The Future of Internet Radio
In the end, King hopes that cooler heads will prevail and the music industry will see radio as its last bastion of hope.
"It’s like two guys in a sinking ship," he says. "One option is to work together to try to save both of you. The other option is to just beat each other up as the ship goes down. I’m hoping they’ll decide that both of them need each other to survive."
Local Heroes
With all of this in mind, over-the-air broadcasters wishing to stream have had to come up with an advertising component to monetize their streaming initiatives. Upon launching Charlotte, N.C.’s WLNK-FM stream, a 10-second preroll ad plays. Prerolls, along with in-stream advertising, static banners, and branded media players have helped this Liquid Compass client create a positive revenue stream that exceeds its royalty and bandwidth costs.
"This station is a great example of a broadcaster that has adapted to the new royalty requirements by maximizing their advertising opportunities," Lewis says. "While we didn’t set out to build a division of our company that is now dedicated on training stations on how to effectively monetize their streaming initiative, it has become a valued resource."
Even pure play Live365 counts on three revenue streams for its bread and butter: ad-free paid subscription listening, broadcast services, and advertising (on free subscriptions). A combination of all three is essential to stay out of the red, according to Stoddard.
"That’s why it’s really tough for guys like Pandora or even your typical independent internet radio broadcaster to really come out on the positive side," he says. "They don’t have all of those same sort of revenue generators."
But King believes that over-the-air stations have a leg up on internet radio pure plays such as Live365 because "they usually have an experienced sales force that is able to add banner ads, pre-roll gateway ads, and replacement interstitial ads to their bag of tricks," he says. "They’ve got five or six guys at some of these groups who are out doing nothing but selling radio ads all day long."
That said, even seasoned salespeople may need coaching when it comes to selling advertisers on internet streaming and explaining to clients what the process entails. Ma says that "one of the challenges has been educating our salespeople to be able to take that out to our clients and let them know what streaming is."
Beyond educating salespeople and advertisers, stations say their highest hurdle right now in growing their streams is educating their listeners, many who hear "stream" and think of the watery kind.
"Once, at a focus group, we asked if they knew that our station was streaming online, and one of the ladies thought we were talking about Field & Stream the magazine," says Jonathan Mauney, director of new media at Greater Media Charlotte, a Liquid Compass client. "We really have to be careful not to use techie terms to describe what we do online." For example, he is careful to use phrases such as "listen online" or "listen on your computer" instead of streaming, and he’ll use "on-demand" in place of podcast.
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