Ambitious Local Online Radio Startup Flops

Goom Radio was launched less than 2 years ago. Using the former studios of Z100 in Jersey CIty, they have been operating a number of online radio stations with professional dj's. Some broadcast live. It was supported by commercials, and prided itself on high quality audio.
According to AllAccess, they announced a day or two ago that they are letting the staff go and shutting down the stations. This could be an indication that while online radio competes with terrestrial, it may be very difficult to make a significant profit from it, given the high music royalty fees.

Goom Radio: http://www.goomradio.us/

The last of the live programming on Goom - "The Ham Radio Show" on The Machine - aired last night.

Goom, I believe, is based in France. I guess the plan is to shut down the US stations and continue operations in their homeland.

Barry said:

Goom Radio... was supported by commercials, and prided itself on high quality audio...

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Recently, I never heard a single commercial on a number of their channels. They even had the TargetSpot program for awhile, but eventually did away with that...

I guess the only thing they had to pride themselves on was their "G-Sound" thing.

Always the good internet stations get shut down, but operating on a pro level, yes those rates are through the roof. So much for "In The Club" I got used to that stream :-\

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Remember when they first signed on, they had a channel dedicated to exclusively playing Madonna music? It was called "Candy Station." Then around the time they launched in 2009, they added an all-Michael Jackson stream (of course, he had died just recently, so what better way to draw more potential listeners to your new radio venture than with a channel playing nothing but the King of Pop?).

One company that is trying hard to make online radio with personalities work is Clear Channel. Their IHeartRadio has quite a few online stations with dj's. They also have dedicated traffic channels, and one devoted to political discussion.
Unlike Goom, perhaps Clear Channel has the resources to invest in this for several years in anticipation of a decent financial return. They also have the advantage that some of IHeartRadio stations are being used as HD2 broadcast stations.
RadioInsight states there are indications that Clear Channel may even be planning to compete more directly with satellite radio by offering some subscription supported stations that would remain commercial free.
It will be interesting to find out down the road whether this venture pays off for them.

Some of the IHEARTRADIO (who the hell came up with that idiotic name?) jocks VT shows on local Clear Channel stations including KC 101.3 in New Haven.

I think CBS Radio seems to be doing a much better job streaming their stations over the internet. Also they own the website radio.com which is a easy name.

MarcB said:

IHEARTRADIO (who the hell came up with that idiotic name?)

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Like "Jay Clark" isn't an idiotic name, either?

Using the former studios of Z100 in Jersey CIty, they have been operating a number of online radio stations with professional dj's. Some broadcast live. It was supported by commercials, and prided itself on high quality audio.

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Those former Z100 studios are in a really high rent building and district where the other tenants are big buck financial outfits involved in the stock market and investment banking. Z100 has been one of the most profitable stations in the country for years and could afford that rent and the prestige of being there.

A startup internet broadcasting operation needs to keep its expenses down, and put its money into its marketing and its sound, not its street address. Because nobody listening cares.

They could have put this thing in somebody's basement or garage and nobody listening would know, and they would have saved a bundle on rent.

Still, give these guys credit for trying to create something new, they were unlucky in picking the absolutely wrong business climate to go after advertisers. The recession timing screwed them. A few years from now, when more people are catching their music on their smartphones, or have their home entertainment centers hooked to the net an operation like this might hit it big.

Another indication that it is very difficult to make money offering music streaming online-Last.fm has just announced that they will start charging a subscription fee to those listening to their music on portable devices such as smartphones. They had tried to subsidize it with commercials. Evidently that is not enough, due to high music royalty fees.
The fact also remains that while smartphones may work well in urban areas as an alternative to radio, the signal can be spotty or worse in the outskirts and rural areas.
It is beginning to appear that terrestrial radio may not have that much serious competition online for free, mobile commercial supported professional grade programming.
Online services that will charge a fee for portable usage face tough competition from satellite radio, which is installed in most newer cars, and receives a good signal in most parts of North America.
Article: http://www.fool.com/investing/general/2011/02/07/premium-radios-growing-wall-of-worry.aspx

And here comes the inevitable question from this engineer: What happens to the equipment in that building? Studio had some very nice consoles.

Yeah, I have a few clients that could benefit from that well taken care of (at least when it was part of Z-100) equipment.

I agree with the idea that renting an expensive space for an internet outfit is dumb. In fact, all of your hosts could do it from their respective corners of the region or the world if they have a decent mic, fast enough connection and an automation system that can support a WAN. Why bother with a big studio? You can also pay people less if they live anywhere that isn't in or near NYC.

WNTIRadio said:

Yeah, I have a few clients that could benefit from that well taken care of (at least when it was part of Z-100) equipment.

I agree with the idea that renting an expensive space for an internet outfit is dumb. In fact, all of your hosts could do it from their respective corners of the region or the world if they have a decent mic, fast enough connection and an automation system that can support a WAN. Why bother with a big studio? You can also pay people less if they live anywhere that isn't in or near NYC.

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Having been on both sides of that argument, there's something to be said for staffing a station with people who can actually meet face-to-face. There's a "team" sound that kind of happens - sure, it's probably easy to fake familiarity with the rest of the staff when you're talking up their shifts, but why fake when you don't have to?

The other side of that is that proximity to NYC is also hard to fake - when you're trying to sound relevant, it's better to be in a position where you can actually *be* relevant.

They probably could have done things in a much cheaper (but no less effective) way, though. That was pretty prime real estate. Would it have been better - and cooler - to refurbish a basement somewhere in Manhattan's Gramercy neighborhood?

Though the expansive real estate did not help Goom's bottom line, I would think that the much bigger financial drain is the huge amount they have to pay in music royalties for broadcasting music online. While they do not have some of the expenses that a terrestrial station incurs, they have to pay out far more for the music they play. And evidently they were not able to attract sufficient advertising to make it work, perhaps because the audience may have been too small.
These appear to be problems that all online broadcasters face, if they are trying to profit by offering a professional sounding product with personalities, that has a chance of competing with terrestrial radio.
As for the costly digs, management may have had ambitious plans to be a sort of Sirius XM, which attracts many artists who come in for on air interviews and performances. The satellite radio broadcaster occupies very expensive office space in the McGraw Hill building in Rockefeller Center.

I often hear this assumption that online is good and terrestrial is bad. Online radio has bigger playlists and less repetition. And yet at the end of the day, it turns out that the terrestrial folks are right about programming: Most people want to hear the hits, and they want to hear them often. The second problem that is killing online radio is the music industry's outrageous royalties that often eat up half of the revenues (not profit, but income). In my view they are single-handedly responsible for why online radio has gotten off to such a slow start, and why online radio will become more like terrestrial, in terms of ownership and commercialization. So at the end of the day, the big corporate broadcasters can afford to run online radio as a loss leader, while companies like GOOM can't. How does that help the music industry?

Having been on both sides of that argument, there's something to be said for staffing a station with people who can actually meet face-to-face. There's a "team" sound that kind of happens - sure, it's probably easy to fake familiarity with the rest of the staff when you're talking up their shifts, but why fake when you don't have to?

The other side of that is that proximity to NYC is also hard to fake - when you're trying to sound relevant, it's better to be in a position where you can actually *be* relevant.

They probably could have done things in a much cheaper (but no less effective) way, though. That was pretty prime real estate. Would it have been better - and cooler - to refurbish a basement somewhere in Manhattan's Gramercy neighborhood?

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If people are listening to the music all over the country, or even all over the world, who cares if it comes from NYC? How is what's going on in NYC relevant to the listener in Boulder, Co. or France? Being local on the internet as an internet only outfit is a waste of time. Take a look at Pandora. That could come from a server in a men's room stall at a Stuckey's on I-81 in Virginia and it doesn't make one damn bit of difference.

The model is different for 'net only. Maybe have one satellite studio somewhere in NYC to get artist interviews. Or again, take your portable digital recorder and go to the artists wherever they are.

WNTIRadio said:

Being local on the internet as an internet only outfit is a waste of time.

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It's also a huge mistake. I've read about internet only sports talk stations in markets where they don't have such a station on-air. I did a traffic analysis on those sites and found less than a hundred weekly listeners. That's not a radio station, it's a hobby. You can't cover expenses with that kind of listenership. And without a major advertising campain, no one knows you're there.

WNTIRadio said:

If people are listening to the music all over the country, or even all over the world, who cares if it comes from NYC? How is what's going on in NYC relevant to the listener in Boulder, Co. or France? Being local on the internet as an internet only outfit is a waste of time. Take a look at Pandora. That could come from a server in a men's room stall at a Stuckey's on I-81 in Virginia and it doesn't make one damn bit of difference.

The model is different for 'net only. Maybe have one satellite studio somewhere in NYC to get artist interviews. Or again, take your portable digital recorder and go to the artists wherever they are.

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Yes, but relevance in this case is the sense that the programming's coming from somewhere exciting - where well-known artists drop in regularly with new music, where the best shows are likely to happen, etc. This is the exact opposite of "live and local" mind you - more the sort of thing broadcasters would tout in the sixties and seventies as "live via satellite".

Which is another angle. It's moot, though - whatever angle they were playing, it didn't work.

There are at least 2 online radio stations aimed at country music fans in NYC, which of course does not have a terrestrial station devoted to the genre. One is WOR Country/ The Elephant. The other is Go Country NY, which has voice tracked dj's. It is operated by Mt. Wilson Broadcasting's Go Country 105, in Los Angeles..
I wonder if they attract a significant audience. New Yorkers have the same huge choice of other online country stations as folks do in the rest of the nation. I doubt that many country music listeners in this area are even aware these two online stations exist. But I am glad that there is an effort being made to reach them.
WABC Country online is no longer streaming music, perhaps due to these issues.