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AG News: 9/13/2006


Internet Radio and Independent Broadcasters

Received a request from M. Bruce Abbott, owner of RadioLounge USA. After visiting his web site, it's clear to me that M. (or Bruce, or Mr. Abbott) believes radio still holds potential despite the industry's diluted effectiveneness.

In response to a couple of articles posted here at AG, M. Bruce wrote: Is there a future for the independent online broadcaster? Are there advertisers out there who would buy 100,000 qualified eyeballs as opposed to the shotgun blast of millions, or is that a thing of the past? Are there independent success stories you know of? If so, what were their revenues and expenses?

He also threw out the $1,000,000 question: Is there any chance of an independent [online station] making money anymore?

In short, yes there is; but not until major changes occur in the way independents approach their product.

In long, I agree with the view that radio is not dead, and have stated so many times. The style of broadcast radio that's been turning off the audience and advertisers for a decade, though, is dead. Unfortunately, much of this style is now being placed online - sans the commercials.

To understand what must happen to salvage radio's lost credibility, we need to consider that radio serves two masters with intersecting needs: the audience and advertisers.

"The audience and the advertisers" sounds like a fairy tale title. With each new audience grouping we have (defining content more thinly into specialized formats), we are able to more easily tag the common thread that each audience carries.

Radio's core classic rock audience is easily identified and differentiated from the core altenative rock audince. The advertiser has better control of who hears their message. That's where online radio best fits, and why the answer to "Is there a future for the independent online broadcaster?" is yes.

Here's where the work is, though: 1) creating programming which attracts an audience because it offers what's not available elsewhere, 2) promoting the existence of this programming, and 3) selling this audience to the advertiser (or agency) with the same zeal that an advertiser sells products on your air.

Competition never leads to less work. So, look at the competition and decide for yourself how much more work you need to make your independent station stand out. Here are your major online radio portals:

Yahoo! Launch
MSN Radio
AOL Radio
Live 365

A lesser known, but very active, independent radio portal is Audio Graphics' RadioRow. The first three (listed above) deal with their own branded stations; the fourth offers independent stations around a single brand. RadioRow lists indies and commercial broadcasters with an online presence. Combined, together they offer thousands of stations.

You can see there are plenty of people looking to build an online radio audience. So if you want to have repeat visitors (to build your audience on), you must create a radio program that gets attention. That requires much more work than the thousands of stations listed in these radio portals are doing today.

You must work to get noticed, as in getting listed on all radio portals and search engines. RRadio Network surveys show that 45% of the internet radio audience find stations this way.

You must do work to build a relationship with your audience that goes beyond serving music. When local radio works it's because, after the music stops, the station delivers information or entertainment that the audience can relate to. There's not much of this in the programming of online radio.

You then need to build quantifiable data about who is in your audience, something a media buyer can show their clients to support the opinion that your radio station is a good way to reach a targeted group. The industry has bellowed its accountability and connection with the audience. If these exist, it should have a firm grasp on "who" is listening. Too many online station owners approach advertisers with an emotional statement, such as "We offer better programming" or "We have the best music."

A buyer of advertising is like a buyer of bread. They want the freshest, best brand. If yours in not perceived as either, there's a long road to hoe in getting someone to write you a check for reaching the audience you've gathered.

Data about your audience supports your contention that the advertiser's getting what's best for them when buying airtime on your station. The fresh sound you offer is attractive, but the description of who is in your audience shows it as "the best" and seals the deal.

By selling at the current online radio CPM of $1.50-$2, you can see there's a need to have dozens of advertisers footing the bills each day. To get that many advertisers to say "yes," you need to weed through thousands of potential advertisers who are going to say "no." More work.

Still more work is ahead to create an invoicing and affidavit system similar to what media buyers are familiar with. Expecting them to accept digital paperwork that does not meet the standards of current media buying is wishful thinking.

Finally, aggregating audience with other station owners is a way for independent operators to expand what they offer an advertiser. I consider it essential to making profit. Here's why:

If your station reaches 100,000 people each month - and only a sliver
of the independent stations do this today - you are reaching 3,300
persons a day (on average). Advertisers are looking for a broader reach.
Being able to offer the combined audience of multiple stations delivers this.

Here's an opinion. If you wish to make a business out of an online radio station, the split of work required to make it go is this: 20% programming, 35% data gathering, 40% promotion and selling to advertisers, and 5% affiliating with others. (Administrative and licensing are not mentioned. They're extra.)

If you look at how most online station are run today, you see the split appears more like 95% programming and 5% luck, with the other elements in limbo.

Who to sell advertising to? Advertisers that stand to gain from being attached to new concepts in non-traditional media; financial institutions, travel, motorcycle, video game manufacturers. They all benefit from consumers' new found online skills. Early FM stations approached advertisers of stereo equipment and music with the same focus.

Lastly are these two questions from Bruce: 1) Are there independent success stories you know of? 2) If so, what were their revenues and expenses?

1) Yes - a few making noise with their stations (in the best kind of way)
are Radio Paradise, Club 977, Digitally Imported, KNAC.COM,
3WK, AccuRadio, RadioIO, and Soma FM. But we also know
the story of WOXY FM.

2) No clue about revenues and expenses. The above are all long-time
online stations that are deemed successful because they are still around,
guided by their original owners. And, unless they are doing it out of love,
we can guess they are making money.

















About Contact Indie Artists Radio Stations Audience Data Privacy




President, Audio Graphics, Inc.
Ken Dardis
Online Since January 1997



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