BY DANIEL MCSWAIN
Internet radio audiences are growing rapidly and revenues associated to that growth are following suit, according to a new report from J.P. Morgan.

Analyst John Blackledge says in the report that Internet radio audience grew 33% from January 2005 to January 2006, jumping from 20 million to 30 million listeners per week over that 12 month period.

Unique overall visitors also grew at a strong clip, climbing 22% year over year to 59 million visitors in December 2006.

The analysis also points to a Bridge Ratings report that predicts growth rates for Internet radio and wireless Internet penetration for the next few years to support its own estimates.

Both media are expected to grow rapidly over the next several years, with the Internet radio audience expected to grow about 20% annually from 2007 through 2010 and wireless Internet penetration expected to grow about 40% annually from 2007 through 2010.



According to the report, the increase in visitors and audience has translated to a boost in revenues and CPMs for Net radio. The report says: "We believe the Internet radio ad market was roughly $500 million in 2006 or about 2.5% of $20 billion traditional radio advertising market."



Blackledge argues that three factors have strengthened Net radio ROI over this period of growth. These are:

• Net radio's ability to quickly provide accurate audience numbers than its terrestrial counterparts
• Through registration data and listener surveys, the ability to "pinpoint the demographics of the audience"
• Interactive "connectivity" between listeners and advertisers.

Blackledge also claims that CPMs have grown "from about $1 in 2003 to about $5-6 (on average) in 2006." The report estimates that "Internet radio network CPMs have risen about 50% annually since 2003."

Read the entire report from JP Morgan here (.pdf).

...	... Although Blackledge's estimate of $500 million in industry revenues in 2006 seems somewhat high based on my knowledge of the industry, it's great to see a respected analyst paying attention to our field. -- KH ...

From CNet.com: "Shortly after Christmas, music start-up SpiralFrog appeared to be spiraling out of control...

"[SpiralFrog CEO Robin] Kent's ouster created a chasm in the company's leadership, the former employees said, and soon after, 5 of SpiralFrog's 10 board directors and 5 company managers exited. [Read previous coverage in RAIN here]

"Just four months before, SpiralFrog was a media darling. The company promised it would launch a Web site that provided free music by the end of 2006, covering the cost of those tunes through advertising sales...

"From the beginning, there were doubters. The most glaring problem, at least to critics, was that the company had signed only one of the of four top music labels: Universal Music Group. The other was that SpiralFrog said customers would have to wait 90 seconds for each song to download...

"Music sold on SpiralFrog would be locked into a digital rights management (DRM) software... Songs downloaded from the site would not be compatible with iPods or Microsoft's Zune and they also couldn't be burned to a disc. SpiralFrog users must update their music at the site once a month or lose access to their music libraries...

"Mohen, SpiralFrog's founder, said he has added former WB Network chief Jordan Levin to the board of directors, and believes the ad-supported music market is packed with  potential.

"'SpiralFrog isn't just a Web site,' Mohen said. 'We're a new medium.'"

Read the entire article at CNet.com.