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RAIN 3/31: The Net now tops radio in ad revenue

Posted on: 03/31/2009


According to Internet Advertising Board figures, the Net has officially surpassed radio as an ad platform, growing 11% to $23.4 billion last year — almost $4 billion more than radio (“hat tip” to Inside Radio for making this point). TV is still tops with $28.8 billion in 2008. “If IAB’s surprising numbers are to be believed,” writes Ryan Singel at Wired (here), “two things are clear: one, the Internet’s popularity with advertisers continues to grow and two, someone ought to be hiring all the people being laid off for lack of advertising revenue.” 46% of the ad dollars came from search ads, while 21% came from banner ads. Find the press release from the IAB here.


Michael Arrington, writing in TechCrunch over the weekend, maintains that the ad-supported business model for streaming music can’t work, based on the royalty structure versus current ad rates. “There’s no chance for these startups to work until the labels reduce, significantly, the streaming rates they’re charging. Or agree to radically different business models. There’s no sign that is happening any time soon.” Arrington mostly discusses “on-demand” streamers like iMeem and MySpace Music, but his point might be applied to Internet radio as well.

He attributes labels’ stance to simply “playing out the clock” until their own business model inevitably implodes (Earlier this month in RAIN we covered an Arrington column in which he claims an anonymous label exec confessed his belief that when CD sales bottom out, labels will begin to pay streaming services for play. Our coverage is here.) “The labels don’t care if the startups make money, lose money or go out of business. All they want is to make enough money to extend the ultimate surrender date as long as possible,” he writes. “That’s when we’ll finally see the economic reality dictated by the Internet impose itself irrevocably on the music industry… Everything we’re hearing says that the labels would like to see streaming music startups just go away for now so that they can focus on maximizing paid downloads and extend that ultimate surrender date.” Read Arrington’s entire post here.


Senators Blanche Lincoln (D-AR) and John Barrasso (R-WY) have introduced the Local Radio Freedom Act in the Senate, in opposition to any sound recording performance royalty for broadcast radio. It’s the companion bill to the House legislation of the same name — which now has 150 co-sponsors. The Performance Rights Act would require broadcasters to pay labels and performers a royalty for the use of music recordings in over-the-air broadcasting. House Judiciary chairman John Conyers (D-MI) and Rep. Darrell Issa (R-CA) are the bill’s sponsors. A similar bill is backed in the Senate by Sens. Patrick Leahy (D-VT) and Orrin Hatch (R-UT).


As we reported yesterday (here), CBS Radio, AOL Radio, and Yahoo Radio online and mobile listeners in May will begin to hear “known and trusted personalities” from CBS Radio stations voice “live read” ads. A CBS Radio press release explains, “‘Live reads’ are among the most successful form of over the air radio advertising with recall and response rates far above other traditional forms of advertising… The live online commercials will be sold and voiced apart from CBS Radio stations’ over the air presentation.” In February, CBS RADIO logged more than 5.2 million unique listeners who streamed in excess of 66 million total listening hours over the more than 500 streams CBS Radio administers. Read the press release here.


Pandora says it has hit the 4 million mark for downloads of its iPhone application. As we’ve reported, the AOL Radio iPhone app has reached 3.6 million downloads, putting it close behind. Both applications launched in July of 2008. For more, check out Digital Music News’ coverage here.

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  1. It’s not “the Net has officially surpassed radio as an ad platform” – but the Worldwide Web which has officially surpassed radio as an ad platform. Big difference.

    Terry Purvis · Mar 31, 09:06 AM · #

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