The Net/Net of Internet Radio

Live365.com has also taken advantage of the subscription model, providing hosting for aspiring Internet radio broadcasters for as little as $9.95/month. But Live365.com doesn’t just cater to the little guy; their offerings include the ability to host professional broadcasts that serve more than 1,000 simultaneous listeners. The site also offers a VIP subscription to its listeners that enables CD-quality sound via mp3PRO-encoded streams played back on the included Radio365 (also sold separately for $14.95) and Player365-VIP (a free upgrade for VIP members). "Webcasting services, consumer subscriptions, and advertising are very substantial revenue streams for us," says Live365.com COO Rags Gupta. In fact, Gupta claims that his 38-employee company is nearing profitability, suggesting the emerging viability of Internet radio-based business models.

Even though traditional radio doesn’t have the subscription potential of Internet radio, its fingerprints can still be seen in a couple of the non-technical ways Internet radio stations can generate revenue. LRL’s Lewis hopes to develop a regular concert series sponsored and promoted by LRL. Then there’s merchandising. Both LRL and Live365.com hawk branded T-shirts and coffee mugs. Live365.com plays it safe by not veering from the traditional, while LRL uses its merchandise to try and "show that there is some personality involved," says Lewis. (Available products include a Scratch & Sniff Thong and an "I Got Boned" Dog T-Shirt.) "We will be selling our merchandise at our launch party in August, and we hope that it grows into an additional revenue stream, but I don’t think that it’s going to be a significant revenue stream," he adds.

Of course, advertising revenue can’t be ignored. Both LRL and Live365.com offer advertisers a variety of ways of attracting listeners’ attention. LRL sells banner ads throughout its site and on its media players, and offers in-stream audio ads as well as video gateways, which play every time the player is opened. Live365.com doesn’t include video, but offers a more dynamic method of do-it-yourself ad placement: Advertisers upload their ad, select a genre of music, and then choose from in-stream audio ads, pop-ups, skyscrapers on the homepage, and banners on the site and player window. "In the past few years it’s been much easier to sell banners than streamed audio," says Gupta. That said, Gupta hopes that demand for audio ads will provide the greater opportunity. But translating the traditional radio advertising methods to the Internet is harder than you might think.