INTERNET STREAMING GROWTH SAID TO BE STALLED BY UNION ISSUES
Decision of several radio groups to stop streaming their programming over Internet because of union contract problems could “freeze the possibility” that Internet audio streaming would become major business enterprise, said Washington lawyer John Kamp: “There will eventually be a real business here, with profits for everyone, including the unions, but if they don’t get realistic it will stall.” Several large radio group owners, including Clear Channel, one of largest and most aggressive in using streaming, have at least temporarily stopped streaming their radio programming pending settlement with unions, including AFTRA.
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“It is our intention to put the streams back up when it makes legal and financial sense,” said Kevin Mayer, chmn. of Clear Channel Internet Group. He said company was “working hard to resolve outstanding issues” and was selecting and deploying technology that could allow it to remove programming that would trigger higher fees.
Radio group decisions to abandon streaming are result of failure last fall of ad agency groups to negotiate new contract with AFTRA covering ads that are streamed. Industry officials said AFTRA was seeking agreement that would have paid artists 3 times as much in royalties for ads streamed on Internet as for those that were broadcast over air. “Everyone was hoping that streaming would be the great cash cow,” Kamp said. “The union people thought it was their ticket to residuals and retirement.” Union officials said they still believed it was unfair for stations to get benefit of streaming ads over Internet without additional compensation for artists.
Even though contract talks failed last fall, most stations continued to stream until ad groups distributed joint policy bulletin month ago warning that ads on streaming media weren’t covered. That prompted ad agencies to begin writing notices into ad contracts and stations to become concerned about their legal situation, said Dorann Bunkin of Wiley, Rein & Fielding. Unions have indicated they will pursue all legal avenues to assure that ads aren’t streamed without payments. Bunkin predicted that technology eventually would solve problem by allowing stations to eliminate uncovered ads, but “right now they are both losing.”
Mayer indicated some negotiations were under way now to solve problem, but Clear Channel officials would provide no additional details. Kamp and Bunkin said it wasn’t clear what next step would be. “First, the unions have to figure out that the price they want is completely out of line,” Kamp said. He said stations were generating almost no additional revenue now from streaming and if unions wanted it to be good revenue source in future they would have to be willing to accept smaller artist fees now.
Although it’s one of most aggressive in streaming its radio programming on Internet, Clear Channel certainly isn’t only one deciding against continuing practice. Among other groups reportedly making same decision are ABC Radio, Bonneville, Radio One. Clear Channel owns more than 1,200 radio stations nationwide and CFO Randall Mays said 2 years ago that radio group planned to stream all of its stations as soon as possible (CD April 22/99 p3).
Streaming audio and video on Internet could generate $2.9 billion annual revenue just from wireless devices by 2006, according to study released Wed. by Webnoize. Report said consumers were “incredibly enthusiastic” streaming media to wireless devices. Arbitron recently said number of consumers regularly listening to radio stations via Internet had grown nearly 50% in last year, now accounting for 7.3% of radio audience.