Web Radio to Resume Tunes in July

After nearly a three-month blackout, commercial radio stations will soon stream their signals into cyberspace.

Frank Thorsberg, PCWorld.com

After nearly a three-month blackout, commercial radio stations will soon begin streaming their signals into cyberspace again.

New technology will permit the Web versions of broadcast radio stations to sidestep labor concerns that pushed many for-profit stations off the Internet in April.

Music lovers will see a lot more options when they spin the Web radio dial, but listeners will have to pay a price: They'll get more targeted advertising from stations that want to make money online.

"It will mean more choices," says Dannielle Romano, a Jupiter Media Metrix analyst. "The ability to actually make money with very targeted advertising from an online presence is going to make a lot more terrestrial stations viable online."

By 2005, nearly 5 percent--$1.4 billion--of an estimated $30 billion spent on radio advertising will be for Internet radio ads, Jupiter Media Metrix forecasts.

Sparking some of the ad fire will be ad-insertion technology adopted by Clear Channel Communications, the nation's top radio group, and developed by software firm Hiwire. Other big radio chain owners, including Ennis Communications and ABC/Disney, have not announced when their streaming operations will resume.

There's a lot at stake.

Net Music Numbers Jump

The streaming media audience in the United States is following the same astounding pattern as the surge in Internet popularity, says Warren Schlichting, Hiwire chief executive officer.

"The burst of numbers we are seeing is an Internet audio explosion," Schlichting says. "This boom is following almost exactly in the footsteps of Internet access."

The Net came into its own in 1995, he says, when 14 million Americans had Internet access. The number jumped to 30 million the following year. An estimated 65 million people are online today.

Internet audio really started to enter the U.S. consciousness in 1998 when it drew 14 or 15 million listeners, he says. In 1999, the numbers spiked to 30 million. In 2000, it rose to 45 million, and the trend this year indicates the audience may pass 70 million.

"People are witnessing how interested consumers are in experiencing digital music, consuming it that way, and having the convenience of consuming it that way," says Jupiter's Romano. "It's a quickly growing, voracious audience."

Web Radio Returns

But that boom went silent in May amid contract and copyright disputes. Advertisers didn't want to pay creative talent additional fees when ads recorded for use in terrestrial radio were also used online. When American Federation of Television and Radio Artists (AFTRA) members insisted on additional pay for participating in an additional medium, the stations started exploring Web-only ads.

Another dispute still isn't settled. The Recording Industry Association of America (RIAA) and Webcasters can't agree on copyright fees for music played on Web-only stations. They are scheduled to enter a copyright royalty arbitration panel at the U.S. Copyright Office on July 20. The RIAA is the same group that derailed Napster.

But in July, Clear Channel Internet Group (CCIG) is resuming Netcasting by the first of 250 of its parent company's stations.

"It won't come all at once. It will be a staged rollout, starting with the top 50 markets, which we will begin to roll out in July," says Bob Ezrin, vice chair of CCIG, which is part of Clear Channel Communications.

Using Hiwire software, Clear Channel stations' Internet advertising will be targeted at specific listener groups according to age, gender, location, and station format.

"We're delivering an audience to advertisers," says Hiwire's Schlichting. "Basically, we're separating audiences from content. By its very nature, the Internet throws a signal out there far and wide. We bring them [listeners] back together in a nice package that advertisers will pay to play to."

Online Music Options

Listeners have lots of online music choices in addition to traditional radio stations. They can pick from Net-only streaming sites operated by music enthusiasts and Web-only broadcasters to music channels provided by Internet powerhouses such as America Online, Microsoft, and Yahoo, as well as audio specialists such as Live365, NetRadio, and SonicNet.

While Netcasting extends any radio station's reach well beyond the geographic limits of its terrestrial signal, that's not the biggest lure for station operators.

"It's not that we believe that by streaming our San Antonio station's signal that we will suddenly develop millions of listeners in the Yukon," says CCIG's Ezrin.

Most Net listeners are local and will remain local, but they'll get a streamed audio signal that is tailored according to the demographic and geographic profiles highly sought after by advertisers. Stations expect to collect that information from Web site visitors who must sign up to get access to their Netcasts.

Making Money by Streaming

With the new advertising option, the time, effort, and cost of streaming a radio station's signal suddenly becomes something more than a "gee-whiz" accomplishment.

"This allows us to select the advertising that is appropriate to the medium, but it is also more than that," Ezrin says. "It allows us to treat the Internet streams of these terrestrial stations as independent sources of revenue. And that is a very big deal."

For example: a Midwest radio station's terrestrial commercials touting local goods and services are wasted on listeners plugged into PCs in New York, New Mexico, or New Caledonia. With the new technology, the station can deliver two sets of ads--conventional ads to terrestrial signal listeners and targeted commercials to Net listeners based on where they are, who they are, and what type of station they're listening to.

Another Approach: Listener's Choice

Taking a different approach is a fairly new company called XACT Radio. Instead of splitting the broadcast to Net and terrestrial radio audiences, XACT offers radio stations a special Internet player that users can download for free from an individual station's Web site. The network now has eight stations on board and is close to confirming deals with several dozen others.

Users select from the station's standard playlist and get an average of one Internet-only commercial every 15 minutes, according to Eric Neumann, XACT's CEO. Or, they can pick tunes from another musical genre, certain artists, or even individual songs that can be inserted into the mix from XACT's own library of 50,000 pop tunes.

Because giving listeners total control of song selection is against federal copyright law, users of XACT's technology and other personalized music services can't specify when or exactly how many times any particular tune is played.

"With the copyright act, we have to ride the fine line to what makes sense to the consumer so it's friendly to them and makes sense," Neumann says. "We don't want to make it like they won't ever buy a CD again."