The Internet radio revolution: The impact on you and your station


By Steve Young, Director of Pop and Rock Programming and Consulting, Jones Radio Networks/Seattle

The other day, my colleagues Ken Moultrie, Kristopher Jones and I were engaged in a spirited discussion about the rapid emergence and growth of Internet radio. We noted a few apparently unconnected stories that when you look at them together paint a pretty strong picture of where entertainment delivery is going and how rapidly it's getting there. First let's look at some of the results from a 2006 Arbitron/Edison Media Research study to lay the groundwork on the story:

·   More than 1 in 5 has listened to Internet radio in the past month.

·   Weekly Internet radio audience has increased 50% over the past year.

·   19% of 18-34 year olds have listened to Internet radio in the past week.

·   Internet radio skews male and younger, but attracts a wide range of ages.

·   At work streaming has increased an average 43% each year over the last five years.

·   Internet radio attracts an upper income audience with weekly Internet radio listeners 36% more likely to live in a household with annual incomes of $100K than the general U.S. population.

·   41% of online radio listeners have visited a website due to hearing an ad.

·   Internet radio is used as a soundtrack for online shopping and buying with 57% of weekly Internet radio users reporting listening while buying at a website.

·   Radio web site visitors are very loyal with two-thirds of station web site visitors visiting weekly and nearly 25% visiting daily.

These are staggering statistics when one measures them against the drop in persons using traditional radio and you can see where many of these listeners have migrated to. Here are a couple more facts to add in to the big picture:

·   Clear Channel reported over 10,000,000 distinct listeners this past month to their various streaming channels. This is significantly more than Sirius and XM combined. It is also no coincidence that Clear Channel has chosen Internet radio as the best way to market their HD2 formats. Why has Clear Channel put so much effort in to building their streaming strategy over the last year and a half?

·   CBS recently purchased Last.FM, a potential competitor for many millions of dollars. Why would they make a purchase of a company operating on a completely different platform than their core business?

When you look at the above stats from Arbitron/Edison and combine those facts with two of the largest broadcast companies diving deep in to the streaming pool you start to get the idea of where all this is going.

Now let's add the topper to these stories. Avis has recently announced [see related story] that they will make available Internet radio wireless service in all their rental cars. Internet radio plus wide-area wireless availability equals portability; the one advantage traditional radio had exclusively over the Internet sources. Add to this the fact that next generation of cell phones will have multi-media capabilities, including the accessibility to Internet radio and you have the 21st century version of the transistor radio.

Despite the ongoing fight over royalty payments for online streaming, there is no stopping the continuing growth of Internet radio. As many have learned in the past, you cannot regulate technology development. It will outstrip any society's ability to create and enforce rules to inhibit its growth. With the cumulative growth of new technology outpacing any previous era in human history, by the time the rules are developed, the technologies have moved beyond those rules and it becomes a whole new ball game.

The leaders in traditional radio broadcasting recognize that they have to be able to reach their potential listeners by whatever means the general public chooses to access their chosen forms of entertainment. Radio stations are going to have to move from being content carriers to being content creators in order to remain competitive in any way. Ultimately, you and I will be able to create our own perfect soundtracks with all of our favorite songs programmed in the order each of us prefers and we won't need a 100,000 watt transmitter to be able to receive this programming. When this happens, the only way traditional broadcasters will be able to compete is to be able to present unique, exclusive and high-demand entertainment content.

So what does this mean to the individual broadcaster looking at this rapidly shifting landscape? Well, first thing is if you aren't streaming your radio stations yet, you had better get that happening as soon as possible. It is highly likely that Congress is going to limit the copyright royalties the CRB is attempting to assign to webcasters. Many of your local audience are listening to their radio off of the Internet because they are unable to get a clean signal where they work or live. If you aren't available on the same platform as all your competition, then you are heading for ultimate extinction. Once you have streaming capability, you had better start working on better content creation, acquisition and presentation. Why should listeners choose you over the thousands of other choices that will become available when wireless Internet radio becomes commonplace? What unique advantages and capabilities is your content going to possess that other streams can't deliver?

As the radio industry shifts from delivering content via AM and FM transmitters to delivering content through wireless, satellite and digital technology, the one constant that will remain is the need for unique, high-quality programming content.