BY KURT HANSON
According to the negotiator who represented advertising agencies during last year's AFTRA negotiations, media buyers last year were unaware that radio stations were streaming their audio on the Internet!

In an interview yesterday that was streamed on the Radio Ink website, Ira Shephard, counsel and chief negotiator for the American Association of Advertising Agencies (AAAA) and the Association of National Advertisers (ANA), claimed that without the knowledge of media buyers, "some stations chose to stream their entire broadcast without talking to advertisers to see if they wanted it."

Last year, Shephard negotiated the terms of a new three-year contract with AFTRA Assistant National Executive Director Mathis Dunn. In those protracted negotiations, agencies agreed they would pay an additional $660 (for a single-voiced spot) to AFTRA talent in exchange for "initiating" Internet use of a spot.

The $660 fee, which represents 300% of the AFTRA "session fee," buys the agency unlimited use of the spot on the Internet for 21 months with no additional residuals ("use fees") due.

The current crisis in webcasting is based on the fact that AFTRA is arguing that when agencies buy spots on a station that streams its signal on the Internet, that should be considered "Internet use." In an attempt to help agencies avoid paying the $660, Shephard is taking the position that the stations' webcasts are "unauthorized."

AFTRA's Dunn noted that AFTRA believes it has no claim against radio stations for running spots using AFTRA talent, but, rather, based on the language of their contract, does believe it has a valid claim against the agencies.

Shephard argued that agencies would deny the claim based on the fact that they didn't authorize or pay for the media time on the streamed webcast, and that the claim might "implead" the radio station as the responsible party.

The interview with Shephard and Dunn was part of the "Radio Files" webcast that I co-hosted with Radio Ink editor Ed Ryan yesterday. The full hour-long program, which also includes interviews with streaming providers and LMIV CEO Jack Swarbrick, should be available in archived form on the Radio Ink site later today.

...

... Of course buyers knew that stations were streaming their signals! Internet streaming was prominently featured in stations' media kits and their pitches. Furthermore, the "hot new medium" of Internet radio was one of the biggest news stories of 2000! Webcasting was a major news story seemingly weekly in the New York Times, the Wall Street Journal, the Industry Standard, Ad Age, Wired, and dozens of other publications that one would reasonably assume that media buyers read. Not only that, but in-market Internet listeners are actually included in the Arbitron broadcast ratings on which media buyers' buys are based! I suspect that this was simply a sloppily-written clause in the contract between agencies and AFTRA. ("Passive" streaming -- when agencies don't explicitly purchase an Internet buy, as they would if they bought time on Spinner or NetRadio or WTOP2 -- probably should have been excepted out from the 300% fee. But it wasn't.)   -- KH ...

The other point that became clear during the interview is that the decision to demand that stations stop streaming spots was probably driven by agencies' LEGAL departments. Higher up in the agency chain, someone should realize that it's worth $660 to get spots played on webcasts. Let's do the math: 50 plays of the spot on, say, 50 different station webcasts with AQH audiences of 50 people each would give the agnecy 125,000 additional gross impressions. That's a CPM of $5.28 -- a good value!  -- KH .

BY PAUL MALONEY
Major broadcasting companies have continued to removed their over-the-air content from the Internet over the past several days. RAIN's crack team of interns assembled the following charts.

Each table shows a handful of major broadcasters and a randomly selected station or two owned by that company that was either still streaming at the time of the survey, or had had their stream pulled. Also, if it was obvious that the streaming station was using an ad-insertion technology to enable them to remain streaming, it was noted.

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From the Wall Street Journal: "A San Francisco start-up called Digital Fountain is attracting attention for an unusual solution to a problem: the stiff cost of delivering audio, video and other data files to large audiences over the Internet.

"The closely held company has developed a technology that packages data in a new way for Internet transmission. As a result, company officials say, Digital Fountain's server hardware is as much as 30 times more efficient than existing hardware in broadcasting files such as music and movies, a technique known as streaming...

"When coupled with an existing technique called multicasting, a single machine can deliver files on demand to an almost unlimited audience, Digital Fountain says. 'It is a breakthrough,' said Michael Hoch of Aberdeen Group, a Boston market-research firm...

The technology addresses what sometimes is called the 'popularity paradox' of Internet broadcasting. The costs of conventional radio or TV stations stay constant when additional users tune in, but their Internet counterparts must buy additional servers as their audience grows -- and few have subscription or advertising revenue to support additional investments."

Read the full story here.

April 21-22, 2001	New York & Internet Expo: New York, NY
April 21-26, 2001	NAB "The Convergence Marketplace": Las Vegas, NV
June 20-22, 2001	Streaming Media West 2001: Long Beach, CA