• by Jack Loechner , Staff Writer @mp_research, May 22, 2002

Streaming media usage is on the rise, and recent reports show advertisers may soon sign on.
Despite ever-present controversies over digital rights fees, consumers continue to use streaming media in record numbers, and the projections for this emerging medium, though restricted by a lack of standards and low broadband penetration, represent a significant opportunity for marketers.

Approximately 80 million Americans across all ages reported having accessed audio or video online. Moreover, even as the response to “annoying” banners continue to decline, over 40 million Americans (17 percent) listen to audio or watch video online in a typical month, up from 13 percent last year.

These new growth rates are the findings of a recent study conducted by Arbitron and Edison Media Research entitled “Advertising vs. Subscription—Which Streaming Model Will Win?”

The study, which was based on a survey of Arbitron’s radio diary keepers, revealed that four in 10 audio streamies would be willing to pay a small fee for commercial-free content, high-quality audio, or content they can’t find anywhere else.

As Bill Rose, VP/GM of Arbitron Webcast Services says, “For streaming subscription models to be successful, content providers must follow the time-tested model of offering something extra to the consumer: no commercials and great, exclusive content.”

At the same time, consumer attitudes toward streaming advertising are somewhat favorable. More than half of listeners feel banner ads are the “most annoying,” whereas to only one third dislike audio ads. And comparing banners to video ads, 53 percent find banners most offensive while only 25 percent dislike video ads. This is evidenced by the fact that the proportion of those who have clicked on a banner ad in the previous month plunged from 31 percent in January 2000 to 14 percent in January 2002.

Broadband Bottleneck Naturally, broadband access and streaming media consumption go hand-in-hand: 59 percent of people who live in homes with broadband Internet access watch or listen online, compared with 47 percent among those who live in homes with dial-up Internet connections. On a more promising note, people reporting at-home broadband access surged from 12 percent in January 2001 to 21 percent in January 2002. Industry experts seem to agree that broadband penetration won’t make any waves in advertisers’ perception of streaming advertising until it reaches at least 35 percent, but that day seems to be fast approaching. The study is available at http://www.arbitron.com/home/content.stm

Other Streaming Stats To date, the prohibitive costs associated with rolling out streaming services that support all of the current disparate formats has kept many potential service providers and other adopters from taking full advantage of existing market opportunities. The manufacturers of the emerging class of Internet appliances cannot afford to offer multiple streaming media players for differently formatted streaming content. The new Internet Streaming Media Alliance (ISMA) has set out to accelerate the adoption of open standards for the next wave of streaming rich video and audio over the Internet.

According to Streaming Media Research, more than half the companies purchasing streaming services in 2000 were paying too much! Their new “Cost of Streaming Services” report contains the very latest, up-to-date rate cards from providers, along with analysis of the cost and pricing structures underlying the rates.

Finally, MeasureCast, Inc., and Nielsen Media Research announced that their representatives will meet with advertising media directors and planning and research executives to further expose them to the benefits and value of streaming media advertising. MeasureCast CEO Ed Hardy says, “We want to make sure that ad industry executives responsible for making recommendations to their clients include streaming media advertising in their media planning mix. With the aggregation of multiple stations, the streaming audience is becoming large enough to be included in mass media ad buys.”