WILL TRADITIONAL OTA RADIO ABANDON ITS ROOTS AND GO INTERNET STREAMING ONLY?

[northwoods]

This is a topic I have been thinking about and even posted thoughts on this other boards. The main crux of this topic is that traditional terrestrial/OTA radio that also has live streaming on the web will shut down it's transmitters and towers and continue to be solely internet based.

I'll post some links to articles I've seen related to this topic (even though they are a few years old or older now) that pointed to some of the issues I posted about earlier, but then expands them. Granted not all of them have come to full fruition yet, but how soon before they do is an interesting observation.

http://mbainternetmarketingmanager.blogspot.com/2010/06/future-of-radio-industry-and-online.html

http://mbainternetmarketingmanager....f-radio-industry-and-online-radio-part-2.html

http://www.radioinfo.com/2012/9/19/can-terrestrial-radio-thrive-in-the-digital-era/#more-1551

http://seekingalpha.com/article/266888-terrestrial-radio-needs-to-embrace-its-online-future

http://forums.broadcastingworld.net/showthread.php?9239-Will-Online-Radio-save-the-Industry

 

[northwoods]

Since I ran out of room on my last post, I'll just leave this final note. Sometime in the near future you could be hearing "You're listening to WXYZ 104.6 at wxyz1046.com" instead of "You're listening to (or tuned into) WXYZ 104.6 FM (or something to that effect). Call letter and dial postions can, and probably will continue to for the time being, be used on a solely web-based station, but they won't have the signifigance or importance that they currenty have with OTA radio.

 

[Groove1670]

Internet radio still has a long way to go. So far, the potential for revenue is small. Royalty fees are high. Streaming is hit or miss.

If radio continues to serve the community. It will thrive. Not to say OTA should be using social sites. It only enhances the product.

I see a problem for AM. I think it will solved with translators (already happening), and migration to FM in the far far far future.

Remember TV, 8 track, cassette, CD,walkman...etc. Was the death of radio.

If you are a big fan of pure play or net radio, you probably were never a fan of OTA radio anyway.

 

[northwoods]

Internet radio still has a long way to go. So far, the potential for revenue is small. Royalty fees are high. Streaming is hit or miss.

If radio continues to serve the community. It will thrive. Not to say OTA should be using social sites. It only enhances the product.

I see a problem for AM. I think it will solved with translators (already happening), and migration to FM in the far far far future.

Remember TV, 8 track, cassette, CD,walkman...etc. Was the death of radio.

If you are a big fan of pure play or net radio, you probably were never a fan of OTA radio anyway.

My biggest complaint about OTA is it's lack of variety. Your basically limited to three, maybe four, music formats with the restrictive, repetitive playlists. With internet radio, your music choices are endless without the restrictive, repetitive playlists.

I live in a city of about 8,400 (which happens to be the largest population center in about a 50 mile radius) which happens to have five radio stations all under the same ownership and they do not stream; three FM (Country, Classic Rock, and Hot AC) and two AM (Sports Talk and a combination of community and brokered talk). I don't deny that they serve the community, but I don't (and won't) listen to them since their formats don't appeal to me.

 

[Groove1670]

I don't deny that they serve the community, but I don't (and won't) listen to them since their formats don't appeal to me.

Once again OTA radio is and has never been your thing. The best thing about internet is it gives you,and thousands of other listeners like you, the choices you are looking for this is a positive.

Choice is good.

I search out Classic dance and R&B stations on the net sometimes (not often). It is nice to know that option is there.

 

[Groove1670]

I don't deny that they serve the community, but I don't (and won't) listen to them since their formats don't appeal to me.

Once again OTA radio is and has never been your thing. The best thing about internet is it gives you,and thousands of other listeners like you, the choices you are looking for this is a positive.

Choice is good.

I search out Classic dance and R&B stations on the net sometimes (not often). It is nice to know that option is there.

 

[northwoods]

I don't deny that they serve the community, but I don't (and won't) listen to them since their formats don't appeal to me.

The best thing about internet is it gives you,and thousands of other listeners like you, the choices you are looking for this is a positive.

Choice is good.

Choice is good and so is competition. Right now with traditional OTA, stations are competing for listeners within a certain market location. If traditional OTA went completely internet streaming, they would be competing for listeners on a national (if not global) basis. For example, a Country station in Nashville would be competing for listeners with Country station in Dallas, a CHR station in NYC would be competing for listeners with a CHR station in L.A., a Sports Talk station in Seattle would be competing for listeners with a Sports Talk station in Philadelphia, and the list can go on.

 

[Groove1670]

Right now with traditional OTA, stations are competing for listeners within a certain market location.

The only purpose I see for OTA (local station) streaming.

Those in the market who might have reception issues with OTA.

Those who once lived or are no longer in the market, who like to keep up with home.

It is a bonus for those who look for stations via the net. I think that has very little value for the station.

 

[Chuck]

Right now with traditional OTA, stations are competing for listeners within a certain market location.

The only purpose I see for OTA (local station) streaming.

Those in the market who might have reception issues with OTA.

Those who once lived or are no longer in the market, who like to keep up with home.

It is a bonus for those who look for stations via the net. I think that has very little value for the station.

I believe you are absolutely correct. Given the high royalty costs for a commercial broadcaster, it doesn't make much economic sense just to serve a handful of local people who have reception issues inside buildings. Still, you hate to alienate any local listeners, which is why a lot of OTA stations stream. If they ever analyzed what their cost per local listener actually was, they might have second thoughts.

 

[northwoods]

landtuna had made a rather pointed observation in another topic similar to how I started this discussion, but had expanded to an issue that I had not even brought up regarding radio's business model. We are already more than a decade into the 21st century; there are those in radio who will keep with the technological and market demands of what's in store for the years/decades to come, and there are those in radio who will continue to remain in the past century on how things were done and not expand their horizons. I'm not saying I'm totally oblivious to the costs involved (royalties payed by commerical stations that stream online being one that has been mentioned), but I'm hopeful that in due time, market forces will work that issue out. I also understand the identity issue as in being a component of a local community, but I don't know of any business who doesn't want to expand the identity of it's brand beyond it's local confines. Or am I being too simplistic. Just think if Walmart didn't expand beyond Bentonville, AR or McDonalds beyond San Bernadino,CA or Burger King beyond Miami to name a few.

Let's say Listener X comes across music based commercial Station A on the web and would like to listen to it, but it does not stream (lets presume Listener X does not live in Station A's listening area or market). If Station A cannot provide what Listener X is seeking, then that listner will seek out Station B, or C, etc. until they find what they are looking for (it may not even be a commercial station, it could be a web-based station).

I hate to give a marketing lesson (since I had to take it in college and hated it, more like I hated the instructor), but to make it simple, If you can't provide what the consumer is looking for, they will go somewhere that can offer what they are looking for.

Before I forget, here is the link:
http://radiodiscussions.com/smf/index.php?topic=221254.0

 

[Casey]

OTA stations streaming also have to compete with existing internet radio pureplays. They are pretty tough competition in reality. Mostly because they have flexibility that OTA stations don't have, specifically significantly less operating expenses. Then of course there is the personal radio services too. OTA stations are also supposed to pay a higher streaming royalty rate than the pureplays.

If OTA stations were to go streaming only, I think the majority would be lost in the shuffle. Only the biggest with unique content would survive.

 

[KFodor]

The problem with "variety" on radio has to do with it's real name...broadcasting, with the emphasis on the letters b-r-o-a-d.

Radio is designed to reach a mass audience. And it has never, ever been proven you can reach a mass audience by playing everything. While playlist size per format can be argued a little bit either way, generally shorter lists work better, ratings-wise than an incredibly wide one with thousands of titles. Generally, you can be deep with a format, but not wide. And there's different programming tactics a station can use to create the illusion of "depth". Though, not all who should do it, I agree.

Now to the internet and internet broadcasting: I tell my radio classes that I can't say for sure where radio will be in 50 years. Could it be the internet? Sure. Could it be on another band? That's not out of the question either. But there will be a business called radio and it will be considered broadcasting.

Yes, the internet does allow some enterprising people the opportunity to be creative and try their hand at reaching mass audiences online. Some do. Many, in fact most, don't. And that's the real problem. If a template or standard for making money with an internet radio station surfaces, I think the chances of major investors and jumping in and doing it would be pretty good.

Free form FM rock was considered to be some of the most creative, entertaining radio out there way back when. But it died when someone figured out that if you play the hits, you get more listeners. I suspect there's something in there that internet broadcasters could look for, instead of trying to "re-invent" radio. Not that I think every internet station needs to have a tiny playlist, I don't. In fact, having some stations out there with bigger lists, next to the ones with the tighter ones might actually help the bigger list stations grow interest in what they do.

Okay, I know the alternative to this argument: Millions and millions listen to the net. Sure. But, those millions are spread out over thousands and thousands of stations, a good number of which are being run by someone's i-Pod in somebody rec room or basement. Before internet radio can succeed, it has to show it can get a mass audience. Not "on the net", but "on the station".

 

[boombox]

If the internet replaces OTA, I think it will be local stations and national networks -- not too much different than it is now. Most radio listeners don't have the curiosity of DXers.

People seem to want familiarity, and usually that means a local station, or a national network. It's not much different with cable TV right now -- 500 channels, and usually it's the local channel for news, and national networks for everything else.

 

[landtuna]

Radio is designed to reach a mass audience. And it has never, ever been proven you can reach a mass audience by playing everything. While playlist size per format can be argued a little bit either way, generally shorter lists work better, ratings-wise than an incredibly wide one with thousands of titles. Generally, you can be deep with a format, but not wide. And there's different programming tactics a station can use to create the illusion of "depth". Though, not all who should do it, I agree.

And this is why, all things being equal, Internetcasting will eventually fill most current radio genres except for news (including the morning and evening drive time shows) and sports. Music radio will continue to get more and more niche-y and this is the model that the Internet serves best. More and more we are seeing specialty shows on the Net that OTA radio cannot deliver on its advertiser-based biz model. As the current crop of technology-enabled young people ages they will find the Net offerings easier to use and more in line with their tastes.

Now to the internet and internet broadcasting:

There is no such thing as "Internet broadcasting" based upon the current limitations of TCP/IP. Unless another technology comes along that permits an unlimited number of connections "broadcasting" over the Net will be limited to a microcosm of OTA listeners. A wider audience is currently available via cell phones but we are already seeing data caps on those devices and additional expansion will exacerbate that.

Another problem is what I call "out of market broadcasting". Radio's current biz model depends on geographic advertising. Unless it can exist on what amounts to national spots only there has to be some compensation model for regional or local advertisers. All Internet "broadcasters" would have a national marketing base. Instead of having 5-6 local competitors an Internet "broadcaster" is competing with hundreds, maybe thousands of other stations. Not saying it can't be done but it will be tricky and is a major paradigm shift for the industry, it's advertisers and other supporting businesses. Perhaps using the TV model.

There is always the possibility of a subscription model and as the cost could be very small it might work. Of course then listeners may demand higher bit rates which would result in higher costs.....

Okay, I know the alternative to this argument: Millions and millions listen to the net. Sure. But, those millions are spread out over thousands and thousands of stations, a good number of which are being run by someone's i-Pod in somebody rec room or basement. Before internet radio can succeed, it has to show it can get a mass audience. Not "on the net", but "on the station".

If you mean "before Internet radio can become a profitable bonafide business" I agree with you but such is not the case. Already there are thousands of successful, if not profitable, I-net radio stations out there and given the miniscule cost of setting up and running one you do not need to cover anywhere near the amount that a standard AM or FM would cost. No licenses. No engineers. No on-air talent and you can PD it yourself. Internetcasting costs are down there with hobbyists and no longer require the big business deep pockets. And given the all-things-to-everyone format capability there is no longer any assumption that a Clear Channel could run roughshod over an "under capitalized" competitor. The one thing OTA radio would have to sell would be its talent which it seems to be abandoning in the interest of cost saving.

 

[ok walters]

Where do I start?

How about here:
Quote:I hate to give a marketing lesson (since I had to take it in college and hated it, more like I hated the instructor), but to make it simple, If you can't provide what the consumer is looking for, they will go somewhere that can offer what they are looking for.

How about a Business 101 lesson? If you can't get enough listeners to a niche type broadcast (what they are looking for outside of OTA radio), how do you make a profit? And when and if you do get a salable number of web listeners from all over the world, how are you going to pay the crushing royalty amounts when local advertisers are not interested?

Now how about this one:
Quote:If you mean "before Internet radio can become a profitable bonafide business" I agree with you but such is not the case. Already there are thousands of successful, if not profitable, I-net radio stations out there and given the miniscule cost of setting up and running one you do not need to cover anywhere near the amount that a standard AM or FM would cost. No licenses. No engineers. No on-air talent and you can PD it yourself. Internetcasting costs are down there with hobbyists and no longer require the big business deep pockets. And given the all-things-to-everyone format capability there is no longer any assumption that a Clear Channel could run roughshod over an "under capitalized" competitor. The one thing OTA radio would have to sell would be its talent which it seems to be abandoning in the interest of cost saving.

Very few internet stations are "profitable bonafide businesses". The royalty structure is such that when you get a large enough audience to possibly be salable, the royalties and spread out audience will insure there is little or no profit to be had from local ad sales.

Most internet stations are run out of someone's bedroom, and that part time structure does little to help the reliability of webcasting. What if OTA stations were on only when they felt like it like many web stations are? The whole web casting industry is filled with "come and go" stations - unlike OTA radio.

With delivery issues (bandwidth), thousands of come and go stations, and not enough listeners spread out all over the place make "profit" a very unusual word in today's land of internet web casters.

 

[northwoods]

When music based OTA that streams online moves beyond the half dozen or so formats and the 300 song repetitive playlist, I'll consider placing them in a favorable light. Since I don't see that happening, they can wither on the vine and fade off into the sunset as far as I'm concerned. Or they can all switch to news/talk or sports/talk format and they dont' have to worry about paying royalites anymore. Problem solved?

 

[ok walters]

No "problem" here - and the option to listen to the internet always there - for a fee of course. Unlike OTA, the delivery method is not free to the listener, and is rarely local. The concern that internet stations should have is services like XM and Pandora.

 

[northwoods]

No "problem" here - and the option to listen to the internet always there - for a fee of course. Unlike OTA, the delivery method is not free to the listener, and is rarely local. The concern that internet stations should have is services like XM and Pandora.

True, the option to listen to the internet is always there, with your fee being an internet connection at a bare minimum. OTA may also have a delivery method that is free and local, but music wise it is advertiser and consultant driven, not listener driven. To be put more bluntly, the advertisers and consultants decide what songs are played, when they are played, and how often they are played. It's not so much they play what you want to hear, but what they want you to hear, whether you want to hear it or not.

 

[ok walters]

And if they are not playing what you want to hear, you can change the station. The delivery issues with internet radio will outweigh the lack of choice in OTA radio, at least for the near future. If bandwidth issues are not addressed, internet radio may never overtake OTA.

The other issue is the lack of any geographical limitation making local advertisers a rarity. Why would the pizza guy care if someone in Thailand is listening?

 

[northwoods]

And if they are not playing what you want to hear, you can change the station. The delivery issues with internet radio will outweigh the lack of choice in OTA radio, at least for the near future. If bandwidth issues are not addressed, internet radio may never overtake OTA.

The other issue is the lack of any geographical limitation making local advertisers a rarity. Why would the pizza guy care if someone in Thailand is listening?

On the first point, we could go around in a vicious circle. Sure, you can change the station, but when the other OTA stations are playing the same 300 songs, finding something you want to hear becomes a moot issue.

On the second point, we are definately in agreement with regard to delivery issues of internet radio outweighing the lack of choice in OTA. The bandwith issues is an interesting point, which had been discussed online ad nauseum a decade ago or so. Granted all the issues haven't come full circle, but there have been great leaps and bounds as the technology improves. Who would have thought 25 years ago that you could be listening to a radio station (be it conventional or non-conventional) through your PC? Since I'm not a tech expert, I'll have to do some more online research on bandwith issues that still exist.

As for the pizza guy, I don't know how many mom and pop pizza places still advertise on the radio.

In summation, I just wanted to say that I'm coming at all that has been discussed on this topic from a listener point of view, not someone connected with the radio industry, past or present.