• by Ken Liebeskind , February 27, 2002

"Advertising vs. Subscription: Which streaming model will win," was the title of yesterday's webcast from Arbitron Webcast Services and Edison Media Research.

The first of the companies’ streaming status reports to be webcast looked at the growth of the streaming marketplace in an effort to determine whether companies could viably charge subscription fees for streaming content. A few of them do now, but most rely on advertising for their revenue.

Bill Rose, Arbitron's VP and General Manager, envisions a marketplace like cable TV, where some stations, like HBO, charge subscription fees while most of the others are ad supported. "There will be a mix," he says.

One of the study’s findings was that most of the consumers willing to pay for subscriptions demanded streaming content with no commercials. However some were willing to allow a limited number of commercials. Thus, the move to subscriptions "doesn't negate the ad model," Rose says.

An example of streaming content with limited commercials is satellite radio, which offers a mix of commercial free and ad supported stations. Twelve million Americans subscribe now, with Rose projecting a $720 million subscription market within five years.

The study, based on phone interviews with more than 2,000 Arbitron diary participants, found that 14% are willing to pay for streaming content. That comes to nine million Americans, when applied to the total population, Rose says.

Consumers said they'd be willing to pay for certain kinds of content, including songs from their favorite artists, concerts and sports.

The study also looked at broadband penetration, which is growing hand-in-hand with streaming. Twenty-one percent of those surveyed have broadband now, compared with 12% last year, with 14% planning to get it within the next year. The study also found that 85% with broadband at work access the Net, more than radio and other media.

It also found that those with broadband are more likely to stream. Fifty-nine percent of those with broadband stream content compared with 47 percent of those with dial up.

The study focused on streaming radio, which is far ahead of video streaming in terms of availability and consumer interest. Twenty-five percent of those surveyed listen to streaming radio. They spend five hours 55 minutes a week listening, compared with four hours 52 minutes last year. This compares with 20 hours a week listening to terrestrial radio.

At the conclusion of the Webcast, Rose offered suggestions for streamers. One was for webcasters to offer commercial free streaming with no commercials. But another was for streamers to use limited advertising to reach an upscale at work audience. And another was for advertising sellers to emphasize the buying power of streamers, pursue advertisers who have used banners and position webcasts as better than banners.