Defining Success for Internet Radio Industry

By James | Posted 203 days ago
Feature Article
Today I found someone commenting on an article: "I think you should re-do the research on this and rewrite this article now that its 2 years later and Online radio is booming." My response: "No need to 're-do the research' ... very little has changed (with the exception of adding multiple big name players - all are operating at a loss)."

Today there still are few independent online radio stations making profit. The possiblity that this will change is slim because of another concern indicated in that June 2011 article: "There are many services that offer people an ability to build a radio station online. But there are no classes given on how to make that station a business."

The comment that I saw yesterday suggests "Online radio is booming." What it does not do is define the word "booming." Let's do that before we start howling with joy.
Are more people listening? Without a doubt, yes. But, the question I'd pose is this: Are more stations making profit? Indications are that answer is no.

Checking Dictionary.com for "booming," you find "a period of rapid economic growth, prosperity, high wages and prices, and relatively full employment." If an online radio station's revenue generating "product" is advertising, I'm not aware of any online radio station that is booming. No more than in 2011. (This goes across the radio industry - pureplay companies and broadcaster's streams.)

So, this concept that the internet radio industry is "booming" is based on either data I've not seen (please provide, if you have some), or it is flat out wrong. I'm going with the latter.

What's changed are these elements: 1) The explosive growth in advertising availabilities which, by supply and demand, has lowered the worth of an audio ad; 2) The world of independent online radio still lacks a central voice, Request for Proposal (RFP) process, standardized invoicing, and - most damaging - no post-campaign analysis (which is offered by much of the digital advertising world).

Defining success for an online radio station can be done in two ways: by assessing the joy it brings a station owner in playing the hits, or by looking at the Profit & Loss statement. Pick the former and "success" is similar to a weekend golfer's pleasure at duffing his way through 18 holes. Nothing's gained from this hobby, except the enjoyment it brings - and there's nothing wrong with this as a measurement for an online radio station's success.

But, if we define "success" as whether a P&L sits in the black, you'll find extremely few station owners smiling.

Very little has changed since 2011, with the exception of those big names getting into the online radio industry. If you notice, they are the only names you see mentioned in radio industry trades. These trade magazines are hoping to some day realize an advertising silo from this new industry, so it's important to mention those companies with deep pockets now.

As for the consumer? More people are listening to radio online but they demand fewer commercials, want the ability to skip songs, define their preferred style of music station (aka: Pandora), and have the ease to find and listen to a station reduced to an effortless movement. All of these require formalized world-class software development, which takes millions of dollars to produce.

These online stations are delivering a better user experience for less revenue. That said, the only companies making money (profit) today are internet radio industry rep firms that schedule advertising on these stations. If that's your definition of "success," then I accept being wrong. I don't believe that's the case, though, for any independent online radio station owner.


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