Really thus far in its 17 year history internet radio is a hobby, a game, a feature. It's a collection of ears. Until the public, in critical mass, is willing to pay for content on internet radio it will never become a business. If an internet radio company grabs supreme content like Howard or the NFL, then Sirius has something to worry about. There is no barrier to entry for music that people can get for free in thousands of places on the net. Music is not compelling exclusive content.
Really, radio is Mel's game to lose. Right now I believe he has the only radio model that has mass appeal to paying subscribers. There is a person who could have made internet radio a business for Pandora or Slacker or Last.fm. That person is Howard. He chose to stay with Sirius. I have serious doubts that these "big names" in internet radio even approached him for a deal last year.
That said, I don't think those with a shoestring budget will beat Pandora. Slacker, who makes the best product, has yet to contest Pandora. They are getting beat 5 to 1 last time I checked.
You want to compare the search advertising business to the internet radio "business"? Go right ahead......... There isn't anybody in the media industry that would agree with you. No one.
The real problem here is you are obviously living in the 90s internet techie era. An era long over. Nobody gets judged in the new media industry by eyeballs or ears listening anymore. They get judged by cash flow. In 17 years nobody has been successful at internet radio. Pandora has registered 94 million people. 94 Million!!! And their cash flow stayed negative. With no projection on positive cash flow. What happens when thousands of other net radio companies hit smartphones and start fragmenting their audience? Not a tough equation at all.
No barrier to entry at all.
Last edited by MUSCLE13; 06-23-2011 at 12:06 AM.
It seems pretty clear to me that Pandora and the likes are still in the phase where they are willing to burn money to attract a larger base. Someday they will flip the switch and then we will find out if people are really willing to pay.
I don't want to get into a debate about whether or not they will be successful, frankly, I don't care. I only chimed in on this because you were originally sticking to a point that there is no barrier to entry... it is my opinion that there is and even though there is... it doesn't matter.
Again, we have strayed far from the original point.
muscle = no barrier
charles = barrier but, who cares.
Internet radio has no barrier to entry. 17 years and nobody has made money. You guys push internet radio on Sirius like its a pot of gold. Its a pile of shit industry and the low margins would destroy Sirius stock if they went at the internet like Pandora does. There is only one way to make radio work - satellite, terrestrial, internet, and thats supreme content. Pandora has none. Thats why they have less than a million paying subs. The thousands of free internet radio stations that are coming to smartphones will fragment the audience. If they had exclusive content then maybe they could fight off the inevitable fragmentation.
Last edited by MUSCLE13; 06-23-2011 at 12:31 AM.
Your nephew did not create an Internet Radio company. Live 365 did that. Your nephew merely has created a channel on that platform which he can then share with others. As people listen royalties are paid, as with all Internet radio streaming services.
Your nephew did not negotiate with the record labels. He does not have to seek out and sign deal with advertisers. He does not need to track what songs play so that the appropriate royalties are paid. He did not write the code that makes the platform work. He does not update that code. He does not sign deals with Live356. He is simply a user.
Internet Radio companies have substantial barriers to entry:
1. They must negotiate streaming rights in the countries where they want to broadcast. Spotify has been negotiating for almost a year to get into the United States. You can't just up and say I want to stream music to Europe and do it. If I wanted to start an Internet radio company today, it would take millions of dollars, thousands of man-hours, and about a year to make it happen.
2. They need to develop a compelling website interface that can handle the traffic that they hope to bring.
3. They need to market their brand so that their business can be viable. Marketing is not cheap.
4. Someone starting tof=day needs to be at least as compelling as the likes of Pandora, Mog, Slacker, iHeartRadio, etc. to even have a chance. Many that have dollars, time, and have entered negotiations will still fail. The existence of these very companies is a barrier in and of itself.
Simply stated the barriers are substantial. I don't worry about the "hundreds" that want to try.....I worry about the 5 or 6 that become viable. Not anyone can create these things, and certainly not a child. The viable ones have venture capitalists that back the launch, and even raising the money is no easy feat.
You better worry about the thousands of other like my nephew who does internet radio for free. Because when you get a million internet radio stations with 100 listeners a piece thats 100 million listeners being fragmented. I know of 2 terrestrial radio stations that were sold and taken off the air and started back on Live365. One is WLIR a new wave Lomg Island station from the 80s that used to beat KRock in Arbitron ratings in that era.
Anybody including the hundreds of thousands of bloggers such as yourself can create internet radio for nothing. This creates fragmentation for the big boys.
As much as you love your internet music radio, it is available anywhere for free. There is nothing exclusive about music on the net. If there was something compelling about it that people would pay for it wouldn't be free. That is for certain.
You have no background in radio Spencer. None at all. People like Smulyan, Karmazin Pittman, a couple of which are in the Radio Hall of Fame and one who invented MTV have stated there is no barrier to entry. Pittman has questioned whether it is a business or a feature. They know more than you Spencer. Like it or not. Everybody knows that any and all of the radio industry is trying to make money on internet radio. Including all the aforementioned. Nobody is doing it. As much as you love it NOBODY has done it in 17 years. There is a reason for that. And that reason is not cars. There were tens of millions of people listening to net radio before smartphones got it into cars. The reason nobody has made money at it is no barrier to entry. They fragmented each other on pcs. They will fragment each other on smartphones. The only hope for internet radio is content and the net companies can't afford it.
Watch Pandora 2-3 years from now. Remember Atari and Odessey's Pong? You are seeing the tip of the iceberg.
Last edited by MUSCLE13; 06-23-2011 at 12:59 AM.
Prior to the last couple of years they made zero dollars from advertising. They didn't even have an ad platform.
No one wants to search all over the place for a bunch of hack niche stations. I want the 5 best front and center. There are tens of thousands of search engines in the world yet Google controls something crazy like 65% of all searches with Bing and Yahoo accounting for another 30%. Why didn't the fragmentation affect them? How is radio any different? People want the best possible product and there might be room for a few others. The market proves that with everything.
Stop and think for a minute about all of the things that were labeled impossible or impracticable to produce...
Doctors... DOCTORS... told people it was healthy to smoke and they believed it to be true. They were in commercials pushing the product and all the world believed the "people who were smarter than them."
The world we live in now is very different from 17 years ago. VERY different.