[rumori] Re: pho: Internet Radio...Profitable?

From: Don Joyce (djATwebbnet.com)
Date: Sat Jan 27 2001 - 00:54:07 PST

This (below) is all about how the Net is reversing traditional media
priorities and applications. Although the cost of transmitting high quality
Netcasting will undoubtedly come down in time, no Netcast may ever get much
more than 381 listeners a month. The Net does not work like a radio, does
not seem to BE a radio, and is not a comfortable platform for those old
kinds of one-way imposed taste, and that form of aggrigated music (as well
as the types of aggrigated music delivery planned by labels) may never come
to what they have always considered economic "success" there. Net radio can
never be a center of or for anything as it sometimes can be with atmosheric
broadcasting. The Net turns out to be almost an exact reversal to all other
traditional media tendencies, and humans, being the creatures of their own
thinking habits that they are, are reacting mostly by trying to find ways
to make it conform to their off-Net expectations. This painfully
frustrating forcing of square pegs into round holes (otherwise known as
bottomless holes in which to throw money) just goes on and on. The Net
suggests REVERSING all thinking - from how to COLLECT a relatively
indescriminate audience to how to connect with individuals with highly
specific interests who, together, may never add up to any size traditionaly
considered necessary to make a profit.

Terrestrial radio attracts it's audience from a VERY limited little radio
dial, everything you can "pick up" at a glance, and which can quickly be
checked out in its entirety from end to end. There has always been a
picture of the "whole" of anyone's radio world, and once one knows that,
decisions of allegence can be made with self-satisfied confidence (or
resignation). So radio hits the Net and everyone assumes, wow, now we have
the whole world as our potential audience, this should be great for radio.
- AND IT IS! Except there doesn't seem to be audiences of any size at all
for any individual station. This is because it's TOO big to work in the old
way. There is no sense of the "whole" Net or what it may be offering among
Net users. There is no limited amount of choices there which humans have
traditionaly relied on in order to make taste decisions of allegence. There
is no "there" there, to quote a nice lady from my hometown. Too many
choices (and often "free" choices to boot) makes our traditional forms of
profiting by intentionally limiting choices unworkable, undesirable,
unprecedented... It's a REVERSAL of media functions elsewhere, and that's
not necessarily bad - like slowing down instead of continuing to speed up

These mediumistic parameters (what the medium itself suggests to us when we
turn it on) are precisely what will ultimately change BOTH the nature of
what is created for use there and the nature of how that is accessed there.
The whole idea of a mass "audience" occasioned by limited choices has
disappeared on the Net, even while its worldwide users may constitute the
biggest mass any single medium has ever had. They just can't be "collected"
anymore. Now if we can only get the whole idea of big profits to disappear
there, we'll really have something useful and profitable to EVERYONE on its
own stubbornly enlightening terms.
For now, radio on the Net should be seen, like everything else on the Net,
as a gift to anyone who may be interested, with an economic goal of
breaking even in order to continue. And don't even try any kind of "top 10"
type format there - another kind of formally applicable concept in radio
that suddenly appears agressively senseless in a medium characterized by
unlimited choices. The medium IS the message anyone using it becomes part
of, willing or not.


>Hello Chad;
> The problem with Internet radio is not licensing fees, IMHO. Using
>existing technology,
>it will be very hard for an Internet radio to make money even without
>license fees.
>At present, the marginal cost of streaming media are dominated by the cost
>of data transport.
>Current cost of data transport, in bulk :
>$ 350 / megabit / second / month.
>Therefore, cost to deliver a stream at 28 kbps
>(just data transport) = $ 10 / month
>(this will get you "AM quality")
>Cost to deliver a stream at 128 kbps = $ 45.00 / month
>(This will get you something approaching CD quality)
>Average (1999) terrestrial radio CPM = $ 7.6 (per thousand impressions
>per ad)
>Average number of ads/hour = 12
>Revenue per stream per month = $ 22 / month (assuming average ad rate,
>and typical
>radio relationship between peak and average listenership. You have to
>pay for peak usage,
>but you only get ad revenue for the actual audience.)
>Therefore, the marginal rate of return is not good (for low quality) to
>negative (for
>good quality). This is the MARGINAL rate, not counting for rent, DJ's,
>license fees, computer
>equipment costs, etc., etc.
>Another trouble, of course, is that the audiences are tiny (mostly, I
>contend, because the
>costs are so high). The TOTAL
>average audience of ALL 2,233 Internet radio stations in the October
>Arbitron audience survey (http://www.arbitron.com/article1.htm) PUT
>22,581. The largest station in the survey had an average audience of 381
>people in October.
>By radio standards, these numbers are tiny - so small, it's very hard to
>sell advertising.
>Even the whole industry aggregated together is small compared to a
>typical mass market FM station.
>(Lightningcast.com is trying to sell ads to the aggregate market of a
>lot of stations put
>together, but even that is tough, I understand.)
>So, no, it's hard to see how you could make money, even in principle,
>with current
>technology, at least from advertising.
>In response, you can develop a new business model (love to hear of one
>that works) or new
>technology (which is the direction we took).
> Regards
> Marshall Eubanks
>Chad Ivie wrote:
>> Hello,
>> My name is Chad Ivie, and I am one of the many new
>> Phosters. I have been on the list for a few months
>> now and thought it was time to step in. This is my
>> first official post, but I have followed the PHO daily
>> with enthusiasm. I've worked in the industry for 10
>> years now, having done a little of everything. Iím
>> currently in a transition stage and looking for a new
>> project to get involved with and behind. I still do
>> consulting with artists and new companies.
>> I've noticed a lot of information, opinions and posts
>> about the DMCA, RIAA and SoundExchange. The topic as
>> a whole is obviously something that will affect the
>> industry as we know it, but the question is still out
>> there.
>> Is Internet radio (Web Casting) a profitable business
>> model given the likelihood of the new licenses and
>> their potential high costs?
>> If so, what kind of business model do you see as one
>> that will be able to live long-term in the future of
>> web casting and Internet broadcasting?
>> Chad Ivie
>> =====
>> "Hard and Heavy": Internet Metal Radio, That Rips! To listen, click:
>> "Hit Kickers!": Your Country Music Home On The Net! To listen, click:
>> "Independent Music, We're Goin' Global!"tm
> Multicast Technologies, Inc.
> 10301 Democracy Lane, Suite 201
> Fairfax, Virginia 22030
> Phone : 703-293-9624 Fax : 703-293-9609
> e-mail : tmeATon-the-i.com http://www.on-the-i.com
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