Media: All about ... Online radio stations

Internet radio promised much but hasn't yet delivered.

At first glance, it seems only natural that the NME, having had to retrench out of mainstream radio, should choose instead to try its luck in the internet-only sphere.

Last week, it was announced that DX Media, which launched NME Radio under licence back in 2008, had decided it couldn't go on. Instead, a reconfigured NME radio station will now be available from nme.com/radio.

It's somehow in keeping with the NME's slightly quirky left-field branding. Internet-only radio seems to have an esoteric, twilight glamour. This, surely, must be about music at its most exciting, cutting-edge best; and the very concept promises to be intriguingly subversive in bringing together the sorts of powerful motivated virtual communities that web visionaries have always advocated.

That's the theory, at any rate. In practice, this media inter-zone can be somewhat disappointing. The issue is clouded by the fact that you can listen to all the big radio brands via the internet - so you expect internet-only stations to be more modest (and more dangerous) versions of the same.

That's not really how it works. True, there's a quite a rich spectrum of activity masquerading under this banner - but it's rather misleading to refer to much of it as "radio" at all.

There are, of course, recognisable radio formats, some of which come courtesy of the big media conglomerates - such as Sun Talk. And (as in the nether regions of satellite TV broadcasting) there are legions of god botherers, speaking unto us across the wired world in a variety of tongues, many of them with a southern US accent.

Then there are the single-minded music enthusiasts, some of them sitting, you suspect, in their vests and pants in dingy bedsits streaming their music collections in ever decreasing circles via dedicated websites. Just upmarket from this aural form of blogging, we have sites attached to established communities - festivals, say, or clubs, or even bands or labels themselves.

And, of course, there are the commercially minded music streaming businesses, such as Last.fm, Spotify and 1.fm. Then there are services hoping to define a new community territory in the space between internet music and social media - for instance, the new Rdio service announced last week by Janus Friis and Niklas Zenntrom, the founders of Skype and Kazaa. Last, but hardly least, there's the likes of Apple Radio on iTunes, a shop-front for a retail operation.

It's not clear where the NME's rejigged radio operation will pitch itself - but the expectation is, as always, that it will attempt to explore all available commercial avenues.

1. DX Media launched NME Radio across a number of digital platforms, including nme.com, DAB, BSkyB, Freeview and Virgin Media, as a 24-hour music service specialising in "modern, cutting-edge, indie, alterative rock music". Output will now need to be reconfigured into a more simplistic format suitable for production via the NME's in-house facilities. The NME's publishing director, Paul Cheal, comments: "We will continue to develop ways in which the NME's audience can engage with both audio and visual content."

2. Its commercial prospects are questionable - as, indeed, is the case across this whole ill-defined market. There's little conventional audio spot advertising on internet-only radio stations. Instead, they tend to focus on commercial opportunities arising out of their host websites: for instance, search, banner, commissions from retail and transactional activity, sponsorships and events revenues, not least from music festivals.

3. Meanwhile, costs aren't negligible. True, performance rights are charged at a lower rate than apply to broadcast stations; but royalties rack up, especially for stations whose reach claims to be global. And even a modest operation will eat up 50 terabytes of server bandwidth per month, which doesn't come cheap.

4. Nor is the audience easily measurable. Rajar doesn't track listening to internet-only stations, nor are they represented by the medium's trade body, the RadioCentre. Interestingly, however, Rajar monitors the internet audiences being developed incrementally by mainstream radio companies. The fifth Rajar survey of internet-delivered audio services, called Midas 5, was published in December 2009. It found that one-third of the UK's adult population now claims to have listened to radio services via the internet.

WHAT IT MEANS FOR ...

THE RADIO MEDIUM

- Established mainstream radio companies tend to have a rather ambiguous attitude towards the internet as a distribution platform. We're unlikely, for instance, to see them developing their own internet-only brands; and even the simulcast of core services represents an additional cost that is hard to monetise. Listening online is almost impossible to measure and some of it takes place in parts of the world that are of little interest to the UK medium's core advertising customer base.

- On the other hand, simulcasting is a game mainstream players clearly have to be in - it's an integral part of the price they pay to maintain their leading-edge credentials. As such, it's a marketing loss leader. It's an especially useful part of the marketing and promotions arsenal at a time when many stations are attempting to develop a closely related (but, they hope, more easily monetisable) listening option - apps for smartphones.

- After all, the smartphone app may well kill off (and supersede, in terms of the medium's expectations) the whole ill-starred concept of DAB.

ADVERTISERS

- Few internet-only radio stations will ever make a call on mainstream radio budgets. They may well be of increasing interest, however, where discretionary online spend is concerned, especially for music, entertainment or fashion brands.

- On the other hand, News International can point to the example of Sun Talk. This streams a phone-in show hosted by Jon Gaunt every weekday between 10am and 1pm - but the station has extended its hours during the Fifa World Cup and now includes a segment produced in association with the Stan James bookmaking company.

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