An April 2 letter to stations on which Initiative buys time-a reaction to the issue of talent compensation for streamed ads-said, "You may not stream any of our clients' commercials on your Internet Web sites without prior approval," according to Kathy Crawford, exec VP-director of local broadcast at Interpublic Group of Cos.' Initiative, Los Angeles. "We legally advise them, by virtue of this letter, that they have to cease and desist."
Many stations chose to halt Webcasts rather than risk the chance that Initiative would yank radio ads off their stations, according to an executive at a major broadcasting station group. In a tough ad market where radio is struggling for growth and streaming Webcasts generate little or no revenue, Initiative's money is far from expendable.
Radio station operators from giant Clear Channel Communications down to smaller station groups such as Buckley Broadcasting and Emmis Communications were taking seriously communiques from Initiative and others, and many stations have ceased streaming their radio content.
"We got calls from advertising agencies" to remove ads, said a spokeswoman for Emmis, which pulled some Webcasts last week.
Initiative's missive, which Ms. Crawford said was only one of others sent by media agencies, was a reaction to a memo sent last month by the Joint Policy Committee on Broadcast Talent of the Association of National Advertisers and the American Association of Advertising Agencies.
The memo to ANA members explained that the policy committee and the Screen Actors Guild/American Federation of Television and Radio Artists disagreed over compensation. The unions think all streamed ads-those broadcast on the Net without advance knowledge of agencies or advertisers (passive) and those streamed with knowledge of agencies and advertisers (active)-require payment to talent, the memo explained. The policy committee believes payment is due only for active streaming. "Where radio does it passively, without telling anyone, we are not responsible," said Ira Shepard, attorney for the policy committee.
But talent pay isn't the only issue, according to people familiar with the matter. They note some advertisers don't like the idea that radio stations have been blasting their radio ads across the Web without approval of advertisers, meaning broadcast sponsors lose control over where their messages are heard. In such cases, advertisers don't want the Web ads even when they are-as is almost always the case-free.
Clear Channel and Walt Disney Co.'s ABC Radio Division maintain their decision to stop streaming broadcasts temporarily is due to general uncertainty surrounding the streaming audio industry, which, like any nascent medium, has its share of standards, boundaries and models to figure out.
ABC, which owns 54 radio stations and also has more than 4,500 affiliates, began pulling streams from its stations a few weeks ago "due to a number of issues with regard to digital-rights management, including advertising, music and content," said Jeff Rich, exec VP-new media for ABC Radio Division. The debate over actors' compensation "is really between the advertising agencies, clients and the talent," he added. "The agencies and the talent need to know what media they're using."
But Ms. Crawford thinks the letter removes liability from the client and agency. Said Ms. Crawford: "Certainly the client is going to say to the station, `You were legally advised to quit streaming by virtue of a letter from Initiative Media.' ... The station will have to deal with it. The client has every right to [point the finger at] the station. Many other station groups including Disney and others have virtually stopped streaming. It is not 100% of the stations, but there are a lot."
Clear Channel, which owns 1,200 radio stations and also has 7,800 affiliates, stopped streaming on its stations because the industry is in a "climate of uncertainty, and in a climate of uncertainty, you do what you can to limit risks," said Mike Bacco, senior VP-marketing at Clear Channel Internet Group. He said he was not familiar with letters from any media companies.
The radio companies do plan to stream again-and think they'll sell Web ads. Streaming advertising is poised to be a $1.4 billion industry by 2005, according to Jupiter Media Metrix's Jupiter Research. "We will be streaming at some point again. It's a real business, and we have real
audience," said Traug Keller, president of ABC Radio Networks. "But what we want to do is make sure we're compliant with all the laws, all the rules and regulations."
Contributing: Wayne Friedman