MediaBay Cuts Losses
by Jim Milliot -- Publishers Weekly, 4/8/2002
A leaner operation and more focused marketing efforts helped to cut losses at MediaBay in 2001 despite a 5.8% decline in revenues, to $41.8 million. Operating losses at the company fell to $19.8 million from $49.8 million in 2000, and the net loss was cut to $4.8 million from $54.6 million. Moreover, MediaBay managed to report positive cash flow in both the third and fourth quarters.
To help improve the bottom line, MediaBay moved its Radio Spirits division from offices in Schaumburg, Ill., to MediaBay's Cedar Knolls, N.J., headquarters. The move was completed in this year's first quarter. The Radio Spirits consolidation, along with other staff cuts, dropped the company's general and administrative expenses by 17% in the year, to $11.5 million. MediaBay now has 48 full-time employees compared to 68 one year ago. MediaBay's decision to concentrate its marketing programs on its most profitable customers contributed to a reduction in the return rate from 26% in 2000 to 24% last year.
Audio Book Club, which has about two million members, is MediaBay's largest division, and sales rose 1.1%, to $31.8 million, last year. ABC's Internet operation, audiobookclub.com, acquired 58,000 new members last year and 19,000 in January and February. ABC has been able to lower the costs of acquiring members online to $12 from more than $50 in January 2000. In its 10-k filing with the Securities and Exchange Commission, MediaBay noted that although ABC has started only one specialty audio club, Audio Passages for the Christian market, it is exploring the launch of other niche clubs in such areas as self-help, mystery and Spanish-language.
Sales in the Radio Spirits division, home to old-time radio and video programs, fell to $10 million from $12.2 million in 2000. Sales through MediaBay.com dropped to $249,000 from $1.4 million in 2000, as the company lessened its investment in the downloadable unit due to a lack of demand. The company remains confident, however, that interest in the digital delivery of audio will increase in the future.
