While I was undertaking my research for in-stream audio, one interview couldn’t be scheduled in time before the cut-off date for editing. It was with a company called Spectrum Medya, which launched Karnaval.com, a digital radio platform, about a year and a half ago. Spectrum is based in Istanbul – the intersection of where the East meets the West — and in many ways, it's charting where traditional radio meets digital audio. Karnaval has a hugely popular Internet radio stream and was recently selected by Wired Magazine UK as one of the 100 hottest startups in Europe.
I’ve included a transcript of my interview with Ali A. Abhary, Spectrum's CEO (Twitter: @alitalks), below for you to see how a publisher is handling and viewing these changes in the audio ecosystem.
Q. Tell me about your service.
A. Spectrum Medya is owned by private equity fund the Actera Group, which joined two and a half years ago. At the time, the Spectrum consisted of five terrestrial radio station networks across 20 to 30 different cities in the country. Turkey had state-owned broadcasting until the '90s, until deregulation, which is when we got chance to really steer two of the oldest radio stations in Turkey under our own control.
Q. How was the ad business for traditional radio before digital?
In 2002, the zeitgeist orchestrator David Bowie opined, “Music itself is going to become like running water or electricity.” A few years later, in 2005, the futurists Gerd Leonhard and Dave Kusek proposed “music as water” in their industry-shaking book, The Future of Music (A Manifesto for the Digital Music Revolution).
The metaphor was simple — music would flow on demand, like a utility, to people's home hi-fis and portable music players. Subscription access to "all" music was the approach that ultimately ended up with no more ownership of physical or even digital copies; CDs, mp3s, and the other ground-bound trinkets would no longer be necessary. Even in my own behavior, I see this change — where once I’d spend time ripping my CDs and loading up my 160GB iPod, now I simply curate music, like my Boxing playlist, in the cloud via Spotify.
Eleven years later, Bowie’s prediction is coming true and streaming is progressing at speed. In metropolitan Argentina 1 in 3 consumers are listening to streaming music - evenly split between mobile and computers (desktop, laptop, tablet). In France 15% of those we surveyed streamed on a computer but a whopping 27% used mobile. In fact this trend to streaming via mobile is likely to be one that will continue worldwide and today in metropolitan regions of Hong Kong and Mexico, as well as South Korea mobile has already considerably overtaken computers as the preferred listening method.
We've been saying for a while now -- based on the evidence we've seen in certain European markets -- that online video viewers are happy to watch a significant number of in-stream ads in exchange for access to high-quality content. Today, we found yet more evidence of the same from a study conducted by Turner Broadcasting. Today, many of Turner's TV shows only run two or three in-stream ads each (generally less than 2 minutes of advertising per episode); but the broadcaster found that if it increased the ad load to the same volumes the shows feature on TV (as much as 20 minutes per episode) the number of users who dropped off was shockingly low. The CW network found the same in its own tests.
The bottom line: Get ready for more online video ads. Inventory will grow, prices will fall (at least somewhat), and overall online video ad spending will grow dramatically.
(As a side note, The New York Times' article in which this research is published takes aim at Hulu for hoping to "lighten up" the amount of advertising users see and repeats Hulu's accurate claim that it has less than half as much advertising as the same shows on TV -- which is ironic, given that in my anecdotal experience Hulu has been more aggressive than any other US online video site in pushing more ads into its content; most of the ad breaks I see on Hulu these days contain two ads.)