Net radio comes out streaming

As a medium, radio has long been the embarrassing uncle of the broadcast family, the old guy you never really pay much attention to, who doesn’t make as much money as everyone else. But thanks to the Internet, Guglielmo Marconi’s spunky little invention is back. No longer will radio take a back seat to so-called "richer media," because thanks to the Internet and something called "streaming audio ad insertion," radio is poised to become the cash cow of mass media.

Traditional radio is a local medium, with ads targeted for a specific geographical region and not much beyond. By its very nature, then, radio is an unlikely match for the global Internet, and radio stations that currently offer their streams online are losing money doing it.

Several dot-coms have found a way to insert targeted ads seamlessly into netcasts. The technology behind audio ad insertion isn’t very complex. Basically, the ad-insertion company installs a streaming server at a radio station to send out the radio broadcast over the Internet. The server is conversant with the station’s very own broadcast equipment, and it can sense when a station goes to commercial.

During the ad breaks, the server inserts its own ads into the commercial space -- ads which are targeted for the specific Internet listener. "This is a good revenue model for radio stations looking to go online," said Thom Mocarsky, of a radio-ratings service. "Advertisers pay a premium to reach a specific audience, and in this case, you’re pushing ads to a very targeted group."

Because they’re all selling basically the same technology, representatives of the ad-insertion companies at the NAB conference itched to explain how their firms were better than all the others.

One company, CLBN, said that it was the only firm actually doing targeted ad insertion. "everyone else is showing you demos; we’re the only ones live," a representative said. Hiwire, iBeam, SurferNetwork and Lightningcast were charitable enough to acknowledge that, yes, some others might be doing something similar.

But each company’s rep suggested that his firm was just light years ahead of the others in terms of product -- that, if they weren’t the only ones now, they soon would be the only one that mattered. Then there was Bob Chrysler, vice chairman of DirectAir, who was much more blunt about his company’s strength in the streaming ad-insertion market: "We think we’re the daddy," he said, "and in four years, when the dust settles, we’ll be the only one standing."

Individually, all these comments amount to little more than careless dot-com puffery. But the reason there’s so much hype, experts say, is because the ad-insertion market could soon reap windfall profits, and nobody wants to be left behind. "One thing we’ve found in our studies is that ‘streamies’" -- people who listen to music online -- "are really terrific Internet consumers," said Arbitron’s Mocarsky.

He cited a recent survey that found Internet radio listeners to be, as a group, more frequent e-commerce shoppers. Moreover, the streamies don’t mind the audio ads; the study shows that more than two-thirds of them think ads are a "fair price" to pay for Internet audio. And the greatest thing, Mocarsky said, is that this pliant audience of shoppers is growing rapidly. More than 20 percent of Americans listen to radio online, which is more than three times as many as just two years ago.

Big radio broadcast networks that own thousands of stations are just now looking to the Internet, according to Jeffrey Schwartz, an analyst at Forrester Research. "They’ve been sort of looking from the sidelines until now," he said -- but they’re seeing this audience and licking their chops. And the ad-insertion companies, in turn, are drooling at the prospect of signing these radio behemoths.

For now, the playing field between these companies seems roughly even. Even though Lightningcast’s Tom Des Jardins insists, referring to the Web’s huge banner-ad aggregator, that his company is the "Doubleclick of streaming media," analysts say it isn’t yet clear that this market has a leader just yet. In short, everyone’s waiting to see who’s the daddy.

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