The RIAA announced last week that Irvine and Santa Monica, CA-based Internet-only broadcaster WWW.com had signed the first significant U.S.-based license agreement with the RIAA to cover music licensing rights for the songs they're streaming.

What was not announced was the remarkable freedom from the rules of the Digital Millenium Copyright Act of 1998 that WWW.com was granted as part of the deal.

The rules of the DMCA, which was designed to help protect the music industry in light of the fact that copies of digitized music are perfect copies, are many. As I understand it, they include the following: (1) On your webcast (even if it's an exact duplicate of your broadcast signal), you can't play four consecutive songs by the same artist or more than two in a row from the same album. (2) You can't play the same artist -- or songs from the same boxed set -- more than four times in any three-hour period. (3) As of October of last year, you must identify title and artist information for every song. (4) You can't reveal which specific songs are coming up next (or soon).

However, the recently-announced agreement between Internet-only Webcaster WWW.com and the RIAA may change the rules of the game. According to WWW.com's VP/Marketing, Mike Romano, the firm's recent agreement with the RIAA gives his company a release from many of the DMCA's rules.

WWW.com bills itself as "the largest Internet broadcast network" based on the number of digitized songs in its collection (300,000), its number of music channels (200), and the number of songs it streams per month.

It was launched in July, 1999 by founder Scott Purcell and a number of other executives that came largely out of the ISP business. The firm has no radio industry execs in any of its top executive positions, on either the sales or programming side.

In exchange for an agreement with the RIAA to pay a certain fixed price for each song served (an amount Romano wouldn't specify but confirmed that it was in the "fractions of a penny"), WWW.com has been granted a suprising number of rights. Those rights include:

• WWW.com may offer Internative Listening Services by which a listener may request a specific song by artist and title on an on-demand basis.
  
  
• WWW.com's music channels may play an unlimited number of songs per hour by the same artist.
  
  
• WWW.com may add a "Skip this song" button and a "Replay" button to its player.
  
  
• WWW.com's player is also allowed the promote the title of the song that's coming up next.
  

According to Romano, WWW.com will be releasing a new player in the near future that will include a "Pause" button, a CD cover illustration, and title and artist information for "What just played" and "What's up next." The second-generation player later this spring will include the "Replay" button, the "Skip" button, and the Internactive Listening Services feature.

Although WWW.com has built a destination site for consumers that is, according to recent data from PC Data Online, second only to Broadcast.com in popularity among radio websites, Romano said, the firm switched its business model last month to focus 100% of its sales and marketing efforts on business-to-business (B2B) sales.

In other words, the firm is now focusing on building co-branded radio stations for others' websites. Romano told RAIN that WWW.com already has multi-format radio stations already up and running on the websites of Cool.com, UrbanGoods.com, ByteAudio.com, and SRSWowcast.com.

These seem like amazing concessions to me. Hopefully we can discuss them in San Francisco during the Gavin Seminar's full day of Internet sessions today. If so, I'll report on the discussions in RAIN tomorrow. Or, of course, you can contribute your observations here.

BY KURT HANSON
From yesterday's editon of RAIN (here): "Despite all you've heard about the low CPMs that websites are getting for banner ads, did you realize that those seemingly-ineffective little ads are going for about the same CPMs as 60-second-long radio spots? Moreover, the audio spots being sold by Internet-only broadcasters are, as I understand it, going for five to ten times the CPMs of broadcast radio spots -- and that's for :15s as compared to :60s!"

Lots of RAIN's readers had comments and insights regarding this article. Here's a sampling:

The CPM disparity you cite is really interesting. Some observations:

(1) I haven't been in the thick of the media buying wars for a year and a half now, but I think that your estimates may apply to L.A. and Milwaukee but not most of the other markets. L.A. and Milwaukee have always represented the two extremes of CPM's, with L.A. at the top and Milwaukee at the bottom.

Historically, the more people you were willing to pay to reach with a given spot, the lower the CPM. Network CPM's were lower than New York or L.A.'s, which were lower than Rochester's which were lower than Waco's. Pick two other markets of similar size (to your L.A.-vs.-Milwaukee example), say Philly and Hartford and you'll probably find that the larger market (Philly) has the lower CPM. This may have changed a bit with the surge in dot.com advertising in key markets like New York, Boston, San Francisco and Dallas, but I suspect that overall the ratio still holds.

(2) There are some web sites (AOL being the most noteworthy) that get upwards of $50 CPM's, but $15-20 is the norm. Sales commissions from the DoubleClicks and 24/7's of the world run in the 30-40% range (but in many ways they earn that extra money; see below), so the net to the advertising vehicle is about the same.

(3) Banners are almost surely not worth as much as sixty-second radio spots, all things being equal. But all things aren't equal. There are some good reasons why the comparison isn't "apples to apples."

First of all, the Internet reps do a much better job of customization, partnership arrangements and basic ad tracking. National radio reps are pretty much limited to trivia contests and fulfillment tapes (not totally their fault...most radio NSM's don't have the authority to get much else approved on a timely basis), while the Internet reps can offer localization, partnerships and the ability to serve specific individual banners based on what sites a surfer has viewed before and what ads they've clicked through.

Purchasing patterns can be inferred based on surfing patterns and that can impact who sees what banner. Click-throughs can be monitored in real time and creative approaches can be changed based on actual results while the campaign is still running. This isn't just rhetoric either...it really happens.

Contrast that to radio's "download the spot and make sure it runs after the station promo" approach. Bottom line: The Internet industry takes a much more hands-on role with its advertising clients (and the results they get) than the radio industry does and the market seems to be placing a higher value on its CPM's as a result.

(4) Would you want to be the account person at an agency that doesn't recommend some banners to a client? Try this statement on for size: "Radio gets you much more value for your dollar than banners on the Internet which are overpriced given your marketing goals and needs. We recommend that you stay away form the net and stick with a more traditional mix." However true it may be in many circumstances, that statement doesn't sound like a career enhancer to me -- not in this day and age.

(6) Kurt's suggestion that radio sell cut-in's over the broadcast ads when they stream their programming makes sense in the abstract, but dismisses a practical issue that he pointed out in an earlier article. Even at a $100 CPM, if you have an AQH of 100, you're selling a $10 spot, which is hardly worth the trouble. The Internet-only streamers have figured out how to get $100 CPM's but they haven't been able to get 100 listeners.

(7) The Radio and Internet industries could learn a lot from each other. Radio learned a long time ago that listeners perceive :15's to be pretty much as intrusive as :60's. The netcasters would change their lives by applying that principle alone and selling :60's. Clearly the netcasters have done little if any audience research and they could benefit greatly from it.

On the other hand, the Internet has taken customer focus, individualization, cross marketing and strategic alliances way beyond even the most platitudinous RAB convention banter or GSM pitch.

Good luck to all!

Kurt, I think you have hit a good one. And you're right -- when I was still selling in Milwaukee we were getting about $8-12 CPM.

The next question is how does one get stations to start selling off CPM -- and, in some cases, double their ad rates overnight?



Add your own comments and opinions and suggestions here.

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