AOL Names Ad Rep for Radio@

In separate deals that create the largest single media network of its kind, AOL’s Radio@, Yahoo’s Launch and Live365.com’s online radio services are all using Ronning Lipset Radio to sell in-stream audio ads that will run between programming.

The most recent agreement is an ad representation deal between AOL’s Radio@ Network and Ronning Lipset to sell ads on its Radio@Netscape and narrowband Radio@AOL services. Its broadband Radio@AOL streams will remain ad-free as a service to higher-paying customers.

In another deal that has yet to be finalized, Internet radio network Live365.com has tapped Ronning Lipset to sell ads on its programming. Earlier, in October 2003, the ad rep firm signed a similar deal with Yahoo’s Launch online radio service. Eric Ronning and Andy Lipset, managing partners of the agency, are veteran online radio sellers with Yahoo and AOL respectively.

“Ronning Lipset is poised to help advertisers extend their reach across a vast network and kick-start what is sure to be a blossoming audio advertising business,” said Evan Harrison, VP and general manager of AOL Music. Harrison oversees the AOL Radio@ Network.

An unusual byproduct of the multiple rep deals is that inventory belonging to competitors AOL and Yahoo will likely be sold as part of the same network radio buys. On the upside, this will create a larger network of online radio listeners than has existed before, according to David Card, senior media analyst with Jupiter Research.

But Card says there are problems with online radio, including its longstanding identity as a local advertising medium and the fact that despite growth, online radio still represents a relatively small audience.

However small compared to broadcast radio, it’s an audience that’s getting larger. Radio ratings and audience measurement firm Arbitron reported in September 2003 that the online radio audience totaled approximately 16 million per week and 33 million per month; this week it will release new numbers expected to be 20 percent higher.

“The size of the audience is there,” said Lipset. “A couple years ago there may have been a couple thousand listening to a station or network; now there are a couple million.”

Lipset added another factor suggesting the time is ripe for a network ad model in online radio is the emergence of a standardized ratings firm. Arbitron is the measurement standard for broadcast radio, and the company’s interest and investment in measuring online radio audiences creates a ratings platform of the sort that tends to facilitate growth in the ad business.

However, in a move that appears to fly in the face of the supposed growth in online radio advertising, Arbitron said in late February it would suspend its weekly and monthly ratings service for online broadcasters.

“The investment needed to sustain the current method would have been far greater than the revenue potential for the service,” said Pierre Bouvard, Arbitron’s president of new ventures. “We remain committed to the Internet broadcast business and continue to believe in the viability of this medium and its long-term market potential.”

In the meantime, the company will continue to measure the size and growth of the Internet broadcasting audience, as well as to offer customized reports to clients.

In addition to bigger audiences and better measurement, Ronning Lipset partly owes its momentum to new copyright rules that have resulted in a mass extinction of small, independent Webcasters over the past 12 to 18 months.

A little over two years ago, under pressure from the RIAA, government regulators established licensing rates for online radio, requiring commercial and non-commercial Webcasters to pay a per-stream fee for every song played.

AOL’s monthly payment in the wake of the Webcasting rules was estimated at more than $200,000. For many smaller media properties that were streaming radio online, the new rules offered no choice but to cease operations.

The addition of fees to the radio Webcasting space has created a new sense of urgency for large, surviving Web properties such as Yahoo, AOL and Live365. Now, eager to generate revenue that will let them continue operations and hold on to their enormous listening audiences, these companies have turned to Ronning Lipset to unite their various radio holdings into a gigantic ad-hoc network with considerable reach.

According to Lipset, online radio is finally on the verge of fulfilling a promise he and partner Ronning saw in it several years ago.

“Having worked with Yahoo directly and for many years in traditional radio, it’s exciting to see what we thought was going to happen two years ago really happen,” he said. “This represents what the online marketplace has been asking for: to be treated as traditional media.”

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