Marketing of a radio station's stream vs its OTA signal

semoochie said:

Online radio stations have to pay per subscriber. I was under the impression that actual radio stations didn't have to, for their online stream.

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If you're talking about music royalties, everyone pays. But online streams owned by broadcasters get a slightly lower rate, which is why Pandora bought a radio station in South Dakota. It also explains why IHeart negotiated directly with certain labels, and is paying them a portion of on-air revenues for a discount on their online royalties.

My question is why would an on-air station primarily operate as an online stream, when the costs are higher, and the revenues are lower.

>>>My question is why would an on-air station primarily operate as an online stream, when the costs are higher, and the revenues are lower.<<<

Judging from almost all of the posts, you're right, the idea probably doesn't make sense for a radio station owner, even if it is a small AM radio station, which would want to try a music intensive format.

Brian Bowers said:

Judging from almost all of the posts, you're right, the idea probably doesn't make sense for a radio station owner, even if it is a small AM radio station, which would want to try a music intensive format.

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Now you're catching on. If Pandora can't make a profit with 70 million users, what makes you think a small AM owner can do better?

The online radio business is stacked against the broadcasters. That's how the recording industry wants it.

frankberry said:

Please do provide a link which reports that "radio station streaming listenership is dramatically growing every minute."
As I understand the facts, streaming for most stations does not bring in revenue. Streaming actually costs more than their streaming Ads can generate.
As more and more people listen to the streams, the streaming costs go up.
That is why a number of stations limit (listener via streaming) connections to the station's coverage area.

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Frank how do radio stations do that ... Limit the connections?? I have never been prohibited from accessing and listening to any stream of an OTA station and I have listened for an extended period of time.

SuperRadioFan said:

Frank how do radio stations do that ... Limit the connections?? I have never been prohibited from accessing and listening to any stream of an OTA station and I have listened for an extended period of time.

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Geo-fencing:

http://www.radioworld.com/TabId/64/Default.aspx?ArticleId=270236

landtuna said:

If you are outside northern CA/Reno area try listening to 103.7 The River at: http://www.river1037.com/ You will get a message like the following:

This station is not streaming to your geographic area at the moment. You can interact with most of the player features, but will not be able to hear the audio stream. Please check back later, or contact the station if you have questions.

Unfortunately, you will not get a response should you write to ask why they are geo-blocking. The reason is, of course, it costs them money to stream and this is a station supported solely by local-to-Reno-location ads. They get no benefit from streaming outside the Reno market.

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There is a benefit. They can reach their listeners while they're on vacation and never lose them.

semoochie said:

There is a benefit. They can reach their listeners while they're on vacation and never lose them.

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The negatives outweigh the positives. Not much money in streaming to begin with.

landtuna said:

The type of ads run on The River are not the type that would be useful to locals on vacation. Too bad too because this is positively the best Oldies station in the land.

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That's not what I meant. By making your station accessible to its listeners, no matter where they go, you create a "top of mind" awareness so when they think of radio, they automatically think of your station. Can you say "P1"?

semoochie said:

That's not what I meant. By making your station accessible to its listeners, no matter where they go, you create a "top of mind" awareness so when they think of radio, they automatically think of your station. Can you say "P1"?

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You have to balance that with the cost. And for some, the cost of internet radio just doesn't make sense.

landtuna said:

That is, of course, very valid. I would love to have The River in my car and at my home but they don't want me.

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I doubt they don't want you, it's more like they can't afford you. With the royalty rates the way they are (per song, per listener) it really adds up. There is also a cost in accounting and reporting that royalty to Sound Exchange, which can be more onerous than just paying the fee. Unless there are thousands of on-line listeners, nobody is interested in sponsoring it, so for many stations, streaming is just a big negative number generator.

Chuck said:

Unless there are thousands of on-line listeners, nobody is interested in sponsoring it, so for many stations, streaming is just a big negative number generator.

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And the bad news is that the more online listeners there are, the higher the royalty rate. So the law discourages stations from attracting large numbers of streamers. But as you say, it takes large numbers to attract a sponsor.

TheBigA said:

One example I'll give is a college sold it's broadcast FM station, claiming its students no longer listened to broadcasting. They instead set up an online radio station, expecting listenership to stay about the same. They went from a station that had thousands of listeners to less than a hundred. Broadcasting is still more efficient in reaching large numbers of people, if that's your goal.

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KTRU sold to Houston Public Media because there was a willing buyer who needed it to off-load classical music programming from KUHF, in order to offer all-news public radio (NPR) 24/7. Apparently it helped that the UH president lives around the corner from Rice University.

Due to the terms of the bequest of their record collection, they had to simulcast the classical station on HD-2. I heard that they did not raise enough money during a pledge drive last year, which led to the entire classical music staff being laid-off and automating the station. Now they are simulcasting on KUHT 8.5.

KTRU became an internet radio station, but leased KPFT's HD-2 channel for 5 years. So technically they have a broadcast presence, but not many people who can receive(/decode) their signal.