The workplace as a listening venue is opened up by Internet radio. More people are likely to listen to streaming music over headphones, rather than turn on a traditional radio receiver that could disturb other workers.
In search of bandwidth and profit
But Internet radio faces some significant hurdles before it becomes a viable business. The first problem is limited bandwidth. In this case, it refers not only to the listener's pipeline, but also the number of streams a server can deliver from a Web site broadcast at any given time.
The Internet back-end system itself is constrained. Fewer than a million people can hear online radio at any given time, estimates Joe Pezzillo, who attended the Jupiter panel discussion and is the founder of Eclectic Radio's GoGaGa station. "It would max out the Internet if everyone triedd to listen to all Internet radio sites at once -- Imagine Radio, all the ShoutCast servers, Spinner," he says. "Multicasting would be a partial solution but has been slow to develop by the telephone companies and others in the business of selling bandwidth because it's less profitable for them."
Another problem is competition. With such low barriers to entry, practically anyone can start an Internet radio station. That dilutes the audience, making it harder to aggregate enough listeners to attract advertising dollars or survive on the subscription model of revenue.
But new revenue models are developing and are expected to grow as the back-end bandwidth problems are solved. For example, advertisers now typically pay based on click-through rates. Katz Media's Boehme suggests a more finely tuned model in which advertisers pay not only for transactions, but also for "awareness" and "consideration." That is, consumers sometimes buy online after seeing advertising and marketing messages over a period of time.
Another option borrowed from TV, pay-per-view, is relatively new but may work for Internet radio Web sites with original content. Last week, The House of Blues (HOB) broadcast a live 90-minute Ziggy Marley concert from its Chicago club as a technology and marketing test. Using alpha software jointly developed with Microsoft Corp., HOB.com transmitted free to listeners connected at less than 100K bit/sec. It charged $4.99 per hour for 300K bit/sec. and faster connections, which also received full-screen video.
"The trial had one or two glitches, but basically it worked well and heralds a breakthrough in our business model," says Chris Stephenson, HOB senior vice president of marketing. "It told us that we can make money out of the concerts in our archives." HOB plans six more pay-for-view trials in August and September.
Internet sites with novel content might be able to offer music, video and services on a membership model, such as used in public television, suggests GoGaGa's Pezzillo.