CBS Radio extends online reach
DENVER (Billboard) - While other Internet radio providers are frantically trying to stay afloat in the wake of higher music royalty fees, CBS Radio is using the situation to solidify its standing within the format.
After essentially taking over AOL's Web radio operations earlier this year, CBS Radio has struck a similar deal to power Yahoo Music's Launchcast Internet radio service starting in early 2009. CBS Radio will handle advertising sales for Launchcast's 150 stations, as it already does for AOL's 200 stations. The company has 150 online simulcast and Web-only stations of its own and is a CBS Corp. sibling of streaming music site Last.fm.
Driving CBS Radio's momentum in Internet radio is the growing pressure on webcasters to monetize their traffic more effectively. In particular, the U.S. Copyright Royalty Board's decision last year to sharply increase the performance royalties paid by Internet radio operators has forced such services to ease their resistance to audio ads, which are likelier to reach listeners than display ads.
But portal sites like Yahoo and AOL are geared more toward national ad sales than the local focus typical of radio ads, another factor pushing them toward partnerships with CBS Radio, one of the largest U.S. terrestrial radio broadcasters.
"Advertisers want to reach specific metro areas that are relevant to their products and services," Yahoo Music head Michael Spiegelman says. "Yahoo is really oriented to sell nationally. That translates well into video and display advertising, but not as well into audio ads."
Launchcast doesn't have a dedicated ad sales team. By contrast, CBS Radio has a sales staff of thousands dedicated to local markets around the country. And that staff now has more than 500 Internet radio channels to sell inventory on, many of which overlap in major metro areas, allowing advertisers to buy one ad that will run on CBS, Yahoo and AOL stations simultaneously.
CBS Radio's deals with Yahoo and AOL have greatly extended its online reach. In October, the most recent period for which data is available, CBS' Web properties had 3.95 million unique visitors, and Launchcast had 2.87 million. AOL exceeded both with 3.99 million, according to comScore Media Metrix.
CBS doesn't rely on music alone to drive its ad sales. Unlike AOL and Yahoo, CBS Radio carries several stations dedicated to news, sports and talk radio. In fact, sports-oriented WFAN (660 AM) New York is its highest-rated Internet radio feed, according to David Goodman, president of digital media and integrated marketing for CBS Radio.
"We're now the second-largest streaming media company in the world after YouTube," Goodman says, citing CBS Radio's pre-Yahoo 3.6 billion streams per month to YouTube's 12.9 billion. "We have the ability to leverage that entire audience, or slice and dice it in a number of different ways, to give an advertiser the best solution for their needs."
CBS Radio's agreement to handle online radio ad sales for both longtime portal rivals could raise eyebrows, given the persistent merger speculation surrounding the two companies.
The consolidation of three of the top Internet radio entities into one ad network could prove appealing for advertisers keen on reaching an aggregated online listening audience. That, in turn, could keep the participating parties from scaling back their music programing -- something other online radio outfits are considering to save costs. But the downside is that playlists could become homogenized, as has happened at terrestrial radio in the wake of consolidation. CBS Radio insists it will leave music programing decisions to its partners.
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