28 September 2007

Is Net Radio the Future?

    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.


Rob said...

I'm assuming by XD - you mean HD. The radio industry has all but failed at marketing HD at this point - it's a Johnny-come-lately free competitor to satellite. Where they got it wrong was not subsidizing car manufacturers to include as standard equipment HD radios. One of the radio blogs I read - Hear 2.0 - the guy who writes it once wrote - "People don't buy radios, they buy things with radios in them." Satellite was positioned as cable TV< a pay service, but if you want HD to work - you gotta get it into every car, which in turn would drive it into every home. They failed. It's only an option at a handful of car manufacturers. I mean come on - the marketing wasn't even good enough for you to remember the name right!

However - the satellite providers both stream their content over the internet already, and one of them (I can't remember which) streams over mobile phones with a particular carrier. They are fully prepared to enter the net radio game, and some industry publications I read confirm that they look at themselves as "audio entertainment" first, with satellite as their transmitter. As they move into partnerships with mobile phone companies and ISPs (they already have deals with cable companies carrying them for free over digital cable) you will see the shift their marketing takes.

As for net radio - it is a smaller piece of a bigger puzzle of just calling everything "audio content" and being done with it at that. Once we have ubiquitous broadband internet everywhere we go, there will be no distinction between podcasts, streaming stations, and terrestrial radio. Everything is on demand. Not only will you have linear streaming stations that you can't alter, you will have streaming stations you CAN alter like Pandora. Pandora is already available for a fee on Sprint mobile phones, by the way.

Unfortunately, podcasting right now is the bastard stepchild of audio entertainment. Excuse me, INDEPENDENT podcasting - because it seems like podcasters can't get people interested in their medium except for big media podcasts. This is in part due to the lack of production quality on many indie podcasts, but on a personal level I absolutely hate that more folks don't give some of the indie podcasts more of a shot. I can give anyone a list of at well-produced indie podcasts, and can get you at least one decent one on most niche topics. Also - that they can't look past the slightly lower production values for the really good niche content that's out there. You did touch a particular nerve there - and on the weekend of the Podcast and New Media Expo no less! It's really disappointing that we have so many tech-savvy folks who won't give some indie podcasts more of a chance. But I can tell you from attending Podcamp Philly a few weeks ago - podcasters are ready not only to fight, but to form partnerships with bigger media. Already Podshow has made a deal to have their video podcasts carried on TIVO, and with Comcast bringing TIVO to its DVR boxes, that's no small ball of wax!

I hope that as we get internet in more and more places - podcasts - as well as linear net radio - will simply begin to blend as audio entertainment - much the same way that blogs have blended on the web with the web sites of more traditional media like magazines and newspapers. Feel like some music? Call up your custom pandora station! Local news? Your local town blog has a podcast - bring it up! Need some weather? Call up your instant updated every 15 minutes weather podcast. But at that point podcasts don't take on that name - they're just audio entertainment, and that is ultimately what this ALL is.

It's gonna all blend to one thing.

Finally - just to say this about net radio - as companies continue to look to save money - many people aren't able to or won't be able to stream net radio at all at work. My company blocks all ports with streaming audio and video. There are some sites that work if they use Flash instead of Windows Media or other streaming - but by and large - I'm almost totally out of the net radio game at work - so it's either the radio (not very good reception sitting next to the server room) or my iPod - so my day is spent with my iPod's music library on shuffle, or podcasts. I expect many people have the same experience.


Andrew said...

Thanks Rob. I think it's because I've been hearing XPN and HD together over and over. To their credit, they have been trying to push it, but I agree, the format will be dead on arrival.

The main point of my post is that I expect the Internet to become the default broadcast medium. As you point out, providers are creating net presences already, including the sattelite companies. I expect that audio and video providers will keep moving in that direction as the Internet becomes more and more ubiquitous (which I think is your point to).

I think broadcasters will manage the transition. There will certainly be casualties. Pay providers like XM/Sirius will face a lot more competion online. And just wait for the court battles when ISPs try to block competing media services on their network.

As for net radio at work, I control the firewall at my office, so I'm good :-). In general that will become a moot point when everyone has broadband on their mobile device. Just think of the security implications there! But that's for another post....

Rob said...

Something just hit me about your comment about Satellite. When satellite moves further into the online streaming space - the advantage they have is top tier talent. Howard Stern aside, both satellite providers carry lots of A list radio talent - and it's not just about the music - what's between the records does count for something. Whether it's oldies with Cousin Brucie or 80s music with Martha Quinn and Alan Hunter, or the latest craft tips from Martha Stewart, or whatever...the big media personalities and brands will still appeal to a great segment who will still be willing to pay for the privelege of getting all that in one place. So I see XM and Sirius as holding onto at least what they have - and maybe even growing with their music.

Oh yes - and if we don't keep the royalty rates at a reasonable level - they very well may be some of the few who will still be ABLE to stream online. But you've also posted about that as well....

Oh and with regard to mobile devices - well - we already see that with IM - folks already text their friends instead of using the PC for that - so yes, it is only a matter of time....