Webcasting is the non-interactive streaming of digital audio on the internet, sometimes called "internet radio". The technology can be used to transmit all kinds of content including live talk, musical performances, sporting events, and pre-recorded music.

Webcasting offers the possibility of almost unlimited choice, while broadcast radio is profoundly constricted by the limited broadcast spectrum. The number of channels available on standard AM/FM radio is generally limited to a couple of dozen choices. Those choices are further limited by the current domination of commercial radio by a handful of corporate conglomerates including Infinity Radio and Clear Channel. A great deal of mainstream commercial radio sounds like one long commercial “interrupted” by shouting shock jocks and right wing commentators.

Webcasting makes it possible for a potentially unlimited number of independent voices transmitting a virtually unlimited amount of programming, including music. In addition, one webcaster can provide an incredibly broad range of different music “streams”. And because it is delivered through the internet, it can reach a worldwide audience.

According to recent studies by Arbitron and the General Accounting Offices, the number of listens to webcasts is growing and has at least doubled over recent years. In regard to music based webcasting, many experts agree that as more people elect high-speed broadband Internet access, and as consumers upgrade their home entertainment systems, the potential for internet radio and webcasting is unlimited.

Yet the recording business has been criticized for insisting on higher royalty rates and minimum fees for webcasting recorded music. Those rates are higher than those charged by the music publishers (through ASCAP, BMI and SESAC) for songs. Dozens of small webcasters have signed up for new rates negotiated by Sound Exchange, the not-for-profit designated to negotiate rates for webcasting music.

Among a certain group there is continuing unhappiness. The Webcaster Alliance, an association of approximately 400 small webcasters, filed a complaint in 2003 in the U.S. District Court for the Northern District of California alleging anticompetitive conduct by the Recording Industry Association of America (RIAA). The crux of the complaint is that the new rates eliminate the commercial viability of most small commercial webcasters by imposing unreasonably high minimum fees. In April 2004, the district court granted the RIAA's motion to dismiss. Webcaster Alliance Inc. v. Recording Industry Association of America Inc., C 03-3948 WHA. The plaintiffs are appealing the ruling.

Webcasters contrast the minimum fees charged by SoundExchange for recorded masters to the rates charged by the U.S. performing rights societies, i.e., ASCAP, BMI and SESAC for the use of songs. The ASCAP BMI and SESAC minimum fee total less than a $1,000 per year for musical compositions. But the deal negotiated by Sound Exchange is $2,000 for recordings. And that rate is set to escalate to $2,500. Also, the three PRO's royalty rates add up to approximatley 5% of gross income, while the SoundExchange rate for recordings is 10%.

Do you listen to any webcasts?

Do you think that webcasting has the potential that I think it does?

Do you have a point of view on whether the record labels are overcharging for recorded music on webcasts?

Has radio consolidation led to reduce diversity of music in local markets? I have seen no competent study that proves this.

This may shock you. Don’t formats overlap? Aren’t station playlists shrinking?

Take a breath. Is consolidation the cause of any of the problem?

Radio is largely financed by the sale of local advertising. Within each local market, a multistation operator would have the apparent incentive to attract the most listeners in its potential audience. This would suggest that the operator should position its format offerings across the listener spectrum – country, Top 40, adult contemporary, urban, etc. – to widen its overall demographic appeal. Indeed, local stations that operate in the same format only cannibalize common audiences.

What about song overlap in different formats? Yes, it exists. But this may be result from the inherent ambiguity in classifying things into humanly conceived categories. Snakes and turtles are different enough, but have enough common attributes to be called reptiles. Overlap exists.

Moreover, song overlap can be as much a consequence
of competition as not. For example, Sears, J. C. Penney's, and Bradley's are heads-up competitors. Yet they offer a great number of common clothing labels. Why? Some brands are particularly popular to the buying public. If any store were to decline a popular designer, some customers would migrate to the competition. Don't need consolidation to explain this.

What about playlists? Radio playlists on commercial radio are designed to sell advertising. Playlists may indeed shrink – each station has an incentive to specialize its particular brand to better reach its particular audience. These target audiences may be happy enough with more focus. If not, they can change the channel. Or buy a car CD device.

Radio listeners have instant choices at their disposal. Want to measure exposure of music? Don’t count songs on playlists or the overlap between formats. Count the total number of plays in local markets.

With wider format selection, the total amount of music played in local market may have actually increased or decreased. Critics have not begun to ask the right question.

Podcasting is getting a lot of ink lately. This Article provides tips for marketers on how to utilize this potential new medium. He didn't really address the medium of streaming internet radio, which provides a better advertising vehicle to marketers -- harder to skip audio spots, potential to serve up a visual along w/ audio, ability to do 'live' events -- but he should have. Also, the size of the overall internet radio market, of which Podcasting is currently a tiny sliver --Arbitron/comScore recently reported the combined weekly audience of the radio properties of AOL, MSN & Yahoo to be 4.1 Million.

Podcasting has garnered attention because it is affiliated with the iPod, and because it enables internet radio to be portable although it's kind of a hack in that wireless broadband will cause internet radio consumption to skyrocket, but who wants to wait or that. Elegant hacks, however, have a knack for sticking around, and I wouldn't be surprised if this kept going.

Finally, I wonder what kind of response, if any, the performance rights agencies (Ascap, Bmi, Sesac, SoundExchange) will have with respect to Podcasting. Will they view it as requiring additional licensing or falling within the statutory webcasting license? Will they go after unlicensed Podcasters with music playlists as the 'show' that they Podcast every day? It's probably not big enough to warrant their attention...yet.

The End of Radio (as we know it)

This month's Wired magazine's cover is titled "The End of Radio (as we know it)", and has articles about satellite radio, podcasting, "indie radio" and Howard Stern. Amazingly, there is scarcely a mention of internet radio or webcasting. (I'd link to it but it's not up on their site yet...supposed to be up later this week).

Now I'm a subscriber and a fan of Wired and applaud their covering the 'radio is changing story'. But I have to admit, I was flabbergasted as to how they could have glossed over such an important part of the story -- to wit, internet radio is a medium that has tens of millions of listeners each week/month according to Arbitron; has thousands if not tens of thousands of channels/stations that people can tune into provided by large corporate players to indie mom&pops out of their basement; and has offered the ability for consumers to create their own broadcast for years.

One of the articles was about the rise of mult-channel, microniche broadcasting. This is something that internet radio supports much more readily than Podcasting, satellite or HD-Radio (and let's face it, all of these are simply a technological means of distributing content from producers to consumers). Why? Because including copyrighted music in Podcasts is ILLEGAL. Sure, the RIAA have bigger fish to fry and probably won't go after most of the small players out there doing so. But if anyone starts making real money from it, you can bet they or Harry Fox will come a-knocking. Most Podcasts are talk/spoken word, though, and so don't have this problem. However, internet radio webcasters can use copyrighted music in addition to talk. The downside? It's not as easy to make it portable though there are some companies that are working on this.

The other lesson? Marketing counts. In the case of Podcasting, I'll point you to a previous post of mine on how the right combination of technology, marketing & ease-of-use (I'd also add timing to this) can lead to escape velocity. OTOH satellite radio used the brute force method, which is to say their awareness and marketing stems from the billions they raised from Wall St. that they went on to spend on goodies like satellites, studios & Stern. Of course they had a worthy product to sell that is also easy-to-use.

[cross-posted from my blog]

Reuters announces ClearChannel's new Net strategy. In short: catch up. Let's parse what they're doing:

-Simulcast stations...this was announced a little while back I think, and was to be expected

-Create concert programming (a la Sessions@AOL) & monetize via sponsorships & video ads....what's nice here is that they don't pay for the talent save for production costs. I think they can have more success given the number of artists going through their radio stations and their concert/promotion business.

-"It may begin offering subscription online radio services, the ability to buy songs digitally or in CD format, or even ringtones directly from their Web sites."...Note that CC already has a very nice subscription online radio business via their Premier Radio property that sells subs to their top talk radio personalities' shows/sites.

In terms of the latter two, they're kind of a yawner as others have been doing this for a while. I wonder who they'll use to provide the back-end. A key question is the branding. Is CC simply going to be a conduit to existing retail stores like iTunes or MSN, or are they going to try to private label their own digital music/ringtone store?

The latter could imply vertical integration that may make some label folks nervous (i.e. if ClearChannel is getting into the business of selling/distributing recorded music, what's to stop them from moving upstream to take a piece of the action by signing artists?).

-"Perhaps most surprising of all, Clear Channel also plans to make some of its live morning shows available for downloading, commonly known as "Podcasting."...This makes sense as it will appeal to the types of folks that have been tuning radio out, but I wonder if they'll include copyright music as part of the Podcasts (since this is currently not licensed under the DMCA, or license the music from the labels), or if they'll stick to talk only.

There is a good deal of distance between ClearChannel and the two front-runner digital music properties, Yahoo & AOL. But ClearChannel can take long strides by virtue of the tens of millions of consumers they reach every week, and they have a very capable leader in Evan Harrison. Game on.

[cross-posted from www.ragsgupta.com]

Big news in the digital radio world with the announcement that XM & AOL are combining forces.  XM will provide content to AOL for its portal with there being a free offering and a premium one.  XM enables AOL's 10 million radio listeners to sample their product betting that they'll get hooked and, frustrated by being tethered to the desktop, subscribe.  AOL gets 'premium' content that will make their portal more attractive as part of their strategy to open up their walled garden.  The AOL stations will continue to carry ads (sold by Ronning Lipset Radio), while the XM stations won't have ads.  I wonder how much XM is paying for this...I'm guessing cash is flowing from XM to AOL since the ad-free XM stations will, at a minimum, be accruing CARP-royalty rates.  Also, AOL will be promoting XM to its user base and providing its Sessions@AOL content to XM.  Yes, XM will also be providing good content to AOL, but I'm betting that they're paying to do this integration.

This begs two question:

1. If AOL is going for an open portal strategy, why not list all kinds of other stations?
2. What will Sirius do?

On a different note, Chris Anderson posted about the decline of mass media.  His stat :

In 1993, American spent on the average 23 hours and 15 minutes a week
listening to radio. As of spring 2004, that figure had declined to 19
hours and 45 minutes per week. America's Top 40 just doesn't matter as much anymore.

That's about a 15% decline though it could have been worse given the dominance of analog terrestrial radio in the car.  I'd bet that it's a steeper decline comparing the younger demograhpic from the two time periods. 

[Cross-posted from www.ragsgupta.com]

Infinity announced their intention to roll out visual radio, with help from HP and Nokia, sometime next year. Basically it's a service that will send contextual metadata to your visual radio-enabled Nokia handset while you're tuning into a radio station through their FM tuner, such as artist/album and concert information.

This is a good move for Infinity. The most incisive part of the article is the quote by the person from HP:

"We're able to help them create a relationship with customers they've
never had before, and a revenue stream they've never had before."

She's right. Infinity, and other terrestrials, are realizing the need to cement the listener relationships they've spent tens of years and many millions of dollars in establishing. They can see that the government-created oligopoly of FCC licenses can't be counted on forever in terms of limiting choice in a given market. New technologies such as satellite radio, itself a government-created duopoly, are enabling some consumers to throw off the yoke of the analog radio dial for the greener pastures of the satellite radio dial in the car, and internet radio at work. 

Enhancing relationships and relevance with their listeners, and using new technology to do so, becomes of paramount importance.  For instance, a station could record an in-studio performance underwritten by an advertiser and offerred to registered listeners only (P1s in radiospeak) from its website. Advertisers would reach the P1s they crave; loyal listeners would be rewarded, and it would encourage new ones to register with the station and start the relationship dialogue.

One a side note, if you're listening to the radio today and don't know the name of the song that's playing, dial 866-411-SONG on your cell phone and hold it up to the speaker for 15 seconds. Soon thereafter, you'll get a text message with the name of the song and artist provided by Musikube (using Shazam's technology). There is currently a charge of $0.99 per Song ID for the 411-SONG service, which will show up on your cell phone bill.

[Full Disclosure: I am currently helping Musikube out on a project.]

[Cross-posted from www.ragsgupta.com]