What's the Frequency, Net Radio?

Driving down to the Santa Clara Convention Center to attend the Radio Ink Internet Conference last week, I clicked from pre-set to pre-set on the digital dial, catching snippets of morning talk shows searching for cheery tunes to offset the dreary funk of rain and gridlock. As I pulled into the parking garage, I lamented turning off the car and the radio in mid-song. If only I could continue listening all day . . .

That's a large part of what streaming radio is all about; capturing the mid-day listening audience's time with online radio, book-ended by the terrestrial radio of their morning and evening commute. "There's an enormous audio appetite [during the day]," said Peter Desnoes, president and CEO of iBEAM and a panel speaker at the conference. Throughout the conference, the consensus seemed to be that radio stations, both terrestrial and online-exclusive, could capture chunks of that expansive audience and make a nice profit doing so. The nuances of how to monetize, though, were fiercely debated.

Cashing In, or Out?

The days of triple-digit streaming stock price leaps are behind us (in fact, any triple-digit changes are often in the negative direction these days), and buzz-phrases like "path to profitability" were bandied about the conference. A major concern with regard to revenue is the Digital Millennium Copyright Act (DMCA), which the recording industry is using to demand licensing fees on songs streamed over the Internet (in addition to the fees already paid for normal broadcast).

Although some of the panelists at Radio Ink weren't even aware of the DMCA (Desnoes, when asked his thoughts, replied, "I don't even know what it is"), it was clear that this act could greatly impact streaming radio and its potential profits.

Costs and fees aside, the dream of streaming radio stations is the ability to conduct one-to-one marketing campaigns, with commercials tailored directly for individuals and targeting their interests. Jim Taszarek, president of TazMedia, noted one example where a car dealer sold 35 Subarus in one day after targeting sale prices to the appropriate demographic.

Also hot, was the concept of ad insertion technology, which uses software to remove local ads from a terrestrial radio broadcast and then inserts new commercials for the Internet's audience. But first, all agreed, the appropriate audience needs to be determined and that can be the most difficult part.

Local vs. National Audiences

When radio stations first began showing up online, they fought to create a national or even an international audience. After all, wasn't the Internet just a giant transmitter that made every PC a shortwave radio? But most of the time, this met with limited success. Conference attendees seemed to feel that, for the most part, local stations should retain their local focus -- even online.

Richard Hart, a host of CNETnews.com, cited a Stanford report that maintains that small businesses trying to reach the world with their products are overextending themselves. Similarly, local radio stations usually don't have much to offer listeners who live beyond their terrestrial broadcast reach, said Stuart Alsop, a general partner in the venture capitalist firm, New Enterprise Associates.

But one way that local stations could hope to reach a larger audience is by affinity. "A local guy covering the Giants games can specifically target a niche in the market - to aggregate people of specific interests for an affinity audience," said Peter Ziebelman, a partner at 21st Century Internet.

Rather than waste money trying to push "classic rock" or "world music" to other markets that already have a dozen "classic rock" or "world music" sources on the radio - never mind the Internet - stations should target interest niches that are not bound by geography, panelists said.

Harnessing the Technology

Determining what content to broadcast on the Internet is only half the game. Ziebelman and others said that streaming radio isn't taking advantage of the interactivity that is possible on the Internet. "You should be able to package streams, so you can get what you want, where you want it, and in the order you want to listen," Ziebelman said. Rather than requiring you to listen to an entire 30-minute news broadcast, for example, streaming radio should let you jump to the sports, financial, or political segments.

The future of streaming radio receivers was also discussed, including the ability to receive streamed broadcasts over a cell phone or other small devices. Wireless broadband technology may open many new doors for Internet radio stations and serve as an enticement for even more terrestrial radio stations to go online. But reliable, widespread broadband wireless access remains, for the most part, a vague promise for an undefined future date.

Overall, it seems clear that streaming radio has tremendous potential in scope and revenue possibilities. Tapping that audience for interest and dollars -- while laying the groundwork for the Internet as a legitimate broadcast medium in the eyes of the recording industry -- is where the difficulty lies. Radio Ink attendees seemed adamant to overcome those hurdles, one way or another. Stay tuned.