Web radio sites chase ad revenue

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With only about 5% of U.S. radio stations online, audio ad messages might be the way to cut through the clutter of banner ads. At least that's the hope of Imagine Radio, a startup from Imagine Media, a videogame and computing publisher in Brisbane, Calif.

Imagine Radio, which rolled out its ad program in early May, announces today an advertising and e-commerce deal with CDnow to sell CDs. Users who hear a track on Imagine Radio will be able to click to buy the artist's album.


And because Imagine Radio is meant to play in the background from a downloadable tuner application while users surf the Web, Imagine Radio Managing Director Brad Porteus said its focus is on audio ads. It's targeting business users with high-speed connections.

Banners will be sold on a per click basis in conjunction with audio ads. One package for synchronized audio ads and banners sells for a cost per thousand of $20, plus 50 cents per click-through. It's just started talking to advertisers.

Imagine Radio is designed to be an ad-supported service, yet Mr. Porteus said it plans on playing only four minutes of commercial advertising per hour.

Compared to a traditional radio station, "Our operating costs are incrementally lower," Mr. Porteus said. Not only is it cheaper to launch a station, but it also doesn't have to pay for a transmitter or a Federal Communications Commission license.


There's also no cost for live disc jockeys. Content from 20 audio and talk radio stations is narrowcasted, or sent to users as they request them. Imagine Radio also has a feature that allows listeners to rate each song, enhancing or decreasing their chances of hearing that genre of song again.

"The stations are being created on the fly for each unique user," Mr. Porteus said.

Rivals TheDJ.com and AudioNet, which changed its name to broadcast.com last week, also have original Internet broadcasts and audio ads.

TheDJ, which is planning to relaunch its site in June, is also in discussions with several major advertisers for audio-enhanced banner ads, said Scott Epstein, VP-marketing for TheDJ.

"The product has to be very good for people to tolerate audio advertising," said Mr. Epstein, noting that TheDJ has been free of audio commercials since it started two years ago.

Unlike Imagine Radio, which requires people to download a tuner, TheDJ has a tuner and a Web-based version of its product. Mr. Porteus said Imagine Radio is working on a Web-based version.

Audio ads break through the clutter of banners, said Jim Nail, senior analyst at Forrester Research. "It's so easy to train your eye not to see the banner ad," Mr. Nail said.

Local ads from online regional radio stations also don't make sense on the Net, he said.

However, he said most people hate plug-ins and information technology people "go nuts at something like PointCast hogging the network," even though it's news. "I don't see corporate IT being crazy about having Nine Inch Nails clogging up the network."

Copyright May 1998, Crain Communications Inc.

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