BY KURT HANSON
So far this week in RAIN (here and here), I've presented my thesis that Internet radio's midday audience size is currently roughly the equivalent of the 15th largest radio market in the U.S.

Figuring that such an audience size should be big enough to be of interest to some national radio advertisers, we then took a look at several of the benefits that Internet-delivered radio could theoretically offer national and network radio advertisers, and we discussed some of the reasons that advertisers have not yet begun to seriously embrace Internet radio.

Those benefits for advertisers include (1) a high-qualitative-profile audience (as virtually all Internet radio listeners seem to be listening on a broadband-enabled PC at work), (2) a low spot load (meaning a high attention level for commercials), and (3) the ability to display an advertiser's logo (or any 468x60-pixel piece of creative) and offer an immediate link to the advertiser's website.

What's gotten in the way of acceptance has, I believe, included (1) until now, relatively small audience sizes (compared to what national and network radio buyers are used to), (2) Internet radio salespeople operating without a lot of experience in the field or existing relationships with buyers, (3) our medium falling "between the cracks" in the organizational structure of an ad agency, and (4) the post-9/11 advertising recession.

Yesterday, I promised some proposed solutions today. Unfortunately, I have to pull the old disk jockey trick of saying "Coming up right after this..." and then delaying a bit longer; I've realized I need one more day of set-up.


Additional problem: AFTRA talent fees
Several alert RAIN readers pointed out to me yesterday (see RAIN Reader Feedback below) that I missed a key problem in getting significant spot schedules from national advertisers onto Internet radio: The AFTRA contract signed in early 2001 between ad agencies and voice talent, calling for increased talent fees if rights to use a spot on the Internet are purchased after the fact.

Apparently this clause of the contract is being wildly misinterpreted in some major advertising agencies — e.g., "It'll cost 300 times more to buy rights to the spot!"

That's wildly wrong. In fact, the increase in fees is not 300 times the talent fees, it's simply 3 times the "session fee" (which as I understand it is kind of the base minimum for talent showing up and only a small portion of the typical total talent costs). I believe it's a total one-time payment of $660.

Furthermore, as I understand it, even the $660 wouldn't apply if the agency would simply rewrite their talent contracts on a going-forward basis to include Internet rights! (They've had two years now to make this simple contract change. Have many made it? I'll bet not.)

At any rate, the perception of huge rights fees is clearly an impediment to progress.


So...how big is the medium?
Before the week is over, I'm going to propose a solution that I think might help get some national and network radio advertisers interested in buying significant spot schedules on Internet radio.

But first, I want to circle back to the question of the size of the available audience. I've argued previously this week that I believe that Internet radio's AQH audience size in the middle of the workday is about 500,000 listeners, which would be a genuinely meaningful audience size even to the largest advertisers.

The chart below shows my math. (Again, please see Reader Feedback below.) I've taken recent audience size estimates from Arbitron Internet Broadcast Ratings (rounded slightly for easier reading), folded in some major webcasters who do not report to Arbitron (including, major stations that stream through Shoutcast, which reports live audience estimates), and tried to include very rough estimates for some other significant webcasters.

I've tried to avoid double-counting by not including both a broadcaster (e.g., Cox) and the firm (content delivery network, or "CDN") which streams their stations (e.g., ChainCast); thus, audience sizes for CDNs are lower than you see in the Arbitron press releases.

Realize that my estimates for individual webcasters are very rough! To address that point, RAIN will publish a revised list of estimated audience sizes tomorrow based on your feedback. Please use the feedback form that immediately follows this article to help us correct any imprecise estimates we may have made in this first draft of the chart (or e-mail me at kurt@kurthanson.com).

At any rate, even if individual webcaster estimates may be off significantly (some too high, some too low), I believe that the industry total is probably not that far off the mark:

I should explain the final piece of math: Most webcasters who get audience size data (from either Arbitron or their CDNs) know that if their full week (Mon-Sun 6A-6A) audience size is, say, 1,000 listeners, their Thursday 2PM audience size is probably going to be about double that — i.e., about 2,000 listeners). That's the general pattern of Internet radio listening — simply a reflection of the fact that Internet radio is currently a Mon-Fri 9A-5P at-work medium.

Tomorrow in RAIN
First, we'll publish a revised and corrected version of the above chart, based on the feedback we receive from webcasters today.

Then, more importantly, we'll get down to brass tacks. The question is, "What could our medium do to attract attention from national and network radio buyers — that could eventually lead to purchases of significant spot schedules on Internet radio?"

Some suggestions will appear here tomorrow.

TO BE CONTINUED...