Online Radio Looks To Local Streaming Audio

New York's radio listeners went for years without a country music station, but on July 2, WOR-AM, Buckley Broadcasting's venerable news/talk outlet, launched WORcountry.com. Billed as "New York's only locally programmed country radio station," WORcountry.com didn't go long without competition. The very next day, Mt. Wilson Broadcasting's Los Angeles-based KKGO, Go Country 105, announced GoCountryNY.com, a streamed, New York-centered version of its west-coast format.

While newspapers and TV stations have tackled the local digital arena largely by competing in news and information, radio stations have mostly banked their digital fortunes on streaming audio. Some stations simulcast their over-the-air service, while others have created outlets, like WORcountry.com and GoCountryNY.com, solely for the Internet.

In spite of high costs and sticky copyright issues, 4,650 stations—nearly half of radio's 10,000 commercial outlets—offer some form of streaming audio. They compete for listeners and revenue with nearly a dozen online-only music services, including category leader Pandora, News Corp.'s MySpace Music, Sirius XM Internet Radio and Napster. Throw in more than a hundred public radio stations streaming music, talk, news, information, concerts and other performances, and you have a uniquely competitive arena for an audience that now listens mostly on computers and via aps on mobile devices, but will soon have the option of tuning in while in the car.

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Over-the-air radio stations first began streaming their programming online in 1994, just after the World Wide Web began to become popular. Today, legacy radio companies command the biggest share of web radio advertising revenue, generating $480 million last year, up 13% from 2008, according to the Radio Advertising Bureau.

Internet pureplay radio outlets are estimated to have generated less than half of that, with Pandora finishing the year at $50 million.

But although they trail in revenue, the pureplays surpassed traditional radio in online listenership this year, for the first time. According to Infinite Dial, an annual study from Arbitron and Edison Research, Internet pureplays reach 55% of monthly online listeners, compared with 40% for the online streams of traditional radio companies.

The same study found that online listenership is growing. This year, all Internet radio reaches 43 million people a week, up 30% from 2008. That's about 17% of the U.S. populated aged 12+.

Online radio's growing influence has the full attention of traditional radio broadcasters.

"As technology evolves and augments the accessibility and distribution of radio, digital and mobile radio have become an increasingly essential part of our business model," says David Goodman, president, CBS Interactive Music Group.

Jared Lapin, director of interactive at WOR, credits improved ease-of-connection with greater consumption of WOR over the Internet, and predicts that the big promise of Internet radio lies n the car, once adapters and built-in receivers proliferate. "It's the ability to listen on the go," he says.

Owen Grover, vice president of programming and marketing at Clear Channel Digital, adds that geo-targeting is only one element to providing a more compelling listener experience. "It's about how the consumption of media evolves," he says. "Learning more about the listener, where the listener is and identifying characteristics about that listener allow us to serve them better."

Clear Channel Radio's iheartradio streams more than 750 of its radio stations, plus on-demand video of performances and interviews and exclusive digital-only stations. The iheartradio mobile applications recently surpassed seven million unique downloads.

CBS Radio streams all of its 130 radio stations plus AOL Radio and Yahoo! Music Radio through one integrated player, and sells all the advertising.

"Over the past two years, the company's radio applications have been downloaded on mobile devices over 13 million times, and approximately 8 percent of our online listening audience streams CBS Radio stations on a mobile device," Goodman says.

Lastfm.com, a personalized online service from CBS, delivers music based on listener selections. Finding a way to allow listeners to choose their own music helps radio compete with Internet-only purveyors like Pandora -- not surprising, as the Infinite Dial survey confirmed that the ability to control or choose the music being played is the No. 1 reason for listening to online radio.

Some companies are using streaming as a way of introducing new and emerging musical acts. Recently, Clear Channel gave exposure to critically acclaimed Swedish pop-singer Robyn by presenting a live performance on iheartradio. At the time, Robyn had not yet been played on any of Clear Channel's over-the-air properties.

Although radio has been delving into listener-engagement on the web, and dominates online radio ad revenues, digital revenues still represent only 3% of the industry total.