What Kind of Impact is the Internet Having on The Radio Industry?

By: Jackie Feibus

Ever since the first terrestrial radio broadcast in December of 1906, new technologies have continually emerged that have tried and tested the durability of radio. Radio experienced a period of extreme growth and prosperity in the 1930s and 1940s, with 95% of homes equipped with a radio by 1950 (Dominick et. al, 12). As the world’s most widely available and most listened to form of mass media out there, the notion that it may be fading is a difficult concept to realize. However, radio itself is not really in the decline – it is simply just evolving with new changes in technology. The new millennium brought on the emergence of satellite radio in 2001, which relays digital signal through the use of satellites that can transmit to a much wider geographical area than terrestrial radio, which transmits sound over the air via electromagnetic waves. But even more advanced than satellite is the notion of Internet Radio – being able to stream radio over the web from virtually anywhere in the world, from a multitude of internet-connected devices. The big question is, will this new form of radio cause a downfall in terrestrial radio?

The Internet Radio model is very effective for many reasons. First of all, there are no boundaries as to how far it can transmit audio because it isn’t running through the airwaves – terrestrial radio can only travel about 30-40 miles and satellite can travel over 20,000 miles, but the distance of the Internet is unlimited. There are also much fewer, if any, interruptions to programming by DJs or commercial advertising. The majority of Internet Radio sites make money by sporadic 15-30 second commercials after a few songs have been played, and much of the advertising is displayed via banner ads and mobile ads that don’t take away from listening time. Terrestrial radio often has several minutes of commercials in between songs. Internet Radio is also free, pending the availability of an Internet connection – no costly subscription fees like those necessary for satellite. Additionally, Internet Radio provides the highest possible sound quality, and there is not the hassle of dealing with radio static or frequency loss. Finally, and perhaps most importantly, Internet Radio can travel wherever there is an Internet connection. Users can listen from home, in the car through a mobile device, or on a computer from anywhere in the world – the programming is not limited to a specific geographical area (iListening.com).

There are a wide variety of Internet Radio stations available with different features that users can choose from. One of the most popular Internet radio stations is called Pandora, which uses a technology it calls the Music Genome Project, a music information system that classifies songs based on a multitude of distinct characteristics to deliver music based on individuals’ tastes and interests (Pandora Media, Inc.). Another station is called Live 365, which allows users to create their own Internet radio station to reach a global audience. The site has thousands of stations created by the public that cover over 260 genres of music (Live365). A different type of program is Blog Talk Radio, which lets anybody with a telephone and computer host a live Internet talk show and it integrates with social networks to go even deeper into the web radio experience (Blog Talk Radio). There is also Last.fm, a service that lets listeners subscribe to stations and then access them from any Internet-connected device (Last.fm). Aside from these programs, there are countless other stations with similar features such as Slacker, SHOUTcast, Jango, AOL, Radio Tower, Last.fm, Reciva, NPR, Sangean, CBS Radio, and Absolute Radio – the list goes on and on.

You can also purchase Wi-Fi Internet radio players that stream music through aggregators of Internet radio sites. Many of these have a social networking aspect as well that lets users share recommendations and see what their friends are listening to at the same time. These devices are turning radio into more of a social experience (Hardware Zone). Another up and coming technology is in-dashboard car radio systems now available by most automobile manufacturers that use Smartphone and Bluetooth connections to stream online radio. Many of these are partnered with brands such as Pandora and are hands-free and voice controlled to allow for a safe and enjoyable driving and listening experience (Kerry). According to an Arbiton in-car study done in 2009, 38% of drivers are interested in listening to Internet radio in the car (RAB).

One of the reasons that Internet radio is so successful is because it is controlled by the listener, meaning that users of these sites get to decide exactly what they want to listen to. However, this is not as easy as it appears and it can fact be very costly. The Digital Millenium Copyright Act of 1998 has played a major role in regulating Internet Radio and making sure that proper royalties are paid off. While terrestrial radio stations only have to pay publishing royalties to songwriters when a song is played, Internet radio stations must pay both publishing royalties as well as performance royalties to the artist performing the song (Radio City FM). Pandora states on its website that they monitor every single song that is played so that they can pay these royalties to their respective artists and songwriters (Pandora Media, Inc.). In addition, Internet radio stations also must pay a flat fee to run the station, as well as fees to host the website and domain name.

As for the future of Internet radio, it has yet to make enough of an impact on the industry to replace existing forms of radio, but it is certainly making its way up. In a recent study in April 2010, 22% of people indicated that Internet radio is playing a bigger role in their lives and 53% of people found that streaming songs on demand is the most important feature of Internet radio. Additionally, smartphone users are more likely to use a web-based app to listen to radio on their device than a broadcast service (Audio4Cast). One online radio application, Absolute Radio, has recorded how much of an impact it has had on listeners. In November 2010 alone there were 1.1 million hours of online audio content available and 353,000 hours of mobile listening. It has had a 305% year on year increase in mobile listening and a 40.2% increase in online live streaming as well (Cridland). Furthermore, revenue from Internet is over $500 million a year as of 2006, with even higher figures today (iListening.com). With all this being said, it’s safe to say that Internet radio is definitely going to propose challenges within the radio industry as it continues to grow in size, revenue, and listenership.

Sources:

Absolute Radio. (1993-2011). Absolute Radio. http://www.absoluteradio.co.uk/

Audio4Cast. (2010, April 20). Study: The Future Looks Good For Internet Radio. http://audio4cast.com/2010/04/20/study-the-future-looks-good-for-internet-radio/

Blog Talk Radio. (2011). Blog Talk Radio. http://www.blogtalkradio.com/

Cridland, James. (2010, December 15). Stats: How Absolute Radio is Consumed Online. http://james.cridland.net/blog/stats-how-absolute-radio-is-consumed-online/

Dominick, Joseph R., Messere, Fritz, and Sherman, Barry L. Broadcasting, Cable, the Internet, and Beyond: an Introduction to Modern Electronic Media. 6th ed. Boston: McGraw Hill, (2008). Print.

Hardware Zone. (2010, June 16). Logitech Unveils Squeezebox Touch Wi-Fo Music Players. http://www.hardzarezone.com/tech-news/view/46035

iListening.com (2009, June 24). Internet Radio: Encyclopedia. http://ilistening.com/Internet_radio/encyclopedia.htm

Kerry, Brewer. (2011, January 16). New Trend… In Car Radio Streaming! http://brewerkerry.wordpress.com/2011/01/27/in-car-streaming-radio-becoming-the-new-trend.

Last.fm. (2011). Last.fm. http://www.last.fm/

Live365. (1999-2011). Live 365. http://www.live365.com/index.live

Pandora Media, Inc.. (2005-2011). Pandora Internet Radio. http://www.pandora.com/

Radio Advertising Bureau. (2009). Arbitron National In-Car Study. http://www.rab.com/public/adchannel/radiostudies.cfm?type=nm

Radio City FM. (2009, February 19). How the DMCA Affects Internet Radio. http://www.radiocityfm.us/how-the-dmca-affects-internet-radio/

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