outside the label system and would therefore need to commission videos more directly. However, the matchmaking model I started with wasn’t quite right — it needed changing, partly to become better aligned with directors’ needs and wants (this only works if enough directors value the model) and partly to allow for scale. That’s how Radar Music Videos ‘proper’ got made – a lot of experimentation. It’s still very fluid but the basic building blocks are the right ones now I think. It’s been self-funded from the beginning.
CB: What opportunity did you see with Kinura?
SP: We knew the web video market was about to explode and it would be pretty straightforward to set up a company like Kinura, focusing on a niche in delivering and hosting Flash video. We started with no outside investment – we just put in a lot of our own time and a little bit of our own money to buy bandwidth, and got ourselves out there. We had a bit of a head start I guess, because I was a director of a streaming media company for five years previously, although it’s never easy building up a business from scratch.
SP: What are the opportunities and threats that you see right now?
CB: On balance the current recession is good for us. Our costs are low. We’re not accessing enough of the existing potential demand yet, so anything that keeps the cost of market acquisition down is good. Having said that, we don’t do paid advertising anyway, I’m not confident it would deliver significant ROI. We reach most communities via cross-promotion deals – the relatively low cost of access to new customers via social media is a great opportunity for us. Our biggest threat is new competitors. Hopefully the recession is keeping some new entrants out for the moment. Speed of growth is also an issue – we’re really agile but I generally want things to happen even quicker and that’s a resource issue.
SP: I know exactly what you mean. One of our main challenges is managing growth and making sensible decisions about product development. Our overheads are low, but we need more staff for the work coming in, so it’s balancing success with cash flow. The good news is that we are seeing a major increase in demand for online conferences and live video solutions. People now have faith that webcasting is reliable and they want to find ways of saving costs on travel, reducing their carbon footprint and so on.
We thought one of our biggest challenges would be selling Flash video hosting when there are so many free platforms out there, but many companies still want the reliability and flexibility that comes with using a CDN. The fact that some webTV platforms have file size restrictions has worked in our favour. Plus there are plenty of organisations whose content is sensitive and they want it managed properly, or want live streaming as part of the package, so the service we provide is still massively in demand.
SP: If you could choose investment to access right now, how much would you have and what terms would you want?
CB: I think we’re just coming to the end of a big experimentation curve and there are still some things to put into place before Radar stacks up as a profitable, secure business. I might look for a loan from a strategic partner soon, but it’s not priority at the moment, as the basic business is still being built. I got some great advice to hang on and make the business work profitably before looking for investment – from someone who felt he had invited investors in too early to his (very successful) business. For good or for bad, I usually concentrate on what’s happening in the next couple of weeks. There’s an ambitious aim for Radar, but seeing as a lot of this business is about working things out as we go, most resources go on working out the next step. It seems every week or so there’s news about another large scale music-related business folding or in danger of going under and I’m very happy for us to be playing relatively small right now whilst we get the main things working right.
SP: I don’t think Kinura is currently eligible for VC type funding. Our business model isn’t quite scalable enough. For us, I think the next couple of years will be about building value into our products, continuing to innovate and doing this via a bank loan if necessary. We might consider investment from a known and trusted business associate, but would rather build the business up and sell it all in one go. I think it’s important to think about your exit strategy from the outset, and also not to make yourself indispensable. You have to look at the operations of the business and separate delivery from management and so on. That makes it easier to hand over if it comes to it.
CB: What trends are you taking into account in your business planning?
SP: In the medium term, we’re focused on the trend towards ‘webinars’ and online training: simple ways of making video communications interactive and trackable. Companies want marketing data, and organisations want to make resources easily accessible online. I also definitely think live video is a big growth area. Bandwidth at venues is increasing all the time and serious fibre networks are being set up to link venues. Music industry wise, online gigs are becoming more common. Would you say so?
CB: Yes there’s all sorts of interesting developments in live communications. It’s very exciting and it’s having a positive effect at our end: more live content means bands and artists can feel more relaxed about commissioning a non-performance promo video – great news for a directors worldwide and for consumers too. Unless you know the band already or they are truly astonishing live, there’s very little reason to have the promo video as a performance video.
At a macro level, I’m really interested in what’s happening with video streaming and download sites. All the reports suggest that ad-supported services just don’t cut it, and business models for nearly all streaming services depend fundamentally on ads. I don’t think any of them have successfully substituted subscription models – Imeem tried this recently but with limited success.They are currently getting propped up the major labels to stop them going under and peer to peer taking their place. Crackle - also very big in the US – have very recently stopped accepting ‘general’ uploads. Because more content = higher server costs and all these services depend on fresh content – they’re in a bind.
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