The Future of Radio Is Online

As a musician and producer who lives and breathes for new technology in audio entertainment, I am convinced of two things concerning the future of radio:

1. Terrestrial radio is a dead man walking.
2. Satellite and Internet radio are the going to be the new and permanent sheriffs in town.

Now I think we all know why The National Association of Broadcasters is so against the Sirius/XM Merger. Their business model is so outdated it has rust flaking off the chassis. Don't think so? Let's speculate for a minute.

We know that the satellite radio race is in turmoil thanks to our fun loving politicians at the Justice Department and the FCC. Sirius (SIRI) and XM (XMSR) are dangerously close to collapsing without a merger. Well, MAYBE. We can all say that without a merger one will fail and one will not but the truth is that neither stock will fail regardless of the outcome. Here is why.

As a merged company or as separate companies, they will probably be bought out. But unfortunately, Satellite radio itself is limited. 300 channels won't make the cut as soon as auto manufacturers install Internet-ready receivers. This will not only give listeners thousands of channels but will turn your car into its own hot spot so you can use your laptop in your car as well. That is until your car comes with it's own PC or MAC system built in but that's a discussion for another time for the next battle between Microsoft (MSFT) and Apple (AAPL).

This many options are just too good for the consumer to pass up. So Sirius and XM will more than likely be bought out. Not because they can't make it on their own but because there are hungry companies out there with deep enough pockets to make the shareholders an offer they can't refuse. Standard satellite radio will still remain because of content like the NFL and MLB.

Sirius and XM will probably need both satellite and Internet streaming radio to compete but that will only give them more options to make money by expanding their business model to either free radio with advertisers to pay the bill or paid radio without advertising with subscribers to pay the bill. I predict that Internet radio will probably become the top gun in autos within five years. At my house I go to a web site that lets you create your own Internet radio station based on your musical tastes and I can pipe it throughout every room. And as soon as cars roll off the line with Internet receivers built in to them you can wave goodbye to terrestrial radio.

Clear Channel (CCU) has only one chance to stay on the right side of the soil. Stop trying to fight technology and start stroking checks because once this satellite radio merger debacle has cleared the trees, the likes of Microsoft, Google (GOOG) and Apple will be salivating so hard they will need bibs.

Disclosure: None

Comments

[fxtrader07]

'the future of radio is online'? oh yeah? maybe not!
I can live pretty well with the 'dead man walking' terrestrial radio! Why the f*** should I use the Internet for that silly purpose? The web is already overbudrdened with data traffic - transmitting hundreds of radio channels makes matters only worse.
When I get up in the moring, I switch on my normal, traditional radio. I have no intention to start my PC or go online everytime i want to listen to a radio channel. the same is with driving. maybe in the U.S. the truck drivers will like satellite based radio but as for europe, such truck driver radios have so far gone nowhere.
I for my part don't need online radio. It's only slightly more useful than, say, tv via handy - which is probably the most overhyped and absolutely silly and useless mobile application i could think of.

[Plowboy]

Hey Gino.. I like your writing. Two questions for you since I'm sure we all agree that the dominate platform for satrad is in the car.

How will internet radio work in rural America and how will I be able to listen to programming cross country ... or across my state?

The last issue remains content and advertising. At least from my perspective, advertising and limited content will still be the bug-aboo to internet radio?

Your thoughts?

[screamer]

If the siri/xmsr business model is so outdated and destined to fail, then why are the Feds so concerned that the merger will create a monopoly.

Something stinks in Washington, as well as your article.

[Plowboy]

I'd also like to point out that SI-XM pays 6-8% of their sales to performers while the NAB not only pays nothing but now argues that it should pay nothing now, or in the future.

Here are the 12 Congressmen that are trying to pass a bill to get the NAB off the hook. Please contact them voicing your support for the RIAA and performers and most of all, remember them at election time.

5/12/2008--Introduced.
Declares that Congress should not impose any new performance fee, tax, royalty, or other charge relating to the public performance of sound recordings on a local radio station for broadcasting sound recordings over-the-air, or on any business for such public performance of sound recordings.

www.opencongress.org/b......

Sen. Blanche Lincoln [D, AR]
and 12 Co-Sponsors
Sen. Wayne Allard [R, CO]
Sen. John Barrasso [R, WY]
Sen. Samuel Brownback [R, KS]
Sen. Richard Burr [R, NC]
Sen. Charles Hagel [R, NE]
Sen. James Inhofe [R, OK]
Sen. John Isakson [R, GA]
Sen. Lisa Murkowski [R, AK]
Sen. Ben Nelson [D, NE]
Sen. Jon Tester [D, MT]
Sen. Jim Webb [D, VA]
Rep. Roger Wicker [R, MS-1]

[cos1000]

"I predict Internet radio will be the top gun withing 5 years".

Huge prediction using a dozen words without anything to back it up. I have no problem dealing with this being a reality but how? at what cost? who's going to subsidize it? what's the business model? how do you get nationwide coverage?

Aside from Satellite Radio, (because of the satellites), cell phones are the next best solution for coverage of signal. I am not sure but, data is a problem with satellites which is why broadband internet is still a Cable Company competitive advantage. You can put Wind Towers up but you think their going to let enough land line equipment be put up nationwide for internet radio. You can put one up right next to your campsite in the middle of nowhere.

[cos1000]

correction: ....you can't put Wind Towers up

[Wow - WTF?]

fxtrader07 - "overbudrdened with data traffic" "transmitting hundreds of radio channels makes matters only worse"

WTF? Is the internet about to collapse? HAHAHA!!!

BTW fxtrader07, Internet radios have been available for years that are just as easy to operate as your traditional radio, without the need of sitting in front of a PC. It's just a matter of time before every car has one a stock equipment. Wake up, it's the 21st century outside.
www.sonos.com/
www.amazon.com/Sangean...

Plowboy - WiMax, 3G cellular service, or something similar could provide access to the internet, so if you can use a cell phone where you live you will be able to access internet radio in your car. Regarding your advertising question - check this out - www.pandora.com/

[cos1000]

WoW-WTF? 3G cellular service is not free....now we're getting somewhere. At what cost? Where are the auto maker deals? Whose going to subsidize the units? Just because the technology is there, maybe, can you build it so they will come?

[ardano]

interesting, but perhaps not definitive...The real answer is that radio will morph into something not yet understood, probably a balance of all systems, traditional, satellite and internet.

Local franchises in traditional radio do have value. Satellite and internet radio also have their drawbacks. Here's one, fidelity. Both sound thin. We live in a world of high def, yet when it comes to radio, we're going in the other direction. I don't get it. Ipods have less fidelity and dynamic range than a good traditional fm signal. Pop in a cd, (remember those,) and fidelity jumps. Cars come equiped with sophisticated amplification systems and dozens of speakers putting out sound that you can get of AM radio.

There are times when a radio listener must have local traditional radio. Other times that same listener will gravitate to a national feed. Circumstances will dictate that choice and given the technical upgrades of autos, consumers will be able to listen to all of them.

[Mark Lassoff]

Yes. The author of this article "gets it." Chrysler just announced that all of its 2010 modesls will have on board interent and be capable of receiving online radio. It's about consumer choice. Why settle for 300 channels when you can have thousands at your fingertips.

[cos1000]

M...Lassoff I'm not saying the technology might not be there in the future but at what cost? Make your case, show us the numbers. Chrysler will have all models with on board internet. I'd love to read the announcement, please provide the link...

[cos1000]

M...Lassoff....you of all people must have this information, being VP and Managing Director of IBG, Internet Broadcasting Group.

[Gino Lattarulo]

All very legitimate points and questions. As I said, this is only a prediction based on the progression I have seen in the audio world over the last 10 years. I too still enjoy terrestrial radio but I just don't see it surviving the availability of Sat and internet streaming, especially, as cos1000 states, Cell phones being a good source of streaming content. A very good point about what the business model will be, who will subsidize etc. Of course none of us knows the answer but what I do believe is that when you are talking about a potential audience of billions, someone will figure it out. "WOW-WTF" , Pandora was actually what I was referring to in my article, nice job.
"Plowboy", as far as reaching rural areas and cross country coverage, I think that will all be satellite internet based (coinicidence right?). Right now you can get a satellite internet card for your laptop for about 60.00 per month and have internet access anywhere you go. Sure there are areas with coverage dead spots but sooner or later it will all be blanketed by the satellites.

[Gino Lattarulo]

Sorry, I didn't put my name on the previous posting.

[americanbands]

Internet radio will cross all borders...

The best software to accomplish this will be brought to you by a small indie company jamroon.net

proof id in the pudding:

www.canadianmusic.com/...

[americanbands]

Misspelled: jamroom.net

[Bob Kincaid]

What is emerging, in some corners at least, is a re-examination of not only what people listen to, but how broadcasters view their audiences.

Anyone who thinks terrestrial radio (or what I call "buggywhip radio") is free isn't paying attention. There's nothing free about it. Content isn't so much delivered to listeners as listeners are delivered to advertisers. That's the relationship that matters. Advertisers generally don't give a fig what kind of music is being played so long as the demographics are there in sufficient numbers. For example, if terrestrial broadcaster "A" has a million listeners and 60% of them are within the demographic that buys cars, the Ford Motor Company doesn't care if the content is Country, Rock, Fingernails on a Chalkboard or a 1 KHz tone. What matters is getting the advertising to the victim, er, consumer.

With the recent passing of George Carlin, it's worth remembering that there are far more regulations on which words may be said than on how products may be foisted on the "consumer" public via the public's own airwaves.

Right-wing talk radio is the best example: listen to any of it and see how long it takes before you get a per-inquiry spot for "Buy Gold Now" or a vaccuum cleaner that picks up bowling balls, a patent medicine herbal erection enhancer or baldness cure. These products are placed on these shows because the advertisers have determined that (a) the listeners are dumb enough to fall for the con and (b) the shows numbers are large enough that the mathematical scale alone is guaranteed to deliver them some rubes.

Internet radio has a much greater chance than either satellite or buggywhip radio to get away from the predatory advertising model based upon its multimedia immediacy. While it's a certainty that advertisers will want to get their predatory hooks into the medium, it may be possible to keep them at bay and make them less intrusive into the actual programming. Listener subscription models may actually make it possible for broadcasters to tell the product hustlers to take a hike. How refreshing THAT would be, regardless of format.

Thanks for a great, thought-provoking article, Gino..

[Sirius Fan]

Internet Radio in cars? THOUSANDS of channels?? Turn your car into a Wi-Fi hotspot? What, drivers don't already have enough distractions in their vehicles? Outstanding! Now we'll be able to talk on the phone, text, email, surf the web, and channel surf on the radio, all while doing 70+ mph. Paying attention to what's going on around you is overrated anyway.

Regardless, and quite frankly, CONTENT IS KING as someone else mentioned on another thread. I don't care if you offer me a million channels, crap is still crap, no matter how high it's piled. I haven't listened to FM radio at all since I subscribed to Sirius 3 years ago, and made-to-order Internet radio "stations" are best suited for eclectic musical tastes, a very small niche market at best.

Everyone I know who subscribes to Sirius absolutely raves about the service, and I am (obviously) no exception. It is simply a superior product, and if the goddam government would get out of the way and let the free market work, the results will most certainly bear me out.

[OldGaDawg]

"FM" screwed "AM"..
Sat.Radio will do the same to "FM" but allot harder and deeper...........

OldGaDawg

[Plowboy]

People should stop giving Gino shit. After all millions of people have lost billions of dollars believing in Sirius and XM so far? ..who the hell knows that the future is. Did you or GM see 4.25 gas three years ago?

Did 85% of American's hate Bush four years ago?

WTF.

[User 168418]

INTERNET RADIO WOULD HAVE TO GET FCC APPROVAL THAT WILL TAKE ABOUT 10 YEARS.... I DONT THINK FOR A SECOND THAT ALL OF THIS WOULD BE FOR FREE.........AS SOON AS THE MERGER IS APPROVED EXPECT A BIG COMPANY TO TRY TO MAKE A TAKE OVER AT THESE CHEAP PRICES.

[jemcon]

Mostly good stuff here. I think internet radio is the future too. I just haven't figured out the revenue (ie profitability model). Terrestrial has advertising, and plays nicely to the local markets they serve. Satellite has subscribers, most of whom really appreciate the ability to pay not to be bombarded with advertising, and also receive good content for the same nickel. Cars? will we really be driving cars in the future?... maybe electric or hydrogen. We will be listening to music and audio content forever though, and there's lot's of opportunity for innovation. Handheld/mobile devices are where it's at. I will not only be watching as this evolves, I'll be participating in the evolution.

[muley101]

internet radio is just another way to listen to commercials.

[Bruce B]

Content is NOT king...money is, and money is the reason why terrestrial radio will survive. Let me explain why.

Drive around wherever you live, and take a look at the businesses. How are they going to get you to come in the door if you have no specific pre-existing reason? Advertising. There are any number of ways people can advertise to get you through their doors, but traditional LOCAL radio has been one of the most-used methods of getting the word out because it's usually less expensive than most others.

Disclosure: I work for a smaller market radio station (not in sales), and I guarantee you the businesses across the road from our station are not going to shell out big bucks to advertise to a worldwide audience on the web OR satellite radio. They'll continue to spend their advertising money with us because we're reaching their target audience: local shoppers. As long as we continue to provide the area our signal reaches programming that people will listen to (be it of local or networh origin), we'll continue to generate revenue through advertising to those listeners.

I own shares in Sirius and have both Live365 and Shoutcast bookmarked on my computer, so I'm not anti-satellite radio or webcasting. However, I wouldn't write terrestrial radio's obituary just yet.

[cos1000]

Bruce B......every median has a niche, local broadcasting is fine with certain demographics in certain areas of the country, where local radio exists. This is a big country geographically and satellite gets there where folks are starving for content. What your talking about is more of that home town "folksy feeling" that is lost on the national platform. So what. It's a choice. Most people know where the Hardware Store is and Know that there's a special going on at Pop's because of all the litter in their mail box. Local advertisers will keep your local radio station alive. This is an apples and oranges discussion.

[cos1000]

Plowboy......I didn't think anyone was giving Gino shit. Obviously in his comments, neither did he. It's a debate about internet radio. More importantly it's an article that is tell readers that Satellite Radio is not going to be the top gun in the auto media market within five years. Conveniently this comes when satellite is being beaten up by NAB. So if you think that this article, and the author is doing satellite radio any favors by saying terrestrial radio is going to be dead and Internet Radio with be "Top Gun" your being foolish. This article is a ridiculous introduction of a technology, that the author himself admits, has no viable business plan. Excuse me, but Satellite Radio is soon to be "King of the Road" regardless of all this bullshit talk about Internet Radio. It doesn't exist in autos as a viable technology currently: PERIOD. I am currently heavily invested in SIRIUS and will defend this Company to anyone. It's my Company. It exists now. It provides consumers with a tremendous option to Terrestrial Radio. So EXCUSE MEEEE!!!!! For giving the author a F--cking Hard Time. Show me the BEEF or Shut the fup!

[cos1000]

Plowboy....Please, before you even bother, spare me your lament that you are a satellite radio subscriber or investor. I would not want you in my foxhole, given the posts I've read from you defending Sirius.

[Gino Lattarulo]

Maybe I wasn't clear in the article about a certain point. I believe that Internet radio will be king but I also believe that Sirius will be a part of that model along with the satellite radio, providing the best of both worlds. I do not think for a minute the company will go away. Sirius is a pioneer for next generation radio but it isn't the only stop on the way. It will have to grow and change with the landscape because Internet radio will be a dominant force very, very soon. There is no avoiding the evolution of technology to give the masses more for less. But you are correct. Currently Sat radio is where it's at. I am heavily invested as well and have been since Sirius came out of bankruptcy a few years ago. Believe me I am not trying to put it down, I want to see it succeed as much as anyone who believes in an idea that will change the world. But I cannot let money cloud reason and logic about the future of this technology. That would be irresponsible. I will be invested in this company as long as they are responsible and do not become complacent. But what the hell, in 5 years it may be called Google/Sirius :-)

[cos1000]

Gino....thank you for your comments. I hope our investment in Sirius is well placed and gives us a return x 3 for what we are being put through with the FCC delays. The evolution of technology, with Sirius not being the only stop along the way, is a statement that still dismisses the potential NOW for Satellite Radio. As much as you believe Internet Radio will be the Dominant force very, very, soon, you still haven't answered my questions about how, at what cost, who is subsidizing the radios, what OEM's are factory installing these devices, under what company will they be launched, etc. Your writing an article which right now is Science Fiction. Although I know full well that Science Fiction "Can" become fact, until you or someone can come up with the answers to the questions....your living in the land of "What If"

[nataly]

Very interesting but I have a different view on this issue. Being a part of the internet radio industry (I work in a company who build online radio toolbars), I think it will take very long time before the internet radio will replace the traditional broadcast in peoples' cars. The platform that has better chances to do it is the desktop radio – online radio applications that sites on your desktop and go where you go.
We see how the computer itself is becoming more and more integrated in our life and it's just a matter of time until we walk around with small computers that are also cell phones (some of us already do…). by then, the online radio applications would be more popular since it would more easy to play the radio from the desktop or browser (like radio-internet.com).

[Sirius Fan]

I'm sorry but I just can't buy in to the whole Internet Radio being king idea. In my mind, that's like saying Public Access TV will be the next big thing. Niche, niche, niche, wannabe's everywhere, and this will somehow appeal to the masses?

Satellite is where the real talent is gravitating to. Established, well-known DJ's people have been listening to most of their lives (Carol Miller, Jim Kerr, even Cousin Brucie, etc.) have gone to satellite, and popular DJ's are the ones who made FM what it became. You want music without a talk-up by a real human? That's what CD's, mp3's and iPods are for. Yes, Internet Radio will have it's place, but I just don't see the coronation coming in the foreseeable future.

Sirius will be king.

[Plowboy]

Kerry is disgusting.

$4.50 gas, kids dying in a made-up war, the market in turmoil, jobs tanking, people going sick without insurances yet he has the time to thrice lobby the FCC for something fully out of his arena and jurisdication.... why?

Nab Money. Pure and simple!

Ask the Senators how much they received from the NAB over the last three years. These Senators are pond-scum on a good day.

The best Government your Money can buy!

[Bob Kincaid]

User 168418, it probably goes without saying since everyone shot right past your assertion, but Internet Radio's already here, friend. What's more, it doesn't require one iota of FCC approval. Like satellite radio, it is beyond the purview of the FCC and both Internet and Satellite radio have a significant edge over terrestrial buggywhip radio in that folks can say what they want and not have to worry about a million dollars in FCC fines incited by the breathless complaints of a gang of brain-dead, knuckle-walking, mouth-breathing fundamentalist thought-thugs.

With regard to local radio stations' ability to service local businesses via advertising, there's a kernel of truth to it if the station is actually local. A vast number of so-called local stations are no longer "local." They're owned by a distant corporate conglomerate that beams in programming via satellite, providing very few actual jobs in the radio industry, especially where on-air talent is concerned. There are, to be sure, a few Mom & Pop radio stations left out there, but not a lot. Terrestrial radio is largely a dead letter: a medium hustling pre-screened, focus-grouped, corporatized pablum as the mostly musical equivalent of the sugar in front of the nasty medicine that is sheep-like America's 24/7 "consumer culture" narcotic.

[richard cavessa]

one thing for sure people will seek what they feel is fair. they know what is right and wrong....many will seek shelter in fear and ignorance....at least we have a choice

[RFWoodstock]

The Internet will be the major delivery for all media. The future of radio is to evolve into a multi-media, branded social network community. Radio, of all media, has the best shot at converting its listeners to online because it is the medium that has the strongest emotional bond with its listeners. No one feels a sense of community with a TV network or newspaper. The revenue model includes content sponsorships, new forms of advertising including contextual and online commerce. Having a strong brand such as Radio Woodstock to cut through the online content clutter is key.