The Net/Net of Internet Radio

Traditional, terrestrial radio stations make their living selling airtime to advertisers; satellite radio listeners pay a monthly subscription fee to avoid these ads. Each business model has proven successful to varying degrees, but neither has the potential for capturing consumers’ attention and monetizing that valuable asset in the same way that Internet radio can.

Since nearly all Internet radio broadcasts are listened to on a computer, advertisers have all of the ’Net’s rich multimedia capabilities at their fingertips. Internet radio players can be branded with a company’s or band’s logo. Hyperlinks can direct audiences to any number of Web sites from retailers or bands, potentially offering an additional click-through revenue stream. Software can be developed and sold for managing and compiling Internet radio links. And because all of this takes place on the Web, Internet radio stations have the freedom to market worldwide at a fraction of the cost of broadcasting traditional or satellite signals.

This article takes a look at some of the opportunities for Internet radio success (as well as some of the challenges) as seen through the eyes of three companies: Liquid Compass, a streaming design firm that has set up streams for more than 80 Clear Channel stations and is starting up an Internet radio station of its own; Live365.com, "the world’s largest Internet radio network;" and RadioTower.com, the first Internet radio directory.

On the Money
Getting end users to cough up a few bucks a month in subscription fees has long been a struggle for Internet-based companies; too much high-quality content is already available for free. That’s why Internet radio stations have had to rely solely on advertising or work towards diversifying their revenue streams. Somewhat surprisingly, the most lucrative way to diversify revenue may actually come from a subscription-based model. Liquid Radio Live (LRL)—Liquid Compass’ nascent Internet radio station—gives independent artists the opportunity to have their music played on the site for free, pending approval by one of LRL’s listening teams. Or, artists/bands can upgrade to one of two options: $9.95/month for a short description of the band, a Buy Now link for the group’s CD, and a direct link to their Web site; or $24.95/month for a personalized Web page with up to eight photos, a dedicated streaming media player, and a listing in the Featured Artists section. "As we continue to roll this out across the nation, $10 a month becomes significant when you have hundreds of artists signed up," says Zackary M. Lewis, cofounder and CEO of Liquid Compass.