Internet radio is the future
In the early 2000s, many listeners accessed their favorite radio station via their computers. However, with the specter of costly copyright royalty fees imposed on stations streaming music, their numbers dwindled and the future of Internet radio was cast in doubt. To mollify the situation a proposed royalty rate compromise bill, known as the Small Webcaster Settlement Act (H.R. 5469), was passed by Congress. It was designed to mitigate the burden, so the future for the medium has brightened. Rates established by the Digital Millennium Copyright Act of 1998 had forced many radio broadcasters – both commercial and noncommercial – to reconsider their plans to Web cast. At the time radio industry publisher Eric Rhoads made this observation, “With the current fees, the economics do not make sense for anyone intent on building a business from this. Unless Congress steps in and makes a change, the RIAA fees are unreasonable and will kill the music side of online radio.”
Despite the upheaval resulting from the “pay for play” issue, most broadcasters felt that it was important to retain a Web presence, even if it meant offering no music programming. It was thought that stations broadcasting news, sports, talk, and other nonmusic forms of programming were the likeliest to remain in the webcasting business. Maintaining a Web site for promotional purposes, even without audio streaming, was perceived as a worthwhile endeavor.
Commented Jay Williams, Jr., “In the initial surge of the dot.com boom, radio stations rushed to create web sites that included station, music and local event information as well as billboard ads. After the Internet bloom faded in 2001, many stations stopped streaming audio and many radio web sites languished. Station web sites are again considered essential, and streaming over the Internet is seen as a critical, additional distribution platform for terrestrial radio stations. As more national and local advertisers demand a web site presence as part of their radio buys, stations have also learned the benefits of using these sites to relate programming and promotion information. Station web sites can give listeners direct and immediate access to personalities and can be used for listener research,both of which can improve a station’s connection with the audience and the on-air product.”
In spite of the formidable issues confronting webcasters, the RAB determined that over 4000 stations were streaming their content as of April 2002, and Arbitron Edison Media Research calculated that online radio listening actually grew from 14% in 1999 to 23% in 2001. Meanwhile, MeasureCast reported that Internet radio listening was continuing to grow a year later, so the practice was far from moribund. Radio Ink magazine cited Jazz FM and Virgin Radio in London, L-Love Radio in Sacramento, ESPN Radio in Connecticut, and WQXR/ FM Radio in New York as the top five simulcast streamers during the summer of 2002. Indeed, today stations continue to view the Internet as a viable supplement to their on-air signals, especially for promotion and audience research purposes. Interactive radio is a growing reality, as is the opportunity for everyone with the right computer and software to be a broadcaster or cybercaster. With an Internet encoder, the home user can transmit to an international audience. This prospect prompts a collective sigh from station managers, who are losing track of the new forms of competition.
Notes longtime broadcaster Lynn Christian, “The major concern regarding the future of radio is centered on new competition from satellite, cable, and online sources. Those companies that are planning to partner with these new media choices, and develop data services, will undoubtedly be the big winners in the twenty-first century. Broadcast radio, as I have known it during the past 50 years, will not be the same in the next few years. But what American business is the same now? These are revolutionary times in radio and in the world.” Jason Insalaco, observes: Radio executives programming in the rapidly changing media landscape must embrace the technological revolution that is upon them. Cell phones, the Internet, MP3 players, the iPod, and videogames are vying for the audience’s attention.
Programmers must heed these encroachments on terrestrial radio or else accept extinction. Rather than fear the new and evolving audio media, traditional radio needs to embrace it for its own benefit. Radio websites are great places for listeners to find out about the station’s personalities, music, contests, and events. Websites are cyber-extensions of the over the air station brand. Station websites also enhance audience interactivity and constitute another revenue source for a station.
In 2009, the biggest challenge confronting Internet presence related to fees charged to provide music. States Paul Kemp of Backbone Networks, an Internet radio software provider:
The performance royalty rates is probably the largest obstacle. Currently, in the US, there are a number of different rates and laws that apply to internet performance royalty rates. This includes the Small Webcasters Settlement that requires stations of a certain size to pay a percentage of their revenue. There is also the commercial Copyright Review Board (CRB) rate that requires internet radio stations to track performances of a particular piece. This rate escalates through next year [2009] when it is up for renewal again. The reason this is a big challenge for internet radio is that the rate is higher than for other broadcast mediums, like terrestrial and satellite broadcasts. If the rate was equal across all broadcast media we suspect there would be a rush to internet broadcasting because of the more precise listener statistics that can be generated and the opportunity to more precisely advertise to a particular target. The royalty rate discussion masks a broader issue that needs to be confronted. The strength of the internet is that it is worldwide. As such an internet broadcaster would have to pay performance royalties to all of the Professional Rights Organizations where a connection terminates (the country from where the listener connects).
Cognizant of the many obstacles and challenges that exist in the age of the Internet, most radio broadcasters forecast a long-termrelation between the two mediums, one that will benefit both. As radio heads warp speed into this “future world,” it is obvious that aspiring broadcasters will have to know their way around a computer, because the audio studio will exist both in the ether and in cyberspace. For those interested in this aspect of the medium, Radio and Internet Newsletter (RAIN) provides a daily update on the key issues involving radio and the Internet.