Web Radio could lead to demise of some and reward smaller local broadcasters

[joshzz]

Did you hear about the latest study?


Study: Web radio in five million cars by 2015.
Motorists are on the road to having not just dozens of local, over-the-air radio stations at their fingertips, but thousands of internet stations, too. A new study forecasts five million cars will be internet radio-equipped in North America by 2015, using a “hybrid-connected model.”


This will put the local Class A FM station on equal footing with the 50 KW stations - Maybe, there will be an end to the radio monopoly.

 

[davideduardo]

Did you hear about the latest study?


Study: Web radio in five million cars by 2015.
Motorists are on the road to having not just dozens of local, over-the-air radio stations at their fingertips, but thousands of internet stations, too. A new study forecasts five million cars will be internet radio-equipped in North America by 2015, using a “hybrid-connected model.”


This will put the local Class A FM station on equal footing with the 50 KW stations - Maybe, there will be an end to the radio monopoly.

The average age of a car in America is approaching 9 years (up from 8 pre-recession). That means it will be around 2019 before 50% of cars are replaced with new ones.

And the internet connected cars, like satellite, will have to pay for bandwidth. Not everyone will do that.

There are over 200 million cars/trucks in the US; 5 million is around 2%.

And since about 70% of radio listening is not in the car, the effect this technology might have impacts less than 1% of listening time.

 

[TheBigA]

What radio monopoly? Just having a 50KW station doesn't mean a thing. It takes more than a signal to get people to tune in.

So here's a question: You have an internet radio station that can reach everyone. How do you let people know you're there? They can't just tune up and down the dial to find you. You need to go out and grab them and make them listen. What's your plan?

 

[gr8oldies]

If this comes to pass, the big boys now will be the big boys then. XM/Sirius has a few channels that have most of the audience. Most people won't be listening to kids playing their favorite tunes in their basement

 

[nd2023]

What radio monopoly? Just having a 50KW station doesn't mean a thing. It takes more than a signal to get people to tune in.

So here's a question: You have an internet radio station that can reach everyone. How do you let people know you're there? They can't just tune up and down the dial to find you. You need to go out and grab them and make them listen. What's your plan?

There are many sites that list Internet stations by format and also by location. So instead of tuning around different frequencies, you would tune around different stations within the format you like. And if it's listed also by location, an Internet station serving the local community would be easily found. People will tell each other about radio stations, and there's also social networking sites to spread the word. Once on the presets, tuning in would be as easy as pushing a button.

While Internet stations may be able to be heard globally, who says they can't just focus on one area? For example, pulse87ny.com is an Internet station focusing on the New York City metro area, where its former FM listeners are.

As for bandwidth costs, people with smartphones would already be paying for bandwidth. That percentage would only increase. I'm sure that the cost of bandwidth would be included in the person's data plan. They're only going to pay once for bandwidth that can be used on any of their devices. There will be a way for the car radio to automatically connect to the phone's Internet connection as soon as it's started, and there will eventually be one universal standard for all radio/phone manufacturers to connect the radio to the Internet.

 

[TheBigA]

There are many sites that list Internet stations by format and also by location.

That doesn't answer the question. There are OTA radio guides too. They don't get people to listen. They are merely a resource for those who seek the information. Generally, the majority of people don't seek the information.

As for bandwidth costs, people with smartphones would already be paying for bandwidth.

Those costs won't stay the same. The airwaves are free. Bandwidth is not. If you've been following the actions of the big telecom companies, they are aiming to increase the cost of bandwidth. The people are being "monthly billed" to death with numerous costs. The level of dedication to small internet radio stations isn't enough to overcome the amount of corporate BS big telecom is about to throw. Unless we get nationalized free WiMax, I don't see there being parity with OTA. As for localized internet radio, who is going to pay the staff doing the work? Or is it volunteer? There isn't enough ad money to support hyper-local staffing.

 

[radioboy]

The most common reason for the demise of AM stations appears to be losing their tower site(s) without having an alternative Plan B in the event that happens.

One local AM station owner here sold his 4 acres/tower and site, then discovered that there were no alternatives. He's lucky..the developer right now is not able to build, so he is leasing back the tower to the station owner for $2k a month. But, what happens when/if the developer begins construction? 2 stations off the air..and the second station has not been made aware that this has been going on.

I've looked at a couple of AMs but none of them own their tower site.

Now, back to the web radio thing...

It may erode some terrestrial numbers but I don't believe it will be the demise of radio. It has a way of re-inventing itself enough to keep going. IF they have a tower.

 

[Goat Rodeo Cowboy]

All my life I have had this affection... no, this LOVE AFFAIR with small communities. And back when my romance began, radio seemed vibrant in small communities. In my late 20s I slipped up and moved to the big city and found life in the city also offered some things to be affectionate about.

Eating breakfast at four o'clock in the morning in Springfield, Mo years ago as we traveled to spend a week in our "ancestral home" in a small community, I realized that the people this this little waffle house type restaurant had their own small community... within the much larger community of Springfield.

All that verbiage to get to this point: I have watched small business cope with change for years. Small radio stations. Small retailers who were the lifeblood of small radio stations. The changing market place has pressured all these people as long as I can remember. And when they go out of business they sometimes deliver a blistering attack on the force they think did them in. Walmart. The new bypass hiway. The Interstate that turned the face of business upside down in the little town. Television. The computer. The minimum wage law. The wrong party won the election for the White House.

And sometimes those of us watching as un-involved third-party observers smile, roll our eyes and smirk as we think: "You don't even know what really hit you, do you!"

Web Radio is going to have to become 100 times, maybe 1,000 times more dynamic and robust than what it is today if it is to receive the credit (or the blame) for putting smaller local broadcaster out of business. From what I hear when I tune across the dial, the small broadcasters are totally capable of doing it to themselves with or without the added straw on the back of the camel from Web Radio.

 

[davideduardo]

As for bandwidth costs, people with smartphones would already be paying for bandwidth.

AT&T recently announced that unlimited data plans would not be available for new customers. And the new plans are by the chunk, and even a single movie or a day of streaming would put one over the first increment...

 

[bossbill]

Josh, your original premise is that internet in cars will put small Class A stations on equal footing with 50 kw stations? Actually, anyone with a free automation system and a computer will also be on equal footing as far as access. As pointed out, 5 million is not a big number anyway. Plus, the Class A FM in South Bend, Washington is just not going to benefit from the guy listening in Syracuse, NY in his car.

As an FM broadcaster myself, I am unable to convince my local furniture store of the added value of streaming around the world.

 

[nolaradiobuff]

I don't see many local clients putting money behind streaming. National advertisers using larger market stations, yes. Most stations throw in internet banners/sponsorships, etc. to encourage a larger buy. There's no huge influx of local dollars leaving radio, tv or other media to reach a local radio station's web site audience.

I've always wondered why stations don't set up some type of registration to collect data on streaming and block streaming in remote markets, or set up some sort of paywall. A local Louisiana station, KBON-FM in Lafayette, offers a membership plan if you want to stream. I think it's $5/month with discounts if you pay annually. I'm sure even $50/year/listener helps them recoup some of their cost.

Streaming costs the station money with no possible revenue stream. As Bill said, there's no value to a station or it's client to have someone stream their content out-of-market.

 

[TheBigA]

I've always wondered why stations don't set up some type of registration to collect data on streaming and block streaming in remote markets, or set up some sort of paywall.

That's a big issue among radio folks today. The prevailing view I hear is that listeners associate radio with free programming. They don't pay for OTA radio, so they shouldn't pay when that same station is available on the web. It's up to the station to make it work financially.

The bigger owners, like CC, CBS, Cumulus, and Citadel, have combined the metrics on their station web sites and have come up with huge numbers that are attractive to advertisers. Those companies ARE collecting email data, and build loyal listener clubs around their web site. But the idea of collecting credit card numbers and charging listeners for membership is not something they want to do. It requires the stations to get into the retail business, which is a different business. I know there are contractors you can hire to do the collection work, but the view I keep hearing from PDs is that free content is one of the main benefits to the brand of OTA radio, and they feel it should be continued to the web.

But if you do want to charge listeners, and some syndicated shows have paid fan clubs, you have to create the kind of content they'll be willing to pay for. Just putting the air signal on the web isn't worth $5 a month. You need to provide lots of discount coupons for stores or area services, and lots of exclusive member contests, so the listeners feel they're paying for something special.

 

[nolaradiobuff]

Big A - I agree. KBON is a niche station and does provide more than just streaming for the membership fee. Since it's signal doesn't cover all of Acadiana and their music mix is so different from any other station on the planet, the $5 is worth it for many. WWOZ in New Orleans, while a non-com, is a similar station, not musically, but with fans nationwide.

At the least though, every station should want to collect Zip Code and demographic data to show who is streaming/visiting. I look at station web sites across the country and they have no idea who I am. I'm just a "visitor". How can you ever hope to earn any money online if you have no idea who is streaming/visiting? Most advertisers want to know at least the basics. National advertisers care about bulk. It doesn't matter where I'm from. It doesn't matter to Best Buy but it does matter, or should matter, to the local appliance store or auto dealer. Local radio is leaving tons of money on the table and missing out on new revenue streams because they don't understand online. Newspapers are starting to get it. Local TV is starting to get it. Radio, perhaps because of the "corporateness" of it, or it's own ignorance, is way behind the times.

In talking with GM's, GSM's, single owners and regional group heads, I often hear, "We sell radio. The online audience is added value," when it could be a significant source of revenue if they understood how to sell it and how to market it to their local customers. Most radio station web sites offer nothing to the consumer, because most radio companies and radio station managers don't get it (online).

 

[TheBigA]

Radio, perhaps because of the "corporateness" of it, or it's own ignorance, is way behind the times.

I think it's the LACK of "corporateness," because the big companies are doing what you suggest. Some of them (I think Cumulus) won't allow you to stream their station without at least giving your zip code. For all the criticism radio gets for being corporate, it's really still very small and ad hoc, especially outside the big cities. And that small time thinking you mentioned, "we sell radio," is just plain dumb. But it still gets back to proving content that people will pay for. If it's just a stream of the OTA, that's not enough.

 

[davideduardo]

National advertisers care about bulk. It doesn't matter where I'm from. It doesn't matter to Best Buy but it does matter, or should matter, to the local appliance store or auto dealer. Local radio is leaving tons of money on the table and missing out on new revenue streams because they don't understand online.

National advertisers don't buy radio station streams; they almost universally prohibit stations from streaming their spots at all. National advertisers buy local radio, either by market by market spot, unwired sales network spot (really a packaging matter and not a network at all) and via syndicated shows.

Local advertisers are generally looking for support for local campaigns online, not streamed spots. They want something beyond the spot that can drive traffic or sales, so as long as local radio has large local audiences, these advertisers will be best served by additional visual reinforcement, not via the station's stream.

As usage changes, the way radio stations use the web will change, but as an ad medium the first priority is to give the advertiser the best support for their campaign possible.

 

[TVradioguru]

All my life I have had this affection... no, this LOVE AFFAIR with small communities. And back when my romance began, radio seemed vibrant in small communities. In my late 20s I slipped up and moved to the big city and found life in the city also offered some things to be affectionate about.

Eating breakfast at four o'clock in the morning in Springfield, Mo years ago as we traveled to spend a week in our "ancestral home" in a small community, I realized that the people this this little waffle house type restaurant had their own small community... within the much larger community of Springfield.

All that verbiage to get to this point: I have watched small business cope with change for years. Small radio stations. Small retailers who were the lifeblood of small radio stations. The changing market place has pressured all these people as long as I can remember. And when they go out of business they sometimes deliver a blistering attack on the force they think did them in. Walmart. The new bypass hiway. The Interstate that turned the face of business upside down in the little town. Television. The computer. The minimum wage law. The wrong party won the election for the White House.

And sometimes those of us watching as un-involved third-party observers smile, roll our eyes and smirk as we think: "You don't even know what really hit you, do you!"

Web Radio is going to have to become 100 times, maybe 1,000 times more dynamic and robust than what it is today if it is to receive the credit (or the blame) for putting smaller local broadcaster out of business. From what I hear when I tune across the dial, the small broadcasters are totally capable of doing it to themselves with or without the added straw on the back of the camel from Web Radio.

Wow Cowboy, that is a great post! You made your points very eloquently.

I was having lunch with a high-tech friend of mine who is an executive with a well known major Internet search and on-line advertising provider. The conversation turned to the topic of audio and video streaming to portable devices such as smart phones and the anticipated future therein. My friend said that cellular providers are seeing light at the end of the tunnel, unfortunately its a train. The current cell phone and telco infrastructure can not, nor will be able to satisfy the hungry bandwidth requirements of long-term streaming to home or portable devices, especially when it comes to HD video or hours of streamed audio. Obviously the problem for the carriers of the US, is they are busy trying to fulfill the appetite of a hungry public with the myriad of surfing and multimedia features on the phones, while manufacturers of phones introduce more bandwidth-hungry devices to the public weekly. Of course the problem becomes managing expectations of the public who will be forced to pay for future the growth of bandwidth and expect perfection out of an imperfect system.

Radio is free, dependable and easily available, that will never change. So far, I've heard of no on-line streaming networks that are actually profitable, and as others pointed out here, mainly because of the lack of geographical focus which advertisers demand.

 

[KeithE4]

National advertisers don't buy radio station streams; they almost universally prohibit stations from streaming their spots at all.

I thought that had more to do with the performers' unions and the extra money they wanted, not the advertisers themselves.

And, if national advertisers don't buy streams, why are there ads on some of them (Live365 stations & Radio Bop, for example)? Somebody's buying that time. There are also plenty of ads on the CBS-owned stations' streams - and I think some of them are stream-only. Apparently their advertisers don't care if they reach people outside their own local markets.

 

[TVradioguru]

I thought that had more to do with the performers' unions and the extra money they wanted, not the advertisers themselves.

It does, partially. Union represented VO talent and performers want extra money if their voice is carried out of market. Same goes with music used in the spot. And who pays for the performance costs outside of the market? You guessed it, the advertiser or agency who wouldn't benefit from their ad being carried outside the intended market. There may be other international copyright issues with the content too that come into play which an advertiser would rather avoid.

And, if national advertisers don't buy streams, why are there ads on some of them (Live365 stations & Radio Bop, for example)? Somebody's buying that time. There are also plenty of ads on the CBS-owned stations' streams - and I think some of them are stream-only. Apparently their advertisers don't care if they reach people outside their own local markets.

The ads you hear on some of these streams are fraction of pennies on the dollar as compared with targeted ads run on radio within a market. I believe the majority of money made by Live365 as an example, are subscription fees charged to those whom Live365 streams.

 

[davideduardo]

I thought that had more to do with the performers' unions and the extra money they wanted, not the advertisers themselves.

It's the AFTRA agreement that specifies additional payments for streaming of, generally, agency spots. There is a combination of the accounting required, the impressions generated and general additional hassles which make agencies almost universally put a "no streaming" dictate on buys.

[/quote]qAnd, if national advertisers don't buy streams, why are there ads on some of them (Live365 stations & Radio Bop, for example)?[/quote]

My error. I should have said, "radio station streams." There are, however, aggregators who sell spots on station streams in the location where the station cuts its stream to insert local spots. In that time, the aggregators (who may be a separate sales organization of large broadcasters) put their own spots, generally not sold by the station's own sales department.

Somebody's buying that time. There are also plenty of ads on the CBS-owned stations' streams - and I think some of them are stream-only. Apparently their advertisers don't care if they reach people outside their own local markets.

If a station streams its local spots, it's because either they have divided stopsets into local, non-AFTRA spots and those that have no stream dictates. There is no prohibition on streaming spots otherwise... such as the ones done in the station, etc. In this case, the advertiser benefits from the local stream listeners and no harm is done by the spillage into other market areas where the advertiser may not operate.