Could 'Payola' Save Net Radio?
September 8, 2008 at 11:27 AM (PT)
With Internet radio's promise threatened by the raising of performance rights fees, a somewhat notorious concept is being raised as a possible solution to its survival -- payola. DOUG PERLSON, CEO of online advertising network and marketplace TARGETSPOT, asserted in SILICON VALLEY INSIDER that the easiest way to make online radio's burgeoning listener base pay off for investors -- as well as the music industry and its artists -- is some form of programming sponsorship.
"Large Internet and satellite radio stations currently pay per-song performance royalty fees, a significant drain on their margins," he wrote. "On the other hand, with both the rationale for the law and the way it is written, these networks should not be barred from accepting payment for song placement.
"Paid placement would have its own benefits," he continued. "We have seen a similar arrangement work well in the financially successful and user-friendly online advertising search field. In that case, advertisers can easily place bids on search results, and target their message directly to a discrete and highly specific audience. An Internet radio 'pay to play' advertising service could accomplish a similar goal.
"From such a system, artists, management and rights owners would gain the ability to bid for placement on the web’s best radio stations to gain exposure for new bands or to promote existing artists in the areas where they are touring. It could also be useful to push crossover hits across sympathetic genres, allowing artists the possibility of actually breaking out onto a larger stage. This is a serious advantage over the current system, which is so focused on genres that it takes a virtual miracle, plus a high priced marketing campaign, to break out."
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