Internet Radio Profitability

[RedStateTalkRadio]

Thanks for the info. I've used a few of the guys but never got the response you have even on over the air radio. I hope this agency works better
Bob

Well, that could simply be because I have a more needy audience, at least more needy for the products that I've chosen to advertise on my network. In any case, good luck.

 

[gunterm]

I just recently (May 1st) put my own 24/7 internet radio station online. I've recruited nine other hosts thus far, to join me to form a Conservative Talk Radio Network. Our numbers have been modest to this point, as you would expect, but since all the shows I've placed on my network have an established listener base, I'm confident that over time, more and more listeners will find their way to the network.

Believe it or not, I've already brought in significant ad revenue, using the "Pay-Per-Call" model and in my opinion, it makes the most sense for both the radio station and the advertising client.

The premise is really simple. Essentially all of the commercials contain a toll-free number or website address that is unique to your station. You are NOT paid to run their commercials, but you ARE paid anytime a listener calls that toll-free number to request the product or information or when they visit the website and likewise request information or sign-up for a free trial, etc.

The revenue each time that happens can range from $2-$10 or much higher. One of my advertisers pays $70 a pop and there may be others out there that pay more.

Thus far, I've generated $217 in just two weeks, which is great. I'm sure it won't be like this all the time, especially in this early stage of building an audience, but once things get to where I hope to be, I'm confident the revenue should be enough to not only cover expenses, but make a small, but significant profit.

The trick is of course to convince the reps that handle this type of advertising to take a chance on you, but in a way, they have nothing to lose. If no one listens and no one calls, then they aren't really out anything. Your listeners must act in order for you to generate any revenue. It's good for them and it's good for you and even if your audience is relatively small, you still might do well enough, with the right products for your station to at least break even.

Don't waste your time on those CPA or "cost per call" ads, even with our network pulling several thousands of listeners it only amounts to about 20 cents per CPM (20 cents per 1000 people tuned in) each time the ads plays, if anything at all. We have our own CPA just for our network that has never netted a dime in over a year, don't cheapen internet radio's airtime by allowing this s#%t to run.

 

[RedStateTalkRadio]

Don't waste your time on those CPA or "cost per call" ads, even with our network pulling several thousands of listeners it only amounts to about 20 cents per CPM (20 cents per 1000 people tuned in) each time the ads plays, if anything at all. We have our own CPA just for our network that has never netted a dime in over a year, don't cheapen internet radio's airtime by allowing this s#%t to run.

I beg to differ. As I stated, I've had my station online for about a month now and it's worked out great for me, as my audience is in it's infant stage and very small. so therefore my CPM would be MUCH higher. If we were at your level, in terms of listeners, I might agree, but for any new station this model is fair for both the advertiser and the station.

Also, keep in mind, as I said, at least a half-dozen terrestrial stations that I listen to within my part of the state are running some of the EXACT same ads. The only difference is the toll-free number that's given in the ad, so I know it's the exact same program. Now, they might be getting paid a higher "bounty" for each listener who calls in, which would make sense as their listener base is huge compared to someone like me, but I've got no problem with that.

So, if I'm cheapening internet airtime, by allowing this s#%t to run, are the large 100,000 watt radio stations in my area cheapening terrestrial radio airtime as well?

The bottom line is this........to each his own. Each of us should do what we think is best for our stations. I only offered this as possible suggestion in an effort to contribute to the thread and to possibly be of help to someone else by sharing my own experience thus far. It's up to each individual to decide if it's something they should look into further.

 

[northwoods]

I'm coming at this strictly from a internet radio listener's point of view. Regarding Live 365, I have the VIP membership and have nearly two and a half dozen presets (all but a few are also shortcuts on my desktop). Out of the site's 260 different genres, there's a market for those even with the most obscure of musical interests.

I'm not disputing the costs or the other hurdles involved, but this is where internet radio has the drop on terrestrial. Terrestrial won't touch at least 95% of the genres listed on Live 365. I blame a huge chunk of that on the station's advertisers. If there's one think I can't stand is an advertiser playing disc jockey with regard to radio formats.

If the advertisers were smart/cost consious, they would look at advertising on internet radio as a bargain since it's reaching a larger audience than terrestrial, be it banner ads or otherwise. And leave the programming to the internet radio operators.

As for internet radio in vehicles, it is coming providing far more options than terrestrial provides.

I essentially have to depend on internet radio since I live in a part of the country where my options are meager at best.

 

[TheBigA]

If the advertisers were smart/cost consious, they would look at advertising on internet radio as a bargain since it's reaching a larger audience than terrestrial, be it banner ads or otherwise. And leave the programming to the internet radio operators.

The programming is based on who pays. Follow the money. If listeners pay, they control programming. If it's advertisers, then they are in control. You pay your money, and you get to do what you want. I know an advertiser who likes Americana music. So he sponsors a local Americana show. But that's unsual. Normally, they just want to know the numbers, and the lowest cost per thousand.

 

[northwoods]

If the advertisers were smart/cost consious, they would look at advertising on internet radio as a bargain since it's reaching a larger audience than terrestrial, be it banner ads or otherwise. And leave the programming to the internet radio operators.

The programming is based on who pays. Follow the money. If listeners pay, they control programming. If it's advertisers, then they are in control. You pay your money, and you get to do what you want. I know an advertiser who likes Americana music. So he sponsors a local Americana show. But that's unsual. Normally, they just want to know the numbers, and the lowest cost per thousand.

Maybe I'm being too simplistic here, but if there's a market for a listener(s) of a certain genre, a smart advertiser will seek them out, because the internet radio programmer already knows one exist. In some respects, I think many advertisers refuse the see the forest from the trees.

An advertiser's job is to sell something, be it a product or service. It's job isn't determining what is and isn't on a station's playlist or in it's music library. I use the case in point of earlier this decade when Oldies stations (primarily on the FM dial) across the country literally abandoned their 50's and early 60's music library and overloaded it with the music of the 70's decade (since then, they probably abandoned much of their mid 60's music library). They did it because the advertisers wouldn't place ads with them if they didn't. The advertiser's goal was in attractiing a younger audience of potential buyers. In my opinion, this was plain short sighted. I also think in this case the advertisers were just plain lazy because they didn't want to cater to the market the station already had. The only thing they succeeded in was driving those fans of the earlier decade's music to either satellite radio or internet radio. In other words, they wrote off an entire potential market of customers, who had more disposable income. And did the advertiser's succeed in getting the younger audience to tune in to the newer formatted "Oldies" stations? Who knows.

 

[RedStateTalkRadio]

Several excellent points made in the last few posts. The bottom line is that rarely is there only one way to solve a problem. The station regardless of terrestrial or internet needs revenue to offset their costs and hopefully make a profit. The advertisers need to seek out customers to purchase their product or service.

Regardless of the model that is used to negotiate this exchange, as long as both parties are satisfied with the terms of the agreement, why does anyone else care? Whoever doesn't like it is NOT being forced to participate. That's the wonderful thing about the free market. If the pricing model is bad for either party, it won't last long, as the market will discard of it through natural attrition. If it's good for both sides of the equation, then it will be successful and both parties will prosper. Again, natural, free market forces will take care of it all, in due time.

 

[mymediaradio]

There really have been some great points mentioned here. Our company was able to cut some costs by hosting the streaming servers ourselves and by using music provided by independent artists with their permission in exchange for airplay.

 

[CaptBob92]

A couple of points. It's been my observation that many if not 95% of advertisers are not in the advertising business and have little if any time to realy search the mediums to find what best suits them. They pick what they THINK is working for them on a hit or miss basis. Sometimes they get it right and grow a good business but sometimes they fail and then blame it on anything but themselves or advertising perfering to tell you that " people just won't buy my product "

The only way I see to get around this is be proactive. Go out and Sell your station. Waiting for them to come to you will be counter productive. PI's generally arn't very productive. I've heard great stations with poor to no sales staff who fail.

 

[Jay Peninger]

Well if you are getting into Internet Radio with an idea of making your fortune then you are setting yourself up for a dose of harsh reality. The average Internet Broadcaster working from his spare bedroom or Garage generally doesn't have the time or resources required to create a commercially viable station.

The average Joe does it because they love radio or have always had a dream to be a broadcaster and if they break even doing it they are actually doing better than most.

When I started my station I went in knowing it most likely was a venture that possibly would cost me money that I likely would not recover for a long period of time if ever. Eight months in and I am still putting out more than I am bringing in though the gap is narrowing.

It is a tremendous amount of work to successfully promote a station and keep it running then find time to break away to sell time to advertisers.

 

[RedStateTalkRadio]

Well if you are getting into Internet Radio with an idea of making your fortune then you are setting yourself up for a dose of harsh reality. The average Internet Broadcaster working from his spare bedroom or Garage generally doesn't have the time or resources required to create a commercially viable station.

Agreed. When I started back on May 1st, my only hope was to not lose TOO much money doing this and would be tickled to death to just break even. I've only been on the air for three months and thus far, the number of programs on the station has grown to 18 (4 new programs added in July) and believe it or not, I've made enough in advertising revenue to pay my base operating expenses for the entire first year.

If it all goes to crap tomorrow, that's ok, as I do it for the love and enjoyment of doing it and if I'm ever able to rise above where I'm at now, fine, but I'm not banking on it. In other words, I'm keeping the day job.

 

[Jay Peninger]

Agreed. When I started back on May 1st, my only hope was to not lose TOO much money doing this and would be tickled to death to just break even. I've only been on the air for three months and thus far, the number of programs on the station has grown to 18 (4 new programs added in July) and believe it or not, I've made enough in advertising revenue to pay my base operating expenses for the entire first year.

If it all goes to crap tomorrow, that's ok, as I do it for the love and enjoyment of doing it and if I'm ever able to rise above where I'm at now, fine, but I'm not banking on it. In other words, I'm keeping the day job.

That is great, I launched in November 2009 and I took a different approach doing voice tracking myself and not seeking to bring on any live programming until we got ourselves established and comfortable. August 9th we will begin a weekday morning show and we also have a weekday drive time show kicking off too... As those get settled I have several sponsors waiting in the wings and it looks like we will be on track to breaking even our first year plus some of our local news publications have done a couple articles that come out about the time live shows hit the air.

With the PPM smacking down Terrestrial Talk & Active Rock stations many have altered their formats and I think that has sent some Rock fans our way as they look for places they can find their music with a little edge... The PPM really changed things here in Seattle and I think Internet broadcasters have an opportunity to fill in some gaps....

 

[mymediaradio]

That is great, I launched in November 2009 and I took a different approach doing voice tracking myself and not seeking to bring on any live programming until we got ourselves established and comfortable. August 9th we will begin a weekday morning show and we also have a weekday drive time show kicking off too... As those get settled I have several sponsors waiting in the wings and it looks like we will be on track to breaking even our first year plus some of our local news publications have done a couple articles that come out about the time live shows hit the air.

With the PPM smacking down Terrestrial Talk & Active Rock stations many have altered their formats and I think that has sent some Rock fans our way as they look for places they can find their music with a little edge... The PPM really changed things here in Seattle and I think Internet broadcasters have an opportunity to fill in some gaps....

I agree with one exception...I believe internet broadcasters can fill in Alot of the gaps! Especially those who offer the community something more, mainstream music has become so [fill in the blank!] that even mtv don't play music anymore! The internet is the only level playing ground where independent or unsigned artists can showcase their talents, and the even though mainstream has made it difficult, more and more broadcasters are looking closer at the incredible music that is sitting right in front of them. Forget about the headaches and empty bank accounts that come along with playing the corporate game, every town, every city has thousands of talented artists just dying to get their music played "on air". Go ahead and give your local scene some airplay and watch the loyal fanbase they bring and you'll see why all 300 of our stations have shifted away from mainstream!