Kosiner looking for piece of TV music market

A 27-year-old entrepreneur wants to offer an alternative to what he calls a monopoly in the market for audio music channels offered through TV service providers in Canada. Evan Kosiner, president and owner of Kosiner Venture Capital Inc., said in a phone interview there is still a business opportunity in audio-only music channels despite the impending launch of scaled-down TV subscriptions next year as mandated by the CRTC and the rise of online music streaming. "It's something that consumers are used to having, and it provides an extra value of 40 to 80 channels for the consumer," Kosiner said of TV-based audio services. "So it's something that the BDUs don't want to just shut off one day." Kosiner said he knows of no other company operating in this space in Canada besides Stingray Digital Group Inc., and he can provide a similar product that saves service providers 70 to 80 per cent on their costs. "I know a lot of the BDUs are not thrilled with how much they have to pay on a monthly basis for 40 audio channels," Kosiner said. He said service providers pay in the range of $20,000 to $35,000 a month per local service area for blocks of 40 to 80 music channels. "If you bring them down to even $5,000 a month, then overhead is not drastic anymore," Kosiner said. Asked how his company would be able to cut costs so sharply, Kosiner said existing services are overpriced. "I don't see why they couldn't sell it for less." Kosiner said that while there may be little growth in the overall market for music channels, he can be competitive if he offers TV providers a cheaper alternative. "It's not the most innovative industry," he said. "There is a chunk of revenue and it seems people are paying too much for stuff as is, and I think there's demand for competition in the market. It might not be a ton of money, but it's probably an extra quarter-million to half a million bucks a year in revenue for us." Another business venture of Kosiner’s company is BuyNow TV, a shopping channel carried by TV service providers including Rogers Communications Inc. that is also available as a YouTube channel. Kosiner Venture Capital is also the sponsor behind a CRTC application to have AOL Inc.'s HuffPost Live TV channel approved for distribution in Canada. In the music-channel application, Kosiner said he is looking to provide 45 channels initially, and that number could rise to 60 over the term of the licence. Kosiner said in the application he is looking for similar terms to the licence given to Stingray in a decision issued in 2008 for a licence that expires Aug. 31 this year. He said it would take two to four years to launch the service, given the contracts service providers have in place with the competition. Stingray’s licence requires that 35 per cent of the content on its Canadian-produced channels be domestic, that non-Canadian channels not outnumber Canadian ones and that four per cent of revenue be contributed to third-party entities for the development of Canadian content. Kosiner said he's not concerned the CRTC’s new rules that TV providers must offer a low-cost skinny basic TV package, and pick-and-pay options for other services, as of next year will affect demand for audio channels. He said while the skinny-basic option will likely be popular with younger people who get much of their video content from online sources such as Netflix Inc., there is a large proportion of older Canadians who still like comprehensive TV subscriptions. As for how online streaming affects the viability of TV-based music services, Kosiner said: "I don't see it being an issue. Most of these cable companies do not want to mess with their customers' lineups and be perceived that they're giving less value." Mathieu Peloquin, senior vice-president of marketing and communications at Stingray, said in a phone interview that "we welcome competition." Peloquin said Stingray achieved its position as the dominant provider in the market through acquisitions and by providing customers value for money. He said its offerings go beyond audio channels and include things such as mobile music apps, karaoke tracks, concert footage and music videos, most of which is offered to customers through their TV subscriptions. "We're running this business and we're very good at it because we're putting the resources in programming, in content curation, in technology platforms," Peloquin said. "If you're just thinking about a black screen and an audio channel, that's one thing. We deliver about seven, eight different products probably across 20 different platforms and are getting huge engagement from our clients' customers." Peloquin said if Kosiner does provide similar services to Stingray at a 70- to 80-per cent discount, that's bad news for the artists and other rights holders that receive payment in the form of revenue-based tariffs. Peter Lyman, senior partner with business consulting firm Nordicity, said it might be hard for a new company to take on an established player like Stingray, but TV providers may jump at the opportunity to cut costs. He added that Stingray is likely to take action to defend its position in the face of competition. "Stingray seems like a great company that is a lot more than just music to BDUs," Lyman said in a phone interview. "So they'll react in some way. They may negotiate and may drop their prices in order to keep market share. It's not like a fixed service at a fixed price. They can react to the market, too." Kosiner's application will be considered at a CRTC hearing in Gatineau, Que., on June 12. — With reporting by Derek Abma at dabma@thewirereport.ca and editing by Peter Henderson at phenderson@thewirereport.ca

Kosiner looking for piece of TV music market

Broadcast | April 15, 2015

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