Is there a future for Internet radio? It depends on whom you
ask. The news in mid-April certainly put a damper on all things
audio on the Internet.
First, stations were faced with impending fees for simulcasting
their on-air program. While stations are already paying fees for
on-air play, these additional costs made many stations reconsider
the value of the online service. For many stations, these costs
easily outweigh any income potential.
The next blow came from AFTRA, who wants stations to pay talent
fees that are up to 300 times the standard radio rate for spots
played over the Internet. I'm all for fair compensation, but this
is extreme. After the AFTRA announcement was made, a new push for
ad insertion technology and products began in a classic
In a move that seemed to seal the fate of Internet radio, 3Com
pulled the plug on the Kerbango Internet radio appliance. I was
surprised by this, considering how much attention and interest the
product has already received. I guess that 3Com decided to cut its
losses on a project that was likely becoming a significant money
It seems like almost every station has shut down its online
stream until the royalty and payment situation is resolved. Since
no one knows how it will end or if retroactive fees will be
imposed, this is a smart action for stations to simply cover
Is Internet radio finished? I don't think so. While everyone is
pointing at the failure of the dot-bombs, it just goes to show that
old methods don't always work for new technologies. In the end, I
expect stations will pay additional monies to play music online
even if it is simulcast on air. The rates will be negotiated and a
satisfactory solution will be reached. The same is true for AFTRA.
Contracts will be written that automatically cover the rights for
Internet play. A higher talent fee may be the result, but fair
compensation is warranted.
What we have seen is a growing phase for Internet radio. A
recent Consumer Electronics Association study showed that consumers
want free content. We all know that nothing in radio is really
free. Whether it's commercials, underwriting or subscription, money
is changing hands. I'll modify the statement above and say that
consumers want the perception of free content. If they don't know
they're paying for it, they will accept it as free. Like the
business end on webcasting, the listener side needs to grow as
If you're a baseball fan, you have likely seen that this is
changing already. Major League Baseball has changed how it provides
game broadcasts online. To listen, you must now subscribe to
listen. The fee is not excessive — $10 for the season to
listen to any game. Some may see this as greedy, but subscription
services do succeed. If you wonder who will pay to hear something
that has traditionally been free, look at the satellite radio
services coming from XM and Sirius.
I doubt that many stations are generating any revenue from
webcasts. The cost of business is too high for the current
technology to show more than break-even results. Multicast and
other streaming advances, ad insertion and targeted ad insertion
are all part of the evolution of Internet radio's forthcoming
success and advancement.
Are you streaming audio online? Tell us about your
experiences and how you're dealing with these issues.