Musica

Journal of the Music & Entertainment Industry Educators Association
Volume 9, Number 1 (2009)
Bruce Ronkin, Editor Northeastern University
Published with Support from

Drifting Down the Webcasting Stream: Can Businesses Stay Afloat?
Kelsey Bartlett
The MEIEA Journal occasionally features outstanding student papers. This undergraduate research paper was written by Kelsey Bartlett, asenior at Missouri State University.
Introduction
The static of an AM/FM radio is not as familiar as it once was. With technological advances and widespread use of the internet, radio transmission has assumed a whole new form. Streaming radio, often referred to as webcasting, is a recently developed mechanism that broadcasts audio transmissions via the internet. Distinct from terrestrial radiooperations, webcasting provides a “stream” of continuous audio programming to any compatible device. While this innovative service is usually offered at little or no cost to listeners, internet stations are facing steep royalty fees that threaten their futures. Several commercial and radio webcasters are in dispute with record labels, and the entities representing the labels, for using the labels’licensed materials. Artists, record labels, and the collective industry demand to be paid what many consider to be high royalty rates for the use of the music; the webcasting stations argue for paying lower royalty rates. After more than ten years and countless legislative efforts to settle the dispute, a few major players in the webcasting realm remain in clash with the industry. As webcastingbusiness’ revenues are scrutinized, the controversy over a payment plan for streaming music will persist as ideas are converted into workable solutions.
Operation
Webcasting stations operate in two broad fashions, as commercial or noncommercial. Commercial webcasting stations, such as Pandora, are generally large entities that run their stations as for-profit businesses. Noncommercialwebcasters, such as hobbyists or collegiate stations, broadcast for other reasons and usually do not generate profits. This paper will refer mostly to commercial internet radio stations.
Revenue
According to 2007 Bridge Ratings, 57 million people listen to internet radio every week. In the same study, internet radio saw the greatest increase in “Intent to Listen.”1 Perhaps advertisers notice this trend,as webcasters derive a significant portion of revenue from sales of web site advertising spots. For streaming web sites that provide radio services at no charge, this reliance on advertising is especially important; advertising sales are the web site’s main source of income. Pandora, a free internet radio service, receives income from national advertisers such as HP, Microsoft, Honda, Procter &Gamble, and Nike.2 In addition, a recent breakthrough now allows radio stations to generate revenue through insertion of “live reads” into online and mobile streams of internet radio broadcasts, allowing ads to “feel natural and unobtrusive.”3
Outside of advertising revenue, some streaming stations generate income through monthly membership plans. Few internet radio stations obtain income from thesale of the music itself; per-track fees are rare in the webcasting world. Internet radio stations often charge increased membership rates for greater accessibility. For example, Live365 internet radio service offers “VIP” packages of US$5.95, $6.95, and $7.95 per month for “ultimate access.” This access provides listeners with uninterrupted radio, free of commercials, banner ads, and pop-ups.4Expenses
This revenue does not come without costs. To operate an internet radio station, costs vary depending on the station’s size. A webcaster must pay server and bandwidth fees, which have the potential to add up to tens of thousands of dollars per year.5 A station must also pay electricity charges, CD costs, equipment, DJ and payroll wages, and promotional expendi-tures.6 To add further to...