Streaming Media - Attractive Business Opportunities, But Challenges Abound

BUT CHALLENGES ABOUND ATTRACTIVE BUSINESS OPPORTUNITIES

As the Internet emerged as a central aspect of daily life in the United States, Americans spent greater proportions of their time online and, in so doing, increasingly accessed news and entertainment while plugged into the Internet. According to a report by Somerville, New Jersey-based Edison Media Research and the New York-based Arbitron Company, as of January 2001 about 61.3 million individuals—or 44 percent of all U.S. Internet consumers—had streamed Internet audio or video. Over 30 million Americans, moreover, accessed streaming media at least once a month. American Demographics reported that the demographic makeup of the average "streamie" was particularly attractive to advertisers, with approximately 46 percent receiving an annual income of at least $50,000.

Generating revenue from streaming media, however, poses problems akin to those of Internet content providers. Several options exist for purveyors of streaming media. Perhaps the most common revenue scheme was to fill the Web site from which the streaming media was accessed with advertising, bringing in money from other companies trying to catch the eye of its media customers. Pay-per-access was another, though less popular method, whereby customers agreed to pay a small fee for each individual access of a streaming media package. More commonly, companies provided subscription-based access privileges, which often combined access to streaming media with other value-added services and products.

As a model for making money, streaming media was likely to integrate elements of traditional broadcasting. For instance, Jupiter Media Metrix predicted in 2001 that streaming-audio advertisement revenue would reach $1.4 billion by 2004, meaning that streaming-audio networks will increasingly incorporate commercial slots into their programming. The 15-or 30-second commercial spots common on streaming radio and music stations in the early 2000s frequently accompanied and referenced onscreen graphics and banner ads for a multimedia advertisement scheme. The greatest factor behind the hesitance of advertisers to warmly embrace streaming-media marketing in the early 2000s was the fragmented nature of the audience. While Jupiter Research reported in 2001 that streaming audio was beginning to hit critical mass, there was little coherence across the audience base, while streaming video, thanks to lingering bandwidth limitations among the Internet populace, was still confined to a relatively small segment of Internet users.