Is Net Radio the Future?

Transmitter!
Oh! picking up something good
Hey, radio head!
The sound...of a brand-new world.
Talking Heads

Awhile ago I mentioned that I've been listening to YRock on XPN. I still am, and recently I found something pretty cool. I have a Windows Mobile phone with Internet access. Out of curiosity I the listening YRock, and I was able to play the high speed stream reliably. What's more, it sounded great on the little ear buds that come with the phone. It's like a little Net Radio walkman I can use almost anywhere. This gets me thinking, is Net Radio the real future of radio?

The obvious alternatives are satellite and HD. However neither format's future seems secure. Broadcasters are really pushing HD as the successor to FM. Despite the big push, I think the jury is still way out. As for satellite radio, clearly people are buying it, but Sirius and XM are still losing money. They justify their proposed merger, in part, with the assertion that a satellite radio monopoly is the only way to keep the format alive. That's not a ringing endorsement of the technology.

Net Radio has a lot of pluses. It doesn't lock the consumer into a single provider like satellite does. It's more like traditional FM and HD in that respect, which is would seem to be a plus for broadcasters - they don't need to negotiate with provider holding a monopoly. Unlike FM/HD, they have virtually unlimited range. If you have broadband Internet, you can receive their signal. Therein lies the rub. Net Radio requires broadband access, and most of us need to pay for broadband. It will cost you even more if you want it on a mobile device like a phone.

Nonetheless, the broadband market penetration continues to rise even as the price of bandwidth decreases. Even the price of mobile broadband has gone down, and coverage steadily improves. At this rate, it won't be long before incremental cost mobile broadband will be less than the monthly cost of satellite radio (if not already). Other services like telephone and video are also moving online. There has to be a tipping point where broadband will be like cable TV or even telephone, and everyone will have it. At that point, what chance to other formats have against Net Radio?

No Internet media discussion is complete without mentioning podcasts. Personally, I don't see podcasts as a threat to the live radio format. Podcasting is great for downloading new/talk shows (e.g. Fresh Air, This American Life, Marketplace, etc.) and music shows (e.g. World Cafe or Echoes). It's not a great format to replace on-air or satellite radio, because most people don't want to pre-download that material for later playback and the recording industry would be too fearful. Assuming you can access the online stream, Net Radio is a much better fit.

Satellite radio scares broadcasters because it threatens to render local stations obsolete. Net Radio, however, does the opposite. Radio stations will no longer be bound by the size of their transmitter or the geography of their location. Local stations can reach their listeners even when they're travelling. Of course some stations will probably fail when faced with so many competitors. Still, a wider audience means you can find success by specializing. Niche market stations would become more viable because they can find enough subscribers among a worldwide audience.

This should bode well for broadcasters and listeners alike.

Update: I mistakenly typed XD instead of HD. I've fixed it. Thanks to Rob for spotting my mistake.