[Dixielandjazz] The Battle For Internet Radio

[Steve Barbone]

Her is one of the main reasons for the royalty legislation pending in the
USA. It is in "Big" radio's interest to drive out the little guys, some of
whom stream OKOM.

Cheers,
Steve Barbone


NY TIMES - June 12, 2007 - By JEFF LEEDS

Big Radio Makes a Grab for Internet Listeners

Last week a radio D.J. known as Vibegrrl, who works the midday shift on Hot
99.5, a Washington pop station, offered her listeners the chance to receive
tickets to see the rock band Hinder.

But to win, they had to do more than dial in at the right moment. They first
had to visit Hot 99.5¹s Web site and identify the woman wearing a thong, as
shown from behind, and then call the studio. (Unsurprisingly the answer was
Britney Spears.)

³Everybody¹s on the Internet all day,² said Vibegrrl, whose real name is
Lara Dua. ³It would be just kind of not smart if we weren¹t making that part
of what we do.² Interaction with listeners used to be ³very limited,² she
added. Now, though, ³I¹m chatting and blogging and doing research and
answering phones all at the same time.²

After ceding ground (and potential advertising dollars) for years to an army
of autonomous Internet radio stations, some of which are run from basements
and spare bedrooms, the nation¹s biggest broadcasters are now marching
online, determined to corral the next generation of listeners. The result
may be a showdown to define the future of the medium.

Confronted by a slow erosion of listeners who are turning to iPods, podcasts
and other sources for entertainment, the radio corporations are trying to
merge their over-the-air music and D.J. chatter with the Web, adding online
streams of their broadcasts and features already found on many independent
Web-based stations. These include live chat rooms, blogs and MySpace-style
social networking features.

Late last month, CBS said it had paid $280 million to acquire Last FM
(last.fm), a popular Web radio service where listeners can customize
stations based on their personal taste, and also explore other users¹
playlists. And Clear Channel, the biggest radio corporation, with a stable
of more than 800 stations, has built miniature social networks into the Web
sites of Hot 99.5 (hot995.com) and 7 other pop-music stations in major
markets in the latest step in an ambitious digital initiative.

All of this comes at an inopportune moment for small, Internet-based radio
stations, which are facing a sharp increase in the royalties they must pay
to record labels (and artists) for playing their music. The online stations
had previously paid a percentage of their revenue for music streamed to
United States listeners, ‹ in effect ensuring that their costs would not
exceed whatever sales they received. But a federal panel, the Copyright
Royalty Board, has set new rates effective July 15 that alter that structure
so the Internet radio stations are charged a fee each time a user listens to
a song.

Soma FM (somafm.com), a San Francisco-based Web site housing 11 stations
specializing in genres like rootsy Americana and spy-movie themes, owed
about $20,000 for 2006 under the previous rate structure, said the site¹s
founder, Rusty Hodge. But Mr. Hodge, who said the stations combined
generally attracted a peak audience of 12,000 at any given moment, figures
that the rates would translate to a bill of $600,000 for the same year.

Broadcasters of various sizes have been rallying support in Congress to
supersede the panel¹s decision. ³If it stands, then we¹re all done for,²
said Ted Leibowitz, a software engineer and founder of BAGeL Radio
(bagelradio.com), an online service specializing in indie rock that he runs
from a bedroom in his San Francisco apartment. For listeners, he said, the
loss of potential choices would be akin to what satellite TV subscribers
would face if their satellite crashed. ³What people will be offered will be
one one-thousandth of what they¹re offered today,² he said.

The cost of playing music online could become a deterrent for the
traditional radio broadcasters too as more of them stream music on the Web.
But it¹s a price they may not be able to avoid; advertisers are flocking
online. For the first time marketers are spending more money to advertise
online than on the radio, according to TNS Media Intelligence, which tracks
ad spending. Internet sites accounted for 7.7 percent of ad spending for the
first quarter of the year, compared with radio¹s 6.6 percent, TNS said.

Broadcast radio still commands a massive audience: An estimated 230 million
people tune in each week. The trick for the big radio corporations, though,
is that pursuing listeners online may mean developing a wholly different
approach to programming.

Many Internet-based stations say their medium allows them to offer an
abundance of genres far outside the boundaries of traditional over-the-air
music stations, often with playlists that can be tailored to the taste of
the individual listener. Pandora (pandora.com), one of the most popular
Internet radio services with roughly seven million users, creates
personalized stations based on the characteristics of users¹ favorite songs.
Live 365 (live365.com), which says it has four million listeners a month, is
a searchable portal to thousands of tiny stations playing genres ranging
from neo-soul to Christian blues.

Given the proliferation of wireless Internet access, many of the fledgling
radio services hope that fans will soon be able to flip on an online radio
stream while driving to work instead of tuning into the local morning radio
D.J. ³It¹s just a matter of time before you can get Internet streams
wherever you are,² said Tim Westergren, a co-founder of Pandora.

How far the traditional radio broadcasters will, or can, go to match the
diversity of music found on independent Internet stations is far from clear.
One effort at Clear Channel involves letting fans choose to hear songs
posted by unsigned or other emerging artists, and company executives say
some will be considered for on-air exposure.

The bigger focus is on developing features that can be rapidly promoted
using the chains¹ mass and reach. Clear Channel¹s Hot 99.5 in Washington has
said it would distribute $10,000 to listeners when its nascent social
network (the ³Hot Spot²) reached 10,000 members. On the company¹s Z100 in
New York, tickets to see a performance by Beyoncé were recently being given
away in the station¹s chat room. Fans could also join the pop station¹s
social network, the ³Z-Zone.²

In the works are similar networks for rock and sports stations, said Evan
Harrison, a former America Online executive who has overseen Clear Channel¹s
digital efforts since 2004.

³If we weren¹t offering our listeners an opportunity to interact, they would
simply choose somewhere else to go for it,² Mr. Harrison said.

The next battlefront may open in the mobile world: Clear Channel and Pandora
have each begun to offer interactive features though cellular phones.
Listeners of certain Clear Channel stations can receive notices alerting
them before a specific song plays, for example, while users of Sprint phones
can go online and build a unique Pandora station around their personal
taste.

Nonetheless there is still a sense among some Internet broadcasters that the
untamed online frontier where they have cultivated listeners is coming to a
close ‹ or at least becoming more crowded.

Mr. Hodge of Soma FM had been musing about creating a new online station
catering to fans of laid-back 1970¹s oldies, featuring artists like Crosby,
Stills & Nash and the Doobie Brothers. But then a couple of weeks ago he
heard that the same mellow music would be broadcast on a radio station in
San Francisco, KFRC-FM, which is owned by CBS, and streamed on the station¹s
Web site.

Mr. Hodge said he decided to shelve his idea for the moment, figuring that
CBS would grab many of his potential listeners. Still, ³I don¹t think most
of us are intimidated² by the big radio companies¹ push online, he said. ³If
you ask me again in two years, am I going to be worried, that¹s probably
going to be a different answer.²