The American Federation Of Radio and Television Artists have forced most Los Angeles radio stations to discontinue streaming due to a little known provision of the Recorded Commercials Contract put in place in October 2000. The stipulation requires advertisers to pay union talent 300 percent of the normal session fee if a spot originally recorded for radio is used on the Internet. Stations in other markets have not yet begun to be affected, but the possibility exists that stations across the country will soon pull the plug on their streams. Similar to the recent RIAA fees being instituted for streaming, many stations are concerned that fees levied against them could be retroactive.
Several emerging companies that provide ad insertion technologies stand to profit from the AFTRA demands. Firms such as Lightningcast, Highwire, and RealNetworks enable broadcasters streaming on the Internet to extract the on-air spots from their Internet signal, and replace those spots with different advertisements. One compelling reason for this is that the ads can be tailored to individual consumers-effectively making a one-to-one advertiser-to-consumer connection.
“Ad insertion is going to be important for streaming media in the future,” said Lee Black, director of research for Webnoize. “However, the really big advertisers have not yet gotten into the streaming media space. Because there still isn’t widespread use of broadband connectivity, many advertisers still see streaming media as a low quality avenue for their messages. Many of them are still figuring out banner ads and buttons, now they’re supposed to handle streaming as well?”
Black also notes that while the technology exists, it may take some time for companies in the ad insertion space to profit from their invention. “The seed for ad insertion is there but the business fundamentals are struggling. It’s fine that the technology is ready, but if advertisers aren’t buying it then there’s a problem,” Black notes. The current issue with AFTRA could well accelerate the success of ad insertion.Ã