Torin Douglas: AM, FM or URL? the pros and cons of online radio

Like the rest of the Net, Web radio has fallen foul of the New Economy backlash, but the format has much to commend it, despite its lack of profits. By Torin Douglas

A few months ago The Sunday Times was trumpeting “the unstoppable rise of Web radio”. “Rather than spelling the death of radio, the Internet now makes thousands of stations across the globe freely available.” It said there were now more than 5,000 online radio stations around the world (an increase of 1,500 in a year) and the number of listeners had leapt from 21 million to 35 million.

Fast-forward to last week. “Is anybody listening to Internet radio?” asked Music & Media magazine. “Despite improvements in accessibility and sound quality, Internet radio is still failing to fully realise its audience potential.”

It’s been a trying few months for the Net as a whole. Its commercial fragility has been exposed by the closure of sites and laying-off of staff, and its physical frailty by the failure of news sites to cope with the events of September 11 and last week’s plane crash. Yet the second of these phenomena demonstrates that demand for content remains high – provided it is the right content.

Beyond that, the relationship between radio and the Internet is complex and fascinating, and offers enormous potential. What is not clear is how it will develop, as was apparent at last week’s Radio Academy conference, “Radio on the Web”. Not surprisingly, one of the panellists failed to appear because his company had closed down. Less predictable was the huge disparity of views over the role and value of the Web to broadcasters. Put simply, what is a radio website for?

To some broadcasters – the pirates in the UK, or those who suffer under dictatorial regimes – the Web is a means of launching new radio stations without the need for a broadcasting licence from the Radio Authority or any other regulator. To others, it brings the chance to extend an existing terrestrial service to a global audience or, in the case of a local or regional station in the UK, a national one. For yet others, it’s a way of letting audiences hear programmes or items they missed – such as that Today interview with the Prime Minister – or news bulletins “on demand”. All the listener needs is a computer with an audio software application such as RealPlayer, easily downloadable from most stations’ websites.

There are problems, however. Online sound quality in the UK – most of us still use ordinary telephone lines, at least at home – tends to be much poorer than FM or digital signals. It costs listeners to tune in (unless their employer is paying the bill) and costs the broadcaster to stream the audio. Worse, it actually costs the station to increase its audience, because it requires more servers and a licence from the audio software suppliers directly related to the number of potential listeners.

Even though virtually every radio station now has its own website, through which it encourages listeners to tune in, the real benefit of the Internet lies in other areas. As many speakers pointed out, radio and the Web “complement each other perfectly”, in the words of the old Cointreau ad. The Web can address radio’s weaknesses, providing text, pictures and lots of information, as well as selling products directly.

Commercial stations sell audio and banner advertising on their sites, and though early hopes of a revenue bonanza remain largely unfulfilled, three of the Web pioneers – Virgin, Capital and GWR’s Classic FM – reported significant income. Virgin group enterprises director Steve Taylor said the station made about £1m in Web revenue last year. It has a sponsor for its audio-streaming – most recently Erotica 2001, thereby confirming the conventional wisdom that the future of the Internet lies in porn!

Classic FM, by contrast, has its streaming sponsored by Mercedes-Benz, which as an international brand is able to take advantage of Classic’s overseas “streamies” (as consumers of streaming are apparently known).

But the real benefit of the Web, as virtually all the speakers acknowledged, is not as a revenue-earner or an audio service, but as an extension of a radio station’s brand, adding value and depth and information. Pages devoted to DJs or programmes, plus webcams in the studio and chat pages, enable listeners to interact with the station, building the relationship and providing an important form of feedback.

“It adds a new dimension to radio and means we can give licence-payers better value from the material they’ve invested in,” says BBC Radio & Music controller of new media Simon Nelson.

Indeed, it is the BBC – with its guaranteed licence fee income and public service responsibilities – that seems best-placed to benefit from the Web, to the envy of the commercial broadcasters present (and aggravation of some). Nowhere was this better demonstrated than in the BBC World Service presentation by head of new media Dr Chris Wescott.

Here, of course, audio does come into its own, with 43 separate language services available all over the world via the Web. Wescott reported that his boss had met a Somali taxi driver in Australia, listening to the World Service on his car radio. The driver said that at night he logged onto the BBC’s Somali service on his computer.

Each language service also has its own text pages, utilising the huge news resources of the BBC to give a depth that is hard to match.

And when Bridget Kendall interviews President Putin in Russian, live on the BBC World Service site, and prompts 24,000 e-mails, you realise that the combination of radio and the Web has enormous potential.

Making money is another matter.

Torin Douglas is media correspondent for BBC News

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