Case Study: Electronica Finds a Voice at DI.fm

Voluntary Assistance
Despite efforts to increase revenue, DI.fm has not been able to generate enough income to cover its monthly expenses. But that hasn’t kept the site down. "Over time we’ve had a whole lot of volunteers, whether they were people helping with their time or companies donating resources," says Shohat. DI.fm has received a lot of support from European ISPs who’ve donated free and discounted bandwidth. Any company that donates resources to DI.fm is given the title of Gold Sponsor and is listed on DI.fm’s Web site.

DI.fm has received even more support from the fans of electronic music, harnessing über-fans’ knowledge to craft compelling playlists. "We do use a lot of volunteers. They donate their time because they feel that DI.fm is a very unique project," says Shohat. "For every channel there’s a person who specializes in that kind of music that’s usually one of our volunteers who’s helping us out because they love to do this. They’re also responsible for doing the research into what’s hot."

Electronica caters to a decidedly global audience, which is reflected in the makeup of DI.fm’s volunteer ranks. "That group of volunteers is scattered throughout the world," says Shohat. Being spread out geographically helps DI.fm maintain its global flavor, especially for a genre of music in which albums are often released in extremely limited runs on LP. "Those records may only be pressed in runs of 1,000-2,000, and that means once it’s bought up you might never be able to get it again," says Shohat. "We have people around the world going into stores and picking out records," ensuring that DI.fm’s playlist remains both current and unique.

Hope on the Horizon
For the last few years, the primary obstacle in the path to prosperity for Internet radio stations like DI.fm has been the doubt among advertisers about the effectiveness of advertising in this new medium. But Shohat has seen a significant warming of the market in the last year. "It’s much better than it was a year ago. Back then, people still wanted to wait and see where the market was going first," says Shohat. "Within the last six months, the market for everyone’s been picking up."

Still, Internet radio still only captures a minuscule percentage of the advertising dollars spent on traditional radio. Despite that fact, Shohat believes that a major paradigm shift in advertisers’ attitudes has already happened, even if it hasn’t quite shown up in their bottom line. "About 12 months ago, demand was next to nothing. Today, the response we’re getting is positive, it’s just been that a lot of times they say, ‘We like the idea, but we’re committed. Speak to us in six months,’" he says. "There seems to be a lag in advertising as a lot of big media companies lock in their ad budgets months in advance."

Shohat’s optimism for the Internet radio market is evident in the recent beta launch of Sky.fm. "One by one we’re growing into other genres. Sky.fm is going to have all of our non-electronic music," he says. "We definitely want to become not just a destination but destinations. We find it’s easier to stay in business if we support more streaming."