• by Ken Liebeskind , April 13, 2001

Been listening to Internet radio lately? If you have, you may be hearing dead air. Hundreds of stations across the country have stopped streaming broadcasts in the past week because of the controversy surrounding fees that must be paid for the Internet broadcast of radio commercials made by union members.

Last October's agreement between the union, the American Federation of Television and Radio Artists (AFTRA), and the Association of National Advertisers (ANA) and the American Association of Advertising Agencies (AAAA) levied fees payable to union actors who record radio spots. They customarily earn a session fee of $220 for every spot they record. Three session fees, or $660, are payable for the Internet broadcasts. The fee covers unlimited use of the spots for 12 months.

"Compared to the talent cost for other media, it's a reasonable rate," says Ira Shepard, a Washington lawyer who is chief negotiator for the ANA and AAAA in all talent union relations.

The radio advertising industry disagrees, but is reluctantly complying with the agreement, which is called the Actor Radio Commercials Code. In the past week, advertising agencies notified radio stations to stop playing unapproved ads over the Internet. In response, the stations that are unable to block the ads stopped streaming their broadcasts, which explains the dead air.

Many stations owned by the largest radio broadcasters in the country, including Clear Channel, Emmis and Citadel, have stopped streaming. They are now in the process of acquiring the technology needed to block spots, which is available from StreamAudio, RealNetworks and other firms. Darren Harle, coo of StreamAudio, Tacoma, WA, says all 730 of the stations his company streams broadcasts for have the software needed to block commercials. But half of them can't use it, because they aren't automated and can't coordinate their systems with StreamAudio's.

"Many radio stations jumped in prematurely, before they had the technology," Shepard says.

Many radio stations are confused about the fees. They are due for any spots recorded by an AFTRA union member. Spots produced by a radio station locally or by an ad agency would probably be exempt, but nationally produced spots that use AFTRA talent are not.

The ad agencies that buy the spots are actually responsible for the fees since they produce the spots and buy the talent, but they shouldn't have to pay them because they don't intend for the spots to be played on the Net. "When the station without authorization moves them to the Net, the agency isn't responsible," Shepard says.

Radio stations that simply stream their terrestrial broadcasts over the Net need to beware of the spots they play.

Agencies sent letters to stations last week warning them not to play unauthorized spots, which led to the massive exodus from the Web.

Companies like StreamAudio and RealNetwork will benefit from the ordeal, by winning more business from stations seeking to block spots. The technology doesn't just block spots, it replaces them with other ads or stations promos, Harle says.

The other benefit is that blocked spots may be replaced by Internet only ads, which generates additional revenue for stations. Ad insertion firms are excited about the opportunity. "Having this come along raises the profile of what we can do," says Wayne Hickey, a spokesman for Hiwire, the Los Angeles firm that streams Internet only ads it sells to national advertisers into Internet radio broadcasts. For the past year or so, people have talked about streaming ads as the future of Internet radio. With the AFTRA controversy embroiling the industry, the future is now!

- Ken Liebeskind may be reached at kenrunz@aol.com