Michael Robertson doesn’t mince words when he talks about the flawed business model that Internet radio must operate under. Robertson, a high tech entrepreneur, founded mp3.com, a digital music service that did not survive mostly due to copyright lawsuits by the music industry. He’s no stranger to the licensing game, and he pushes the envelope, believing that current webcasting royalty rates are prohibitive to a successful streaming business model.
Now he’s launching an Internet-radio-like service that he says won’t have to pay those royalties. “The crushing financial obligations which ate up 60% of Pandora’s total revenues last year do not apply here.” says Robertson. “Because this is the user’s own music we are not required to pay webcasting royalty rates.”
byo.fm will use Robertson’s other music platform mp3tunes.com to store a listener’s personal music collection, and stream it back to them, along with many other features that radio listeners find appealing, such as news, weather and sports, culled from the user’s favorite websites and delivered in a voice that they choose by text to speech technology. The service puts the user in the driver’s seat – letting them design playlists as well as news and talk features, and listen from anywhere with a connected device.
AT&T has launched a new mobile music platform that delivers “song and album downloads, streaming radio, song match, lyric search and an enhanced music player – into a single, cohesive experience for AT&T mobile phones.” AT&T will charge customers $6.99 a month on top of a data plan fee, with song and album purchases charged a la carte.
The service will extend streaming music capabilities to “quick messaging phones”, also sometimes called feature phones, or non-smartphones. It’s currently available on three popular devices – LG Xenon, Samsung Solstice and Samsung Impression. It will soon be available for downloads on other phones and AT&T will begin pre-loading it on new devices this summer.
AT&T has clearly identified streaming music as a popular application for mobile devices, and created this platform to offer customers who are not using smartphones those capabilities. I’m sure they’re hoping those customers will see a good reason to purchase unlimited data plans so they can stream.
Meanwhile, Nielsen recently reported that smartphones will overtake other mobile devices by the end of next year as more and more customers choose to upgrade. The use of Wi-Fi increases from 5% for feature phone owners to 50% for smartphone users because smartphones give users more ways to utilize a broadband connection. Now AT&T has created a platform that enables feature phone customers with some of those capabilities.
Meanwhile, it’s all a good thing for the growing Internet radio audience…
I’ve said before that side channels are a great idea for online stations. Whether the station is a streamed broadcast or an online station, adding side channels is an excellent opportunity for stations to expand and diversify their offerings and give listeners more reasons to listen and listen longer.
One popular use of side channel programming is the creation of holiday channels. AccuRadio takes the concept of Christmas channel programming to the extreme – offering 43 channels of Christmas music — from R&B to Smooth Jazz to Celtic and Pop Christmas choices. Each year AccuRadio sees a nice spike in their audience as a result of their holiday offerings.
Not surprisingly, new data from AndoMedia shows that holiday side channel programming contributes to long term audience growth as well. Here’s a couple of charts showing pre and post holiday audience average active sessions on AccuRadio.
Stations should take a retailers approach to holidays and create specialty programming on side channels, according to Patrick Reynolds, Sr. VP at AndoMedia. This approach boosts their short term listening, and adds to their long term audience growth as well.
We’ll be exploring more ways that stations can expand their audience and brand with digital audio offerings at the upcoming RAIN Summit West on April 12 in Las Vegas. In fact, there’s a panel discussion specifically dedicated to the topic. To register click here. Audio4cast readers can save 30% by entering the code Audio4cast during registration.
I try to stay out of the way of deep discussion on the topic of performance royalties for Internet radio. I think there are several people who know more about it that are covering it well, and there’s usually lots of other stuff to write about. But this story last week caught my eye, so I wanted to pass it along. The royalties that Pandora is paying now account for 44-45% of all the performance royalties that SoundExchange is collecting for non-interactive streams.
“We’re about 44 percent of internet radio,” Pandora Founder Tim Westergren told Digital Music News.
As you may be aware, I champion Pandora’s success. They have — in a relatively short period of time — built a very popular brand and amassed a huge audience. Their approach has been dedicated and deliberate in providing a super listener experience and honoring the artists they play. I think this approach has gained them a gold star rating from listeners that has fostered their growth. Just try mentioning Internet radio at a cocktail party and see what comes back at you — everyone talks about Pandora. (yep, including me…)
Last year Pandora began taking significant steps toward developing revenues with the same dedication and deliberation. They added some cross platform display ad features, some video ad opportunities, and some audio ads. That made me happy — I wanted to see Pandora contribute to building the business model by selling ads, especially audio ads.
If you’re in the business of Internet radio I think you can go to school on the way Westergren and CEO Kennedy have built their brand. Along the way, I think they have contributed significantly to the growth of the whole online radio audience and benefited the industry.
Radio is well positioned for a transition to a digital future, according to a new study by the Pew Project for Excellence in Journalism. Radio has the ability to maintain and grow its audience through several digital audio platforms and is doing a better job than other traditional media such as television, newspapers and magazines.
Radio is on its way to becoming a new medium called Audio, according to this study. Listeners are tuning in via many channels including Internet radio, podcasts and satellite radio, which are contributing audience growth. Not all newer digital audio technologies are growing audience however — the study notes that HD Radio continues to struggle both with the lack of audience and a static number of stations converting to the HD platform of delivery.
Radio is experiencing an “intriguing fragmentation” across other audio platforms, which are also providing broadcasters with opportunities to grow revenue. Over the next five years, Internet radio and mobile revenues will continue to increase.
The main focus of the study is the impact of new media on news, and the appetite for radio news is dropping on AM/FM stations. But 24% of adults 18+ indicated they had listened to a newscast online – either streamed or downloaded. A stated conclusion is that the slow increase in online listening corresponds to a simultaneous loss of broadcast radio audience.
All of this emphasizes the wisdom of broadcasters who are distributing their audio content across multiple channels. It’s more important than ever to strategically develop a diverse digital audio platform that feeds the digital audio audience’s diverse appetite.
Streaming music service Slacker is readying an on-demand streaming service for launch, according to a report by Wired. Slacker’s current offerings include interactive streams as well as pre-formatted channels. The service launched in 2007 with a dedicated portable device that could have, would have been a unique selling tool for the platform if streaming apps on smartphones hadn’t started to soar. Instead, Slacker abandoned the dedicated mobile device strategy and turned its attention to mobile apps. It’s available on iPhone, Android, Blackberry and other popular off-the-pc devices.
The new service will reportedly allow for an even greater degree of listener interactivity. The station already allows more interactivity than Pandora – listeners can add specific songs to their stations or playlists, while Pandora only permits adding artists. For five bucks a month, listeners can also nix audio ads, add unlimited song skips and requests.
Slacker intends to use the service to upsell its audience to a more premium offering that gives them greater control over their music. There’s no word on how much the service will cost.
During a panel that I hosted in Toronto at RAIN Summit North on March 12th, Slacker VP Jim Rondinelli indicated that ad sales have been healthy for Slacker. He noted that over the past year, they have sold almost all of their audio inventory through audio sales firm Targetspot as well as through Google’s Audio/Adsense platform.
No doubt, the launch of a highly interactive service is a move to position themselves against Pandora, the most popular streaming radio platform, as well as a few new services. MOG is an on-demand streaming service that costs $5 a month for unlimited streaming of whatever you want to hear. Last week they announced new mobile apps for iPhone and Android, upping the ante for the service that had previously been tethered to pc’s. Spotify is another on-demand streaming service that – although they have yet to launch here in the states – Slacker no doubt has on its radar…
An Internet radio legend has announced that they will stop offering free streams and tuck access to their station behind a subscription service.
KPIG has had a few lives in its pursuit of Internet radio success. It was one of, if not the first broadcast station to stream starting back in 1995, when Internet radio pioneer Bill Goldsmith, owner of Radio Paradise, was the webmaster.
“KPIG’s quirky programming was a perfect fit for the Internet when it began webcasting in1995. KPIG was the first commercial FM station to webcast its programming, and it was quite unlike anything anyone had ever heard before”, says Goldsmith. “Internet radio’s early adopters had to put up with lousy audio quality, frequent interruptions, and buggy player software — but they would do that in order to hear KPIG’s music, DJs, humor, live broadcasts…”
In 2001 Mapleton Communications bought the station. The next phase came when KPIG stopped streaming in 2002 in reaction to pricey performance royalties. That’s when they first started experimenting with subscriptions, making the stream available only through RealPlayer’s RealPass for a monthly fee. Again, from Goldsmith: “From 1995 until 2002 KPIG was one of the most listened-to stations online, with an audience size far outstripping any other FM/web simulcast. Unfortunately, the fear and confusion surrounding the 2002 CARP decision on Internet radio royalty rates caused the station’s owners to drop the webcast for over a year.”
At some point, KPIG started streaming again and has been streaming its eclectic americana format based in Freedom California to dedicated listeners worldwide, albeit a much smaller audience than back in their early streaming days. The question now is, will that audience pay for the streams they’ve been listening to for free?
A recent Nielsen study showed that about 25% of listeners are willing to pay for unique radio content – provided it’s commercial free and has value to them. They’re looking for something they can’t find on the free channel, and if they find it, they’ll pay to listen. I’ve talked to a few web-only stations who have told me that their subscription offerings are doing just fine, with a solid base of listeners who are willing to pay. More and more stations are trying it – Pandora’s Pandora One offering is just one example.
In the case of KPIG, Goldsmith for one is skeptical: “Given the number of free choices that listeners have these days (virtually all other online radio streams are free) it seems doubtful that they’ll attract more than a handful of subscribers.” On the other hand, they’ve got a unique brand and a loyal following, so who better to test the waters?
Navigating the rules of using music in a digital media platform is complicated. Whether you’re a streaming music service, offering podcasts, downloads, videos with music from your site, or simply creating ads for advertisers, chances are you’re creating a public performance when you’re doing that, which in the digital world means you have to have a license and pay a fee. In many cases, statutory or blanket licenses already exist. Which means all you have to do is figure out which ones apply to you…
To make that much easier, my friend David Oxenford of the law firm Davis Wright Tremaine has created an excellent resource. Guide to the Basics of Music Licensing is essential reading for anyone in the digital audio space. (It’s free!)
Oxenford is the most knowledgeable guy I know in areas related to copyright issues and digital audio. He has represented webcasters in lots of royalty negotiations including the settlement last summer between pureplay webcasters and SoundExchange. He’s also a busy FCC attorney for lots of broadcasters. He’ll be speaking at RAIN Summit West on April 12th as well.