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The Sound of Internet Radio

by Glen Emerson Morris

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The demise of the Mutual Broadcasting System in spring of 1999 was barely noticed by the press, and perhaps even less so by the public. This would not have been the case sixty years ago, when the network's flagship program "The Lone Ranger" was a national super-hit in the youth market. In those thrilling days of yesteryear, MBS helped define the concept of radio. Today, something else is defining radio, and MBS is not likely to be the only casualty.

One of the predicted best sellers for the 1999 Christmas season is a new series of MP3 recorder/players, capable of downloading music CD's in their entirety off the Internet, in a reasonable time, and playing them back in genuine CD quality. MP3 systems are likely to be on the Christmas list of millions of the under-30 generation, and given the system's relatively modest cost, they probably won't be disappointed. In the weeks following Christmas of 1999, millions of people will be listening to music they downloaded free off the Internet with their new portable MP3 systems, and the resulting decline in CD sales and broadcast radio ratings will be felt nationwide.

Like the Internet itself, the combination of MP3 technology and the Internet isn't just a technological fad, it's a fundamentally new way of doing business (in this case creating and distributing audio content,) and it's here to stay. Even in the unlikely event that the MP3 recorder/playback systems fail in the market, MP3's ability to push high quality stereo sound through standard 28.8 phone connections Internet (making Internet "radio stations" possible) will still make MP3 technology a hit, forever changing the advertising landscape in the process.

By summer of 2000, there will be thousands of well financed MP3 based Internet radio stations (AOL plans to offer 160 different MP3 audio channels alone.) It won't be a good time to be a music company or a broadcast company, but it could be a very good time to be an advertiser (especially if you're one going after all the extra money people will have to spend, now that they won't be buying as many CD's.)

Advertisers have been dependent on broadcast radio (and indirectly artists and music companies) to reach certain markets for so long it it's hard to imagine any different way of doing business. However, declining ratings and climbing rates can't be ignored, and if trends continue, it's only a matter of time before it becomes more cost effective for advertisers to put their own "radio stations" on the Internet than pay a broadcast station a fortune for a handful of listeners.

Advertisers who want to start their own Internet radio station (or more likely, advertise on one) will find no shortage of good talent available. The music industry (like the book publishing industry) has focused its efforts on developing a limited set of artists who were best sellers, rather than a wide variety artists who were good sellers. This approach has left many good musicians totally ignored by the music industry, and left consumers with far fewer choices in music than many wanted. Internet radio will address both issues, offering literally hundreds of different formats, and opening up opportunities for thousands of previously unheard of artists.

Advertisers will be able to use the diversity of Internet based radio to target smaller market segments, with far greater accuracy, than commercial broadcast radio and the music industry permit. Broadcast radio, which has become a powerful middleman between advertiser, talent, and audience, will be bypassed by advertisers who connect directly with the audience, and possibly directly with artists, too.

The concept of advertisers paying musicians to perform for audiences isn't new, actually. In the 1920's and 1930's advertisers frequently sponsored dance bands and sent them on national tours (or at least subsidized them.) In those days, having a corporate sponsor indicated a band was "commercial quality," and helped the band's credibility in getting engagements. (Lawrence Welk admitted in his autobiography that he launched his career by inventing a fictitious company to "sponsor" his band.)

As late as the 1950's it was still possible for an advertiser to sponsor one program or artist completely (though in the more expensive media of television, the phrase "alternate sponsor" was beginning to be heard.) In many cases, the advertiser got top billing; the Texaco Star Theater with Milton Berle, The US Steel Hour, Schlitz Playhouse, just to name a few. However, by the 1960's, there wasn't enough market left in radio for advertisers to bother fighting over who would have top billing in it, and television time was so expensive, only a group of advertisers could afford a TV show, so by default the name of the show got top billing.

Internet radio will give advertisers a chance at top billing again. It wouldn't be hard to imagine shows like the Nike Rock Hour, or Coor's Live at Red Rocks. Even local advertisers could get top billing by sponsoring (and "webcasting") hometown bands, school football and basket ball games, and a variety of other local events not usually carried on local radio, but likely to attract a modest, but cost effective, audience. It won't be radio as it used to be, but just maybe, it will be radio as it should have been.

From an advertiser's point of view, it's unfortunate that broadcast radio station's audiences are deserting them, and that the station owners still have to pay off the rather large debts incurred buying the station licenses, but ultimately it's not their concern. If Internet based radio can deliver the right audience at a better cost per thou, it's the logical choice, and it probably soon will be for thousands of advertisers.

Copyright 1994 - 2010 by Glen Emerson Morris All Rights Reserved

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