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'The Differences Between Traditional Terrestrial Broadcast Radio And Internet Radio' by Grant Goddard
- 2. 1. Introduction
Internet radio broadcasts divide into several types:
Streaming of existing terrestrial AM/FM radio stations by media groups
with current broadcast licences (“simulcasting”)
Streaming of existing terrestrial radio plus enhancements, such as the
ability to listen to or download archived broadcasts of specific
programmes (such as offered by the BBC)
Streaming of internet-only broadcasts where programme content is
determined solely by the supplier (“push” technology)
Customised streaming of internet-only broadcasts where the consumer is
offered some interactivity in determining the programme content (“pull”
technology)
Podcasts, where the consumer downloads a specific pre-recorded radio
programme via the internet for listening at a time of their choice
This paper addresses the differences between traditional AM/FM broadcasts
(which shall be referred to as “terrestrial” radio) and the latter three types of
dedicated internet radio in the preceding list.
2. The Market
2.1 Terrestrial Radio
Traditional terrestrial radio has always been bounded by the technology used
to transmit radio waves, which has altered little since the invention of the radio
medium. The signal from a transmitter, mounted on a mast or a tall building,
can only be heard by the population within an almost perfect circle around that
transmission point. This is the essence of “broadcasting”, by which means a
radio signal is propagated throughout a specific geographical area, whether or
not a particular resident of that area chooses to listen to it or not.
In the most basic radio markets, it is this geographical limitation of
broadcasting radio waves that has led directly to stations producing
programming aimed to appeal specifically to the population of that area.
Stations serve a “community of location” who are provided with local news,
weather reports, travel information and audience interaction, all closely related
to that station’s specific broadcast area:
Community of location
The Differences Between Traditional Terrestrial Broadcast Radio And Internet Radio
©2006 Grant Goddard
page 2
- 3. The “location” that a radio station serves can be part of a city (Radio Jackie
serving Kinston-upon-Thames), a whole city (Capital Radio serving London), a
county (BBC Radio Cornwall) or a country (BBC Radio Four). Even on the
largest scale, the “location” plays the most important part in determining a
station’s programming. For example, a comparative content analysis of the
same day’s morning shows on BBC Radio 4 (serving the UK) and on National
Public Radio (serving the US) would likely show that there were very few
similarities in editorial content between the two.
In more developed markets, the number of radio stations becomes sufficient to
encourage owners to differentiate their channels from each other by adding a
second audience determinant to their programming. Stations start to serve a
specific “community of interest” within their “community of location”. This gives
rise to, for example, a dance music radio station in London, a sports station in
New York City, or an African music station in Paris.
Community
of interest
Community
of location
The extent to which different communities of interest are served by radio
stations in developed markets is determined by:
The regulatory regime (in the UK, station formats are prescribed by
Ofcom)
Frequency planning thresholds that limit the number of stations that can
be broadcast on AM and FM in any one local market
The tastes and interests of the population in a specific market
The economics of serving a particular “community of interest”
The combined effects of these factors can mitigate against substantial
communities of interest being served by a terrestrial radio station. For
example, the huge African community in London has no radio station.
2.2 Internet Radio
The most significant difference between terrestrial radio and internet radio is
the market each of them serves. The very nature of the worldwide web
excludes internet radio from having a “community of location”. The ability to
receive internet radio anywhere in the world is determined solely by the
availability of the relevant technology (computer, internet connection,
soundcard, etc). At a stroke, it becomes impossible for internet radio stations
to include in their programming the very “local” content that is the bread-andbutter of most terrestrial stations. Not only are listeners tuning in within
The Differences Between Traditional Terrestrial Broadcast Radio And Internet Radio
©2006 Grant Goddard
page 3
- 4. different countries, but they also have different language requirements and
timezone existences. A breakfast show on internet radio is likely to be
unsuccessful, because one listener’s breakfast time is the middle of the night
for another listener elsewhere in the world.
This lack of a “community of location” has led to most internet radio stations
focusing almost entirely on the secondary factor that pre-occupies terrestrial
stations – “communities of interest”:
Community of interest
The vast majority of internet radio stations completely ignore their “community
of location”. Indeed, for many stations, it is impossible for a listener to
determine from their web site which country, let alone city, they are
broadcasting from, because such information is in no way a determinant of
whether listeners will be interested in their programming. There does exist a
tiny minority of stations that serve a location (most notably, those that serve
national audiences in the US). And there is a noteworthy exception in MSN’s
1,444 “Local Sounds” internet-only stations, which clone the music playlists of
the most popular terrestrial stations in major US markets, but without their DJ
talk or commercials (or station identifications).1
3. The Content
3.1 Terrestrial Radio
Despite the steady increases in the number of terrestrial radio stations
available in developed markets such as the UK, the US and Canada, some
sources of evidence show that there has not been an accompanying increase
in programming diversity. Consolidation of radio ownership as a result of
legislative change has coincided with a situation where terrestrial stations
have:
1
Adopted similar formats in each market
Centralised music playlists with little or no local variation
Selected music from a smaller library of artists and songs
Incorporated less new music into their output
Overlapped each other’s formats significantly
http://radio.msn.com/
The Differences Between Traditional Terrestrial Broadcast Radio And Internet Radio
©2006 Grant Goddard
page 4
- 5. In the UK, research has highlighted that, in the London market, competing
stations have overlapped each other’s format more substantially in recent
years, a phenomenon that has been labelled “format creep”.2 For the listener,
this can result in a growing lack of differentiation between stations and
sometimes a perceived lack of choice in a radio market such as London that,
on first impressions, would seem to offer a range of different listening options.
In terrestrial radio, the listener can be faced with a choice of stations that might
often sound too similar to each other, and which play a relatively limited
selection of songs, including some with a high rate of repetition.
3.2 Internet Radio
The growing popularity of internet radio can be seen not simply as a response
to the wider ownership of computers and internet connections, but as a
possible reaction to the terrestrial radio industry’s recent inability to satisfy the
changing tastes and interests of available audiences.3 Internet radio has filled
the gap in demand for more specific radio formats that terrestrial broadcasters
have seemed unable to supply.
2
Goddard G., Tools For Radio Content Regulation #1: Playlist Diversity Analysis, private paper, London, January
2003.
3
Evidenced by the declining share of listening of commercial radio since 2001 in RAJAR audience data
The Differences Between Traditional Terrestrial Broadcast Radio And Internet Radio
©2006 Grant Goddard
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- 6. Shoutcast Internet Stations
genre
form at
no. stations % stations
non-music talk
comedy
spoken word
non-music total =
music
rock
pop
trance
house
techno
alternative
80s
metal
gospel
acid jazz
top 40
country
latin
classic
eclectic
college
reggae
ambient
folk
funk
drum & bass
blues
punk
hardcore
urban
industrial
downtempo
breakbeat
contemporary
smooth
asian
ska
new school
old school
african
middle easter
western swing
instrumental
big band
bluegrass
swing
symphonic
film/show
opera
european
turntablism
non-music total =
273
58
41
372
5%
1338
1070
469
467
415
374
305
259
245
243
203
182
154
142
135
130
118
107
105
94
91
90
89
86
83
66
55
47
46
35
34
26
25
24
24
20
19
19
16
16
14
14
11
9
7
5
7526
95%
The above table shows the formats of internet radio stations streaming in the
MP3 format that are listed on the Shoutcast aggregator web site.4 It is not a
complete list of internet streaming services, but includes a substantial number
of independent stations based in many countries. Analysing the format
descriptions that are provided by the stations themselves, it appears that 95%
of the listed stations are music-based, while only 5% are speech-based.
Although rock and pop music are the most numerous genres, there exist
significant numbers of internet radio stations dedicated to more specialised
formats such as trance, techno and house, for which there are no equivalent
terrestrial radio stations.
A new entrant to internet radio could choose to open a station playing “classic
rock hits”, but would have to compete not only with more than a thousand
4
http://www.shoutcast.com on 10 April 2006
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©2006 Grant Goddard
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- 7. other internet-only stations with similar formats, but also with simulcast
streams from rock-formatted terrestrial stations. As a result, this new entrant is
likely to attract less than one-thousandth of the available audience, even if the
playing field were level. In contrast, a station that launched with a tight niche
format, such as taarab music from East Africa, would likely find it is the only
station playing that particular genre on the whole of the internet. Although the
numbers interested in that format in each country would be very small, the total
audience is likely to be greater and significantly more loyal than for one more
rock station that merely adds to several thousand extant rock music stations.
This is precisely what makes internet radio a significant form of
“narrowcasting” that can reach out and touch isolated numbers of people who
may only make up a small proportion of the population in their localities, but
are sufficiently significant in number globally to support a dedicated radio
station. These audiences can never be served satisfactorily by terrestrial radio,
which remains bound by “broadcasting” technology and the need to serve
primarily its community of location. This is why internet radio is considered to
represent an entirely complementary sector to terrestrial radio. Each medium
delivers appropriate content to satisfy different aspects of the human identity,
represented by geographic location for terrestrial stations; and by personal
interests (reggae music or drama) or personal characteristics (ethnicity or
language) for internet stations.
4. The Regulatory Environment
4.1 Terrestrial Radio
The formats of UK commercial radio stations are regulated by Ofcom, including
their music genres and their average speech to music ratios. For example, in
London, these stations’ licences include the following requirements:5
Capital FM – contemporary/chart music – speech >15% daytime
weekdays
Heart FM – adult contemporary music – speech <25%
Magic FM – easy listening music – speech <20% daytime
Kiss FM – dance music – no speech quota
Xfm – alternative rock music – no speech quota
There can exist a “reality gap” between the prescribed music genres and
quotas contained in these licences and the programme content observed onair. For example, recent content analysis of a heritage FM radio station located
in the south of England demonstrated that its average speech content during
weekday daytime programmes was more than double the minimum mandated
in its licence:6
5
http://www.ofcom.org.uk
Goddard, G., 2005. The convention of the regulator is to calculate the proportion of speech or music as a percentage
of the output once commercial minutage has been subtracted.
6
The Differences Between Traditional Terrestrial Broadcast Radio And Internet Radio
©2006 Grant Goddard
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- 8. time
06:00
07:00
08:00
09:00
10:00
11:00
12:00
13:00
14:00
15:00
16:00
17:00
18:00
Total day
music %
of progs
48
47
47
75
72
79
78
80
78
76
70
63
74
69
speech %
of progs
52
53
53
25
28
21
22
20
22
24
30
37
26
31
Market research in local radio markets across the UK continues to produce
results that show one of the main points of dissatisfaction with local
commercial radio stations is that their presenters talk more than desired by
listeners.
4.2 Internet Radio
Early in its existence, Ofcom indicated that it had no wish to licence or regulate
internet radio stations because there was no scarcity of spectrum on the
internet.7 Listening to internet radio has provided many UK citizens with their
first experience of radio that is wholly unregulated by their government.
The vast majority of internet radio stations have no presenters or DJs within
their content, as a pre-requisite to maximising the global appeal of their
programming. The very fact that internet radio is unregulated renders it
impossible to quantify the medium’s speech to music ratios or to be precise
about how many stations are predominantly music. Undoubtedly, it is the
internet’s ability to deliver stations that are music-centred that provides much
of their appeal, particularly to young people.
5. The Listening Environment
5.1 Terrestrial Radio
One of the perceived consumer advantages of terrestrial radio has always
been its portability. A household is likely to have more radio receivers than
television sets, most of which are battery operated, offering the ability to listen
to a station while in the bathroom or kitchen, or relaxing in the garden. Coupled
with this is the ability of radio to be a secondary activity, so that listening can
7
Richard Hooper, Chair of the Radio Authority, Regulating Communications In The Age Of Convergence, speech to
the Institute of Economic Affairs, 14 February 2001
The Differences Between Traditional Terrestrial Broadcast Radio And Internet Radio
©2006 Grant Goddard
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- 9. be achieved simultaneously with other tasks (particularly driving). Radio’s
longevity, in the face of competition from television, computer games and
mobile phones, can be directly accredited to this combination of portability and
secondary activity.
Another reason for terrestrial radio’s durability has been its consistent
technology. Until the recent introduction of digital radio, radio receivers have
not changed since the mass production of the first transistors. With no
obsolescence, radios that may be several decades old can still receive the
same stations as a brand new set. Indeed, this is one reason that the final
switchover from analogue to digital radio has no projected date, because the
industry is aware that current listening levels are enhanced by consumers’
continued use of very dated hardware.
5.2 Internet Radio
Until quite recently, listening to internet radio was an activity confined to sitting
in front of a computer. There was a necessity to use a web browser to locate
the URL of a particular radio station, whilst ensuring that the appropriate audio
player (Windows Media Player, Real Audio Player, or an MP3 player such as
Winamp) was already installed on the computer. Initially, this restricted internet
radio to those who were sufficiently computer-savvy to execute the prerequisites. Home internet connections were also mainly dial-up and proved
insufficiently robust to prevent annoying buffering of audio. Additionally,
firewalls installed in office servers often prevented workers from accessing any
external audio or video streams.
This situation has changed significantly in recent years, because of the
following factors:
8
Internet connections have generally become more robust since the huge
expansion of capacity during the early 2000s
Broadband connections now represent 57% of all internet connections in
the UK8
Windows Media Player version 7.1 (bundled with Windows operating
systems) incorporated the ability to listen to MP3 streams for the first
time. Before that, a dedicated MP3 player was necessary
Wireless networks are becoming more prevalent in homes, particularly as
they are offered and installed by cable providers as part of an initial
TV/phone/broadband introductory package
Standalone internet radios (that connect to a wireless network) are more
competitively priced (below £200) and are more widely available. These
radio receivers look like ordinary radios but offer reception of a wide
range of internet stations via a simple interface. (The failure of the
prototype Kerbango internet radio in 2000 had temporarily stalled such
developments)
Ofcom, The Communications Market, Interim Report, London, February 2006.
The Differences Between Traditional Terrestrial Broadcast Radio And Internet Radio
©2006 Grant Goddard
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- 10.
Although not an internet radio receiver itself, the launch of Sky’s “Gnome”
radio last winter in the UK offers the traditional ease of use of a portable
radio combined with reception of audio from all radio/TV stations on the
Sky EPG. With an extensive cross-promotion marketing campaign, Sky
has introduced non-terrestrial radio to many of its subscribers for the first
time
An increasing number of mobile devices now include software to receive
streaming audio, providing direct competition to car radios and
Walkman/radio combos
Internet radio aggregators on the worldwide web offer one-stop solutions
for consumers seeking internet stations with appropriate formats or music
content. Shoutcast alone offers a search facility of more than 14,000
internet stations
Dominant internet portal such as AOL, Yahoo! and MSN all have “radio”
sections on their homepages where instant access is available to
selections of free and subscription-only radio streams.
ISPs are increasingly offering links to radio stations on their homepages
These developments are significant in improving the ease with which the
consumer can find, access and successfully stream internet radio stations of
their choice, without being tied to a computer. To some extent, it has been
necessary for hardware designers to parse internet radio into a conventional
piece of radio receiver hardware in order for consumers to treat it as “radio”,
rather than as something associated with “computers”. This development
represents the greatest threat to terrestrial radio broadcasters, because as
soon as listeners perceive that there is no difference between tuning in to a
traditional radio station or an internet station, they open the floodgates to a
much wider range of programming choices.
The popularity of internet radio could grow considerably faster once it is
perceived by consumers as simply “radio” and is no longer associated with
computers. This change of perception can be viewed two ways. Either we are
moving into an era of “Radio 2.0” (compared to the old-fashioned Radio 1.0)
where functionality must be “as intuitive and easy to consume – if not more so
– than the current version”.9 Or we are moving into an era when “it stops being
radio [altogether] and turns into something else.”10 Whichever description is
applied, the important development is that the delivery system (the internet)
needs to become transparent to users before non-terrestrial radio can become
more accepted. In the same way that terrestrial radio listeners require no
understanding of electromagnetic waves or frequency modulation to enjoy
radio, it will be essential that listening to internet radio does not require
understanding of the internet or computers.
9
Deloitte, TMT Trends; Predictions, 2006, London, 2006
Geoff Taylor, IFPI speaking at MusicTank seminar, London, 29 March 2006
10
The Differences Between Traditional Terrestrial Broadcast Radio And Internet Radio
©2006 Grant Goddard
page 10
- 11. 6. The Business Model
6.1 Terrestrial Radio
The business model of commercial terrestrial radio has always been the selling
of listeners to advertisers. Money is paid for the ability to propagate a
commercial message to the audience of a station. Listeners have never
entered into the economic transaction directly, but are merely the fish on the
line, captured by the appeal of the station’s programming. To listeners, the
radio experience is free. Research shows that the majority of listeners dislike
radio advertising, but accept listening to it as the only price they pay for the
station’s content. Radio advertising is generally disliked more than television
advertising because it is found to be more obtrusive, less creative and more
repetitive.
Terrestrial radio is dominated almost entirely by fixed costs. Because of the
“broadcast” model the technology uses, a station’s costs are the same
whether one listener or one million listeners are tuned to their radio signal. The
only cost that is variable is that related to advertising sales, which is usually
20% to 30% of revenues and accounts for commissions and expenses of
advertising salespersons and agencies. All other costs – staffing, premises,
administration, transmission, engineering, depreciation and marketing – are
fixed.
The total of these fixed costs varies enormously, dependent more on the size
market in which the station is located, rather than on the size of its revenues or
audience. Although UK radio industry data is not readily available, recent
estimates project that these fixed costs amount to £450,000 for a small local
station; £980,000 for a medium local station; £1.85m for a large local station;
and £23.4m for a London station. In all cases, these estimates relate to
“heritage” stations that were former monopolists in their local markets, rather
than recently launched competitors.11
Staff costs are the single largest operating cost of the terrestrial station. The
smaller the station, the higher the proportion of the cost base is spent on staff.
For a small local station, more than two-thirds of fixed costs can be related to
staffing. These factors create a wide range of performances amongst UK local
commercial stations. Small stations have an average minus 9% operating
margin, while medium stations have an average minus 7% operating margin,
with half the stations in both categories reporting losses. Metropolitan stations
have an average 30% operating margin, while London stations have an 8%
operating margin. Only metropolitan and London stations show an operating
profit, with substantial variations in amounts.12
Although some terrestrial stations are now generating additional revenues from
online activities, it remains the case that on-air advertisements from local and
national advertisers continue to represent the bulk of stations’ income.
11
12
Spectrum Strategy Consultants, Economic Study Of Commercial Radio Licensing, London, 16 December 2003
Ofcom, Radio – Preparing For The Future: Phase 1 – Developing A New Framework, London, 15 December 2004.
The Differences Between Traditional Terrestrial Broadcast Radio And Internet Radio
©2006 Grant Goddard
page 11
- 12. 6.2 Internet Radio
The business model for internet radio is very different. Because radio has
always been viewed by listeners as a “free” good, it has proven very difficult for
internet radio stations to apply a subscription model. Some multi-station
operators offer a number of subscription-only services, but these are usually
an adjunct to a range of free channels. Because the consumer has such a
wide variety of free stations to listen to via the internet, it becomes extremely
difficult for a single provider to succeed by charging.
Advertising revenue remains only a minor part of stations’ revenue and only
has a significant value in the US. Because of the “narrowcast” nature of
internet radio, it is unlikely that an advertiser will want to reach a disparate
audience of, for example, reggae music enthusiasts scattered across the world
who speak different languages. Because the US is not only the dominant
source of internet radio stations, but also the dominant market for internet
radio listeners, the advertising market has developed there more quickly.
Arbitron estimates that, in 2005, 37 million Americans listened to internet radio
at least once a month, up from 11 million four years earlier.
One US report estimates streaming audio advertising revenues as $4.5m in
2004, a fraction of the total $10.5bn spent on internet advertising. Banner
advertising on internet radio web sites is estimated to have generated a further
$30m in 2004, though how much of this relates simply to simulcasts of
terrestrial stations is unknown. The combined total of streaming commercials
and banner advertising is expected to grow tenfold to $320m over the next five
years, though the report cautions these estimates with the caveat: “Where this
goes is anyone’s guess”.13
The majority of internet radio stations are music intensive, and the most
business-minded carry click-through links to Amazon or a comparable retailer
to purchase CDs of the music played to the listener. As the above figures
demonstrate, this is a far more significant source of revenue for internet
broadcasters than on-air advertising. Amazon’s affiliate programme pays from
4% to 8.5% of retail value, according to the total volume of product sold per
quarter. One of the most significant US independent multi-stream internet radio
providers, AccuRadio, says it sells $40,000 worth of CDs per month from its
links to Amazon, which would earn it $3,300 a month. Its 280 stations attract
more than 1m unique listeners per month, with a peak of 20,000 simultaneous
connections during US business hours (internet radio’s peak time worldwide).
Additionally, AccuRadio sells on-air advertising at $14 cost per thousand.14
Whereas terrestrial stations are almost entirely based upon a business model
of fixed costs, internet stations are almost wholly based upon variable costs.
These businesses benefit immensely from scalability, which explains the
growth of tens of thousands of internet stations all over the world. While the
13
Borrell Associates Inc., Here Comes Online Radio – Can Local Broadcasters Tune In To The Opportunity?,
Portsmouth VA, December 2004.
14
http://www.accuradio.com/aboutaccuradio/
The Differences Between Traditional Terrestrial Broadcast Radio And Internet Radio
©2006 Grant Goddard
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- 13. costs of internet stations owned by Yahoo! or MSN undoubtedly run to many
thousands of dollars, it is nevertheless perfectly feasible to operate a smallscale internet station for relatively small sums.
One US report estimates that an internet station can be established for $2000
per year, though even this could prove to be an overestimate. 15 The fixed
costs necessary to establish an internet radio start-up operation are:
A standard computer
A standard broadband internet connection (as low as 128kbps)
Music playout software (free for a basic functional programme or $200 for
a more professional system)
Standard web site hosting
The variable costs are:
Streaming content (commonly music MP3s ripped from CDs)
Streaming audio server (rental)
Marketing costs
Royalty payments
The costs of renting space on a streaming audio server have come down
considerably during the last five years because of over-capacity resulting from
state-of-the-art hardware installed during the internet boom years. One UK
company offers 10 slots on a 32kbps Shoutcast/MP3 server for £2.30 per
month.16 This would allow ten people to connect simultaneously to an audio
stream. In the case of AccuRadio cited above, its peak audience could be
accommodated by renting 20,000 simultaneous connections at a cost of
$9,600 per month, according to one US internet company’s rate card.17 In
reality, additional volume discounts would be negotiable for this amount of
capacity, given that AccuRadio is one of the most listened to internet radio
services in the US.
Marketing costs for internet stations commonly involve online advertising
programmes such as Google AdWords that can be targeted using “keywords”
towards specific web sites and internet searches.18 This is remarkably cost
effective as charges are only incurred when a customer clicks through to the
web site of the internet radio station. Banner exchange deals are also
exploited to drive new customers to the station.
Both the streaming and the marketing costs are completely scalable, according
to upturns and downturns in a station’s revenues, available resources or
popularity. Both can be adjusted on a real time basis, with no contract
commitment longer than one month. In this way, internet radio provides the
owner with considerable flexibility to adjust the variable costs, a luxury that
terrestrial radio cannot enjoy.
15
Borrell Associates Inc., Here Comes Online Radio – Can Local Broadcasters Tune In To The Opportunity?,
Portsmouth VA, December 2004.
http://www.streamsolutions.co.uk/
17
http://www.viastreaming.com/
18
http://www.google.co.uk/ads/
16
The Differences Between Traditional Terrestrial Broadcast Radio And Internet Radio
©2006 Grant Goddard
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- 14. The costs of streaming content vary widely according to the station format
selected. Most internet stations employ no dedicated staff and run on basic
unmanned automation systems. Music can be acquired from promotional
departments of record companies, compiled from private record collections, or
built from existing MP3 sources. Some stations employ live DJs, but the
majority have no on-air staff.
All of these costs are considerably lower than the investment in premises,
studios and hardware required for a terrestrial station launch. If anything, the
costs of starting an internet radio station are considerably closer to that of
starting a community radio station. Remarkably, there is no requirement to
purchase specialised audio or computing equipment, as standard hardware
proves sufficient.
7.0 Benefits
7.1 Consumer benefits
Internet radio generally provides consumers with an additional source of
content that supplements their listening to terrestrial radio. Internet radio
cannot tell you what the weather will be like in your area, cannot warn you of
roadworks on your High Street, and cannot inform you that your train to work
has been cancelled. It is no coincidence that most listening to internet radio
derives from workplaces, where the audio stream is used as background,
whereas terrestrial radio is much more of a foreground source of information in
the morning before leaving home and again in the evening.
In this way, terrestrial radio and internet radio can be viewed as
complementary media, providing consumers with different listening
experiences.
7.2 Industry benefits
While terrestrial radio, for some consumers, has become more predictable and
less exciting, internet radio provides the eclectic, interesting outlook that some
say is lacking in mainstream radio. This is similar to the role that FM radio
stations in the US played in the late 1960s, introducing audiences to new,
innovative music artists and experimenting with new styles of broadcast
presentation. Already, some terrestrial radio owners in the US have reacted to
the new competition by introducing new i-pod type formats on their stations to
imitate the new ways that audiences are mixing music styles and genres. In
the long term, the radio industry is likely to benefit from the influx of innovation
that has arrived with internet radio.
At the same time, record companies have benefited from the role of internet
radio as an extended A&R Department. More than ever, up-and-coming artists
are championed on the internet and achieve a level of visibility that
The Differences Between Traditional Terrestrial Broadcast Radio And Internet Radio
©2006 Grant Goddard
page 14
- 15. encourages major record companies to sign them to deals, knowing that a fan
base has already been established by online activity that includes exposure on
internet radio. Only then would such artists be granted airplay on terrestrial
radio.
8.0 Conclusion
Internet radio is able to provide a narrowcast service to consumers that would
otherwise remain unavailable within the confines of a terrestrial local radio
market. This can be achieved because almost all of an internet radio station’s
costs are variable costs that offer complete scalability of the operation, and
because the market for the internet station is literally the world (or the wired
world, at least).
Grant Goddard is a media analyst / radio specialist / radio consultant with thirty years of
experience in the broadcasting industry, having held senior management and consultancy
roles within the commercial media sector in the United Kingdom, Europe and Asia. Details at
http://www.grantgoddard.co.uk
The Differences Between Traditional Terrestrial Broadcast Radio And Internet Radio
©2006 Grant Goddard
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