Same-Old Same-Old

Check out this article from over 10 years ago:

Tuesday, Jun 6, 2000 15:26 ET

Radio Roadkill

Will Net car radios squash traditional broadcasters flat?
By Damien Cave

Driving in my car, I turn on the radio, and like Bruce Springsteen (who penned that line), I'm on fire. Sure, it's 4 a.m. and the Wyoming grasslands lolling by my window make me want to sleep but my Internet radio is tuned to a samba station in Rio de Janeiro and I feel like I could drive forever. OK, this is still just a dream, but before long you will be able to tune in your hometown station from a car on the other side of the globe or sit through your daily rush hour while listening to an Argentine tango station or the jazz of WWOZ in New Orleans from wherever you live.

By next year, a few American cars, including some Lincolns, will roll out of the factory with Web-radio devices already installed. And Motorola expects to install its "iRadio," a wireless Web connection for cars, in some European autos in 2001. Sirius Satellite Radio and XM Satellite Radio are developing in-car devices that by next year should offer up to 100 radio channels each, and Aram Sinnreich, an analyst with Jupiter Communications, expects several other companies, like the General Motors subsidiary OnStar and the wireless audio on-demand service Command Audio, to add Internet radio capabilities to their dashboard devices.

What do these devices mean for traditional broadcasters? Will Internet radio -- a term that refers to traditional radio stations that stream their programming online, as well as stations programmed by amateurs or even yourself at sites like SonicNet or Shoutcast -- give independent and alternative stations a leg up? With Internet radio on the brink of having the freedom to travel wherever you do, broadcasters big and small are looking pretty closely at "the future."

"It's going to be a whole new ballgame," says David Freedman, general manager of WWOZ. His station counts about 50,000 listeners to its traditional broadcasts, and 50,000 listeners online; it has not determined how many of its fans listen via both methods, but Freedman is certain the station's Web presence has enlarged its audience. Soon it could go further. Freedman expects small, focused stations to become "international phenomena," partnering with companies, listeners and bands outside their cities, states and countries to create concerts, festivals and CDs.

"It's an incredible fit for us," he says. "In this new medium -- where there's unlimited spectrum -- people like us, people who know what they're about; they have some interesting possibilities."

Of course, traditional radio also "considers the Web an opportunity," says Dana McClintock, vice president of communications for CBS, the parent company of Infinity Broadcasting, which syndicates Howard Stern and owns 163 stations including KROQ in Los Angeles and WXRK in New York. "It's like anything else; there's constant fragmentation. If you keep up with the times, and if you're adaptable, you'll succeed."

But we've heard this rosy outlook before. And while it's fun to give such scenarios a test run, to speculate about whether small stations will kill off the larger competition, it's much too early to predict our culture's station-surfing habits. What we do know is that the economics of Web streaming show that both sides have obstacles to face; and while small and big stations alike try to figure out how to make Web radio profitable, listeners should face the welcome challenge of deciding which of the myriad stations available strikes their fancy.

A "second heyday" for radio is imminent, says Joan Fitzgerald, director of marketing for Arbitron, which measures radio audiences. "We're going to see tremendous growth in streaming media usage in the next two years."

Before car Internet radios hit, several companies will release other devices to free Internet radio from the PC. Sonicbox, for example, has developed a $50 portable MP3 player and radio tuner that lets Internet radio stream through your regular stereo system. The "IM remote tuner" has two parts: a base that attaches to your computer, and a remote. But the key is Sonicbox's software, which uses your computer's Internet connection to pull down 800 stations selected by Sonicbox. The base is simply a transmitter, which sends these sounds to your stereo receiver via 900 Mhz radio waves, and to the remote. To listen, all you have to do is sit back and surf by turning the knobs on the purple, plastic tool. You can also program your own radio station by uploading your MP3 playlists.

Kerbango has also designed a console, which offers a slightly different experience. It doesn't require a computer, just a power outlet, phone line and an Internet connection. Simply turn on the purple-and-green boombox -- which costs about $300 -- and it will connect to the Kerbango Web site, which uses search engine-like software to troll the Web and index stations, checking back each day to make sure the stream hasn't disappeared. To listen, turn the dials. You can search by genre or location or you can spin away, browsing from among more than 4,500 stations.

These devices don't offer "anytime, anywhere" access; you can't go for a jog with your favorite station like you can with a Walkman or portable MP3 player. But both of these companies are looking to incorporate their software into other consumer electronics devices like set-top boxes, stereo receivers, clock radios and, yes, eventually cars. "We're focused on a little bit of software and little bit of hardware that can be inserted in a variety of places," says John Alfano, vice president of marketing for Sonicbox.

Like traditional radio, Web radio is free to listeners and will probably be mainly supported by advertising. But the business plans of Internet radio providers don't look a whole lot like their traditional brethren.

"The Internet turns radio economics on its head," says Marc Auerbach, vice president of marketing for Kerbango. "With broadcast radio, it costs a lot of money to get in -- you have to buy a radio tower; you have to buy the frequency from someone else; you have to hire an ad sales team. But adding an additional listener costs nothing. With Internet radio, the cost to get into radio is cheap but it costs additional money to add users."

For example, RealNetworks' start-up streaming package for a college-like radio station is free. The same is true at sites like Yahoo's Broadcast.com and Shoutcast, which act like clearinghouses for anyone and everyone who wants to broadcast online. But once stations grow, costs quickly multiply. KPIG, a rock station in Monterey, Calif., that counts about 57,000 listeners online and the same number via the airwaves, pays about $15,000 each month to maintain the bandwidth for its online streaming.

KCRW, a Santa Monica, Calif., public radio station known for its eclectic programming, loses about $75,000 each year on its investment in streaming, according to general manager Ruth Seymour. And no new purple-and-green boombox or car radio seems able to stem the rising costs of labor, archiving and bandwidth, she says. But she remains optimistic that if the folks at KCRW keep doing what they love, the fans and the money will follow.

"I don't see the future in terms of e-commerce; I don't see the future in terms of looking at screens," says Seymour. "We're all radio people here and we believe in it."

Her excitement seems warranted. While Americans are spending less time listening to traditional radio (9 percent less time in 1999 than 1998, according to Arbitron) some 11 million Americans listen to online radio each week, Arbitron reports. The growth in Web radio audiences has been a real boon to public and alternative stations, which can suddenly find listeners far beyond the reach of their broadcast signal. Some of these new Web listeners are even joining membership drives for the once-local stations. WWOZ, which plays lots of jazz and broadcasts from Louis Armstrong Park in the heart of New Orleans, now receives some 10 to 15 percent of its financial support from outside its local audience, says station manager Freedman. KCRW, which figures its online listeners represent about 40 percent of the station's total audience, finds its Web listeners are also contributing in droves, says Seymour.

But the online stations are finding new ways to earn revenue too. RealNetworks, Sonicbox and a handful of other companies are developing software that lets Internet radio stations swap ads on live radio broadcasts -- say, taking out an ad for a local car dealership and replacing it with an ad for a national product. And Sonicbox plans to offer a "buy" button on its device that links to a CD vendor.

Of course, not everyone is convinced that these little bells and whistles will amount to much on the bottom line. Some traditional broadcasters, like CBS, have not figured out how to make money streaming their programming online, so they just haven't tried the Web. "We're still looking for an optimum business model," says McClintock.

KCRW's Seymour is just as uncertain about the business model, but much more optimistic about its possibilities. "Do I think that in the long run that the investment will pay? Yes, I think so," she says. "But if you ask me how, I have no idea."

http://www.salon.com/technology/feat...internet_radio

worth repeating that last line . . .

KCRW's Seymour is just as uncertain about the business model, but much more optimistic about its possibilities. "Do I think that in the long run that the investment will pay? Yes, I think so," she says. "But if you ask me how, I have no idea."

. . . the more things change, the more they stay the same.

Quoting Mel Karmazin at the Liberty Media Investor Conference on 10/1/10:

"Arts & Crafts matter, but COMMERCE (emphasis added) matters"

"At this point there are likely some “passionate” fans saying, ” but these other companies can not make money like Sirius XM”. I could not care less how much money they make. Sirius XM needs consumers not investors."

Mel better damn well be sure not to concentrate focus on gaining subs in a lower margin business than sat radio. If Sirius starts getting a majority of subs for the much less attractive internet business rather than the sat business I am out of this stock in a heartbeat. Lower margins mean much lower stock price and I mean much lower.

For some reason Spencer is so in love with internet radio himself that he has completely closed his mind to the horrible business model that it truly represents. It's called being closed minded and only believing that what you like is the right business.

The business has no barriers to entry, cannot monetize its users and will have unlimited radio app competition causing severe fragmentation. It's simply a bad business and Mel has done a heck of a job addressing it for what it really is - a good way to keep sat subscribers loyal and a terrible way to focus your business on gaining internet only subs.

Spencer always says how can people say its a good business for Sirius and bad for others? The answer is internet radio is SIMPLY NOT A BUSINESS. It is an add-on to reduce churn of sat subscribers. Once internet radio becomes the majority part of your business YOU DON'T HAVE A BUSINESS! Mel would never do that to Sirius.

Spencer loves internet radio. Let him love it. He has closed his mind to the real fundamentals of the radio business. No barrier to entry = failing business model.