This week independently owned WBEB in Philadelphia stopped streaming, claiming that the newly announced performance royalty deal is to blame. To industry watchers this should come as no surprise. In fact, station management took a wrong turn when they started streaming and decided to simulcast the broadcast station in its entirety rather than sell different ads online.
WBEB Chose Not to Sell Online Ads
WBEB was one of a relatively small number of stations that decided to simulcast its stream completely – including ads – rather than use ad insertion technology to implement a separate traffic log on the stream and monetize the online station separately. This decision was done in favor of qualifying for PPM measurement of the stream by Arbitron – which can only be done if the stream is a 100% simulcast of the over the air programming. Read more about that here.
Internet Radio Ads Should Be Different than Broadcast Ads
It’s a flawed strategy – Internet radio cannot be monetized effectively as a simulcast to a broadcast station. The creative must be different, the advertisers are often different, and the audience is certainly different. Prime time online is midday, when the audience is at work, and online; whereas broadcast stations’ prime time is drive time, when its audience is on the move. Trying to sell campaigns that fit both mediums is sure to create lackluster results.
The performance royalty is definitely the main expense of operating an Internet radio station – it might even be likened to the expense of maintaining and operating a radio tower. At this point, that royalty is a given, and broadcasters who are not interested in developing a dedicated online strategy for monetizing it should probably stay on the sidelines.