Old School RadioOnline radio is expected to grow 147% in the next 5 years, according to Bridge Ratings, and keep its steep growth well into 2020. There is a sharp increase in websites which offer online radio, some of the most popular ones being Pandora.com, CBS Radio’s Last.fm, and AOL Music. Some compare the growth of internet radio these days to the early days of FM radio.

What is it about internet radio that makes it appealing to so many listeners? Should we really expect to see most people consume their radio programming online?

Is Online Radio Better?

First off, let’s clarify that internet radio, as it pertains to this article, includes personalized and on-demand services like Pandora, Last.fm and Grooveshark.  We’re not talking about terrestrial radio stations that happen to also broadcast online, although those are also gaining momentum.  A study by Arbitron shows that variety in content and the ability to better control that content are the two most significant motivators for users of these on-demand and personalized radio services. Other factors include fewer commercials, clearer signal than over-the-air radio, less DJ chatter, and simply because it’s the newest thing.

More Variety

Unlike terrestrial radio, online radio offers the listener the ability to have a much better control of the “station’s” content. In fact, with online radio the listener is almost playing the role of a radio programmer.   Most online radio “stations” shape their content as a result of the feedback it gets from the listener about various songs. Rating a song highly will result in hearing more songs from the same artists and similar sounding artists. Rating a song poorly or skipping a song will have the opposite effect. It’s a great feeling, knowing that over time your own radio station knows what you like, or dislike, and can tailor the listening experience to it.

Keep Your Commercials to Yourself

Commercial interruptions make the listening experience less enjoyable. I haven’t based this last statement on a study, only on a hunch. Honestly, I’ve never met a single person who admitted to enjoying most commercials. People turn on their radio to listen to music or other programming, not to learn about McDonald’s new quadruple-layer burger.

Most online radio providers are still struggling to find profitability, and ,most have chosen the commercial route.  It’s only a matter of time before someone figures out a way to be profitable while still offering a listening experience completely free of commercials. Imagine that!

No Static At All

In 1978 the duo band Steely Dan wrote the song FM (No Static At All) in reference to the relatively new FM radio, which featured significantly less interference than AM radio. This song is as relevant today as it was 30 years ago. There is zero interference for online radio. As long as there is a good internet connection, one can enjoy an absolutely clear stream of music. With the introduction of mobile devices such as the iPhone, iPad and other smart phones, a growing number of people use their mobile devices to listen to online radio.

Our Conclusion

I’m sure the industry will continue to do studies about the transition of people to online radio.  But, simply put, online radio is better than old school radio.  You get more of what you want, less of what you don’t, and this is only the beginning.

Online radio will ignite the next revolution in the music industry. Just like the introduction of the first record, the first Jukebox, and the FM radio reshaped the music industry, so will it happen with internet radio. There are new rules to the game. The old days of terrestrial radio playing the same old songs dictated by a small powerful group of major labels are ending. For every famous artist there are hundreds of less famous, or even unknown artists, who are as good (but maybe not as lucky). Online radio will open up the opportunity for independent artists and indie labels to be heard.

Online radio can offer the creation of the most obscure radio stations, something that was simply impossible to happen with terrestrial radio. There’s no limitation to the air-waves offered online, and there’s no need for a huge mass of listeners to support a station.  As every other type of media has become a niche game, from magazines and blogs to niche-specific webisodes, online radio will support these small groups of dedicated listeners.

It is this sort of customizable experience that has revolutionized every other form of media as they have transitioned online.  It’s radio’s turn.

Yotam Rosenbaum
EVP of Music, earbits.com
[email protected]
LinkedIn http://www.linkedin.com/pub/yotam-rosenbaum/8/308/651
Twitter: @earbits

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