mediachannels; That's Entertainment

American Demographics, Nov, 2000

In the battle for consumers, e-commerce companies will try anything - even a little song and dance.

At the click of a mouse, rapid-fire images stream across the screen. A man in a dimly lit room lip-synchs over views of crowded streets, a hotel room, and rooftops. What is this? MTV.com?

Actually, it's BNTV, streaming video on Barnes & Noble's Web site. The three-minute video - images, sound, and all - is there to sell, of all things, a book of poetry, in this case James Fenton's Out of Danger. But that's not all. With B&N Radio, listeners can tune in as they browse the site's offerings, or surf elsewhere. And this fall, the site will launch a daily interview series with authors. "We want people to have the same experience they have in the store," explains Ilene Saul, co-founder of Rain, the production company which provides all the content for BNTV. "In a store people go to the shelves and look at the back of a book and they either pay for the book and leave or stay for a couple of hours, hang out, then leave. We wanted people to have that kind of experience at home."

Streaming media is the latest tactic employed by e-commerce companies in search of the elusive Web consumer. Barnes & Noble is hoping the use of streaming media - which launches moving images, video, or audio without being downloaded - brings more shoppers to the site and gets them to stay longer and buy more. For now, consumer electronics companies and auto manufacturers are the heaviest users of streaming media, according to Jupiter Research. Twenty-nine percent of all consumer electronics sites and 10 percent of auto sites use streaming video to hold on to Web surfers. But as the race for clicks and eyeballs intensifies, so will the use of streaming media by e-commerce businesses, analysts say. The incentive: By year's end, American consumers will have spent $38.8 billion in online shopping, estimates Forrester Research. In the coming years it will balloon, peaking at $184 billion in 2004, or 7 percent of all retail sales, until an expected heavy wave of Gen Y online shopping around 2010 pushes sales even higher. Put another way, the average household spent $1,167 in 1999 shopping online, by 2004 it will shell out $3,738.

In pursuit of this increasing purse, streaming media, once almost exclusively found in news, entertainment, and business-to-business sites, is waking up retail e-commerce. "It's break out time," says Dana Tower, director of marketing and emerging market development at Gettyone. His company, which provides stock images and footage, hopes to supply this content for the next wave of sites using streaming media. "Right now e-commerce sites are a lot of plodding information," Tower says. "Streaming media brings quick bits of moving information. Compared with the coming of streaming, the first five years of the Internet has been nowhere."

Why is Tower so enthusiastic? Fully 79 percent of Internet home users have installed the players, which are usually free, on their computers, to view or listen to streaming media content, according to PC Data, a computer industry market research firm based in Reston, Virginia. There were 25.6 million adults who used streaming in 1999 and this number is expected to grow to 81.2 million by 2005, according to research firm Cyber Dialogue.

What's more, Americans are increasingly using faster broadband connections, such as DSL and cable modems, that will allow richer and higher quality sound and audio to come into their homes. By the end of this year, 11 percent of households that connect to the Internet will do so through broadband lines, twice as many as in 1999, according to International Data Corp. Not only will they get the fullest experience of e-commerce messages or content, broadband users are also twice as likely as modem users to shop online, according to Jupiter Research.

Broadband or not, new technology is making shopping a media rich experience. At a Victoria's Secret fashion show this May, broadcast live on the Web from Cannes, viewers were able to buy merchandise as it came down the runway, without missing a minute of the show. It was a smoother run than the lingerie maker's first Webcast in February 1999. Even though the site broke previous records for online events when 1.5 million people jammed in for a peak, thousands more were shut out. And many users reported that the images were jerky, and the audio choppy.

Still, in the days following that Webcast, sales on VictoriasSecret.com reached levels usually only associated with the holiday shopping season, according to the company. In fact, only the best holiday shopping day in 1999 beat sales during those post- Webcast days. Considering price tags for commerce sites these days - $1.6 million for mainstream sites and $4.9 million for competitive ones - streaming media can be a drop in the bucket. Estimates range from $1,000 to $3,000 for basic streaming, and into the higher thousands for more complex offerings.