December 28, 2000, 1:44 PM — PEDDLING INTERNET audio technology to traditional broadcasters used to be a lonely business. Jim Pavilack, president of Hiwire, a Los Angeles-based Internet streaming media company, remembers that only a year and a half ago, the audiences for his presentations at media conferences were tiny, whereas the presenters across the hall -- with banners reading "make more money from your radio stations" -- were packing them in.
Now Internet media sessions are bringing in the crowds.
"You can't get into the conference rooms," Pavilack says. "It's standing room only."
Just as cable changed broadcast forever, and the Internet changed print, the technical groundwork is being laid for Internet streaming audio to change radio broadcasting.
The big incentive for change: Streaming audio advertising revenue can potentially pull in anywhere from $12 billion to $22 billion by 2005, according to research estimates.
Already, "streamies" -- the early pioneers consuming streaming media online -- are proving to be a unique market.
"These early adopters are a very choice target for advertisers," says Bill Rose, vice president and general manager of Internet Information Service at Arbitron, a media and marketing research firm, in New York. "They make more money and they are more Web-savvy."
Real profitability will come when streaming audio becomes more widely available. To accomplish that, crucial steps must be taken.
First, broadband must become widely accessible. Today about one in four people say it is difficult to listen to or view streaming media; a number of them outright fail when they try to connect, Rose says. Broadband technology alleviates this problem.
Second, for streaming audio to succeed it must follow the revenue model of traditional broadcasting, analysts say. Content has to be provided to consumers freely or very cheaply, not only to compete with traditional broadcasting for listeners but also because it's what consumers are used to. It would be hard to get listeners to pay a significant amount for what they are used to getting for free.
That means the audio content has to pay for itself with advertising dollars, and a number of companies are looking to provide advertising solutions tied to audio streaming.
Hiwire, for example, has been working on technology to deliver targeted ads for streaming media. Using Windows Media Player as its lead development platform, the company has developed technology that allows local radio broadcasters to target ads to Internet listeners who live outside the local listening area. This ability to strip local ads from content and insert ads that are more appealing to listeners far away makes the Internet stream more lucrative.