Loudeye to Enter Ad Insertion Business

Content delivery firm Loudeye is getting into the streaming media ad business, snapping up privately-owned technology player Addition Systems.

Through the purchase — terms of which were not disclosed — Seattle-based Loudeye will be able to offer clients an ad serving product based on Addition’s insertion technology.

Unlike the way some ads are attached to streams, Addition Systems’ technology is designed to allow Webcasters to dynamically insert targeted ads without delays or rebuffering. The system supports Windows Media Player and RealNetworks’ ad formats.

Addition’s technology can also let advertisers serve targeted ads.

Like several other players in the space, Addition’s serving solution can also block ads in a streaming simulcast from terrestrial broadcasts — skirting the controversial issue of paying royalties from re-purposed broadcasts.

“Addition Systems provides valuable functionality for businesses wanting to personalize and monetize digital music, online radio programming and other streaming media through channels ranging from the Internet to cable and satellite,” said Loudeye chief executive officer John Baker.

The news comes as several other players are racing to beef up their streaming media advertising products, as the industry is seen to be an emerging, potentially lucrative space that will precede — and potentially evolve into — interactive television.

In one positive development for the space, radio station operator Clear Channel Communications said earlier this week that it would resume streaming its terrestrial broadcasts over the Web, using Hiwire’s ad-replacement technology. Additionally, all the big Web ad networks have deals with streaming insertion firm, and DoubleClick recently unveiled an upgrade to its ad server that would let it serve both streaming and iTV ads.

The new interest in the space isn’t surprising, Baker said.

“Online radio applications increase the ‘stickiness’ of consumer-facing Internet sites, drive music CD sales and generate interest in other music services such as subscriptions and pay per view,” he added.

Meanwhile, Loudeye said it would offer Addition’s technology as a stand-alone product and as a component of its own suite of digital media infrastructure products, which it provides to radio stations to stream content online.

Loudeye first vaulted into the public spotlight when Napster announced that it would pay the firm to identify copyrighted songs on the file sharing service.