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Streaming as a Tool for Radio

The purpose of this article is to provide radio mangers with insights and knowledge about today’s streaming technology.

The purpose of this article is to provide radio mangers with insights and knowledge about today’s streaming technology.

Our company, the GMV Network, provides standards-based software technology for streaming media. When we make a presentation to radio broadcasters about how to stream, the following is what we present.

New prospects

Last year, when MP3 was adopted as a technical standard for streaming audio content, radio broadcasters benefited, although many were unaware of their new opportunity.

With MP3 as a standard, individual radio stations and networks have the opportunity of not only saving money vs. older non-MP3 based systems, but also actually using streaming as a system to provide nontraditional revenues.

Live streaming involves the distribution of multimedia information for playback by one or more users in real time. Three processes are involved when conducting live streaming: encoding, serving (often called splitting when streaming live) and decoding/playback (see Figure 1).

(click thumbnail)Figure 1
For live streaming to be successful, all processes must occur in real-time.

Encoding involves turning the live broadcast signal into compressed digital data suitable for streaming.

Serving (or splitting) involves launching the live stream to users who wish to receive it.

Decoding is the process of decompressing the encoded stream so that it can be heard and/or seen by an end user. The decoding and playback process typically is handled by player software like RealNetworks RealPlayer or Microsoft’s Windows Media Player.

The problem, the choice

Imagine a world where a Ford car could only be driven using Mobil gasoline or where a Sony television could only view shows produced by NBC.

This is the world of multimedia streaming today. None of the major software players have streams that are compatible with each other. In other words, a proprietary RealNetworks-encoded audio stream can only be served by a RealNetworks server and played with the RealNetworks RealPlayer. The same is true for Microsoft (see Figure 2).

(click thumbnail)Figure 2 * Denotes operating system license cost ** Denotes per stream licenses
Because many Internet radio listeners are unlikely to have installed all media players, the broadcaster is forced to make a choice: either choose one of the proprietary streaming formats that some listeners won’t be able to hear, or simultaneously encode and stream in all proprietary formats.

Because most broadcasters want to stream to a large audience, these broadcasters incur the costs and headaches of supporting multiple encoding platforms and multiple serving platforms.

Additionally, files archived during the streaming process will be in a proprietary format, subjecting the broadcaster to the negative effects of technological lock-in.


The Moving Picture Experts Group is the world’s leading standards body for digital multimedia encoding and compression. The group’s first international standard, MPEG-1, was designed to compress video so that it could easily fit on CD-ROMs. Audio can also be compressed under the standard as Layer 1, Layer 2 or Layer 3 audio.

MPEG-1, Layer 3 audio can compress CD-quality audio to more than one-tenth its original size. Audio files created under this standard are commonly known as MP3 files.

The wide-scale adoption of the MP3 format, however, is a result of more than just great compression. Because MPEG is an open international standard, anyone is allowed to create products that encode and play MP3 files.

In other words, no single vendor (e.g. RealNetworks, Microsoft) holds the key to the MP3 format. Therefore, more compressed digital audio content is stored in the MP3 format than any other format available today, proprietary or otherwise.

Such a large wave of support for a standards-based approach is difficult to ignore. Due to the overwhelming popularity of the MP3 format, RealNetworks and Microsoft have each added support for their players to receive and playback standard MP3 audio streams.

RealNetworks and Microsoft servers, however, do not have the capability to deliver fully standards-based MP3 streams.

(click thumbnail)Figure 3
Standards-based servers, like GMV Network’s AudioEdge and Nullsoft’s ShoutCast, deliver MP3 streams for playback by all popular players (see Figure 3). As an added bonus – consumer devices, portable players and Internet radios that connect to the home stereo and soon, car radios – all support the MP3 format.


There are three principal ways for radio stations to transmit their content via Internet (see Figures 4 through 6). Each has advantages and disadvantages.

(click thumbnail)Figure 4
Figure 4 shows the once “free” streaming systems that have been offered to the radio industry for several years. In these systems the radio stations are given encoders that are then pointed to servers at the stream hosting company.

In return for streaming services, the radio station surrenders portions of its advertising inventory or even Web site real estate to the hosting company.

The hosting company then sells this advertising space to offset their costs and hopefully turn a profit.

This method has definite cost and ease-of-use benefits for the broadcaster. The main disadvantage is that broadcasters lose control of their streaming system and the potential revenues that can be derived from it.

Alternatively, a broadcaster can choose to host their entire streaming system in-house. The main advantage to this method is the degree of control over the process.

The main disadvantages include the hassle of managing the large amounts of bandwidth that must be brought on-site to support the streaming listener base.

Co-location is the third method available to broadcasters for deploying streaming. Co-location involves placing one or more streaming servers at a site designed to provide dedicated Internet connectivity.

The main advantages to this approach are simplicity and scalability. The disadvantage of this method is cost; it shows return on investment (ROI) only with hundreds of listeners at a given time.

The cost of co-location will vary for carrier to carrier as well as location in the country. Streaming as a Tool for Radio
AcknowledgementsThe following people contributed to this white paper:

Bob Hamilton
New Radio Star

Dennis Seymour
Olivet Nazarene

Marty Sacks
Caroline Dorsey
Telos Systems

John Casey

Ken Lee
Radio Business

Robert Healy

Beth Bonczek

Dave Biondi
Bnet Radio Inc.

John Bishop

Gil Wasserman

Dean Taylor

Ed Emberson

Jared Eikenberg
Clear Channel

David H. Layer
National Association of

Takeo Asano
AT Communications

Jim Schillreff
Streaming economics

Preparing and delivering your stations broadcast for delivery via the Internet involves hardware costs, software costs, and bandwidth costs. Choosing a standards-based MP3 streaming system can help keep hardware and software costs low by eliminating the costs associated with supporting multiple proprietary systems.


(click thumbnail)Table 1
The encoder unit, the first step in the process, can be the least expensive portion of the streaming system (see Table 1). The fundamental feature of any encoder is MP3 compliance. Two major categories of MP3 encoders are available: software-based encoders and hardware-based (appliance) encoders.

The cost ranges for the two options open to broadcasters when encoding.

As a general rule, dedicated hardware encoders are easier to use and maintain than software encoders are because they are designed as an appliance to be used for one purpose. Software encoders have the advantages of features like remote administration that make them a better choice for the user in some cases.


The serving (or splitting) component of a live streaming system delivers the encoded stream to end users. The compatibility, price range and capabilities of the server vary dramatically (see Table 2).

Servers capable of delivering standards-based MP3 streams tend to be cost-effective due to their support for multiple players from a single platform. Another major consideration in choosing a server is the number of concurrent streams the server must support.

(click thumbnail)Table 2

The final expenditure associated with streaming is bandwidth cost. Numerous bandwidth options are available to broadcasters. If a broadcaster chooses to use a streaming hosting company (see Figure 4), their monthly charge or the advertising trade contract pays for their bandwidth cost.

In the situation where the broadcaster chooses to place both the encoder and the server in their building (see Figure 5), the bandwidth cost will vary by the number and size of connections that are brought into the building.

As stated previously, DSL connections are the most popular broadband choice used by radio broadcasters. Corporate DSL connections are typically priced in the range of several hundred dollars per month.

(click thumbnail)Figure 5
When a broadcaster chooses to co-locate their server at an Internet Service Provider (ISP) or hosting provider (also known as Web hosting facilities or data centers) the cost structure changes dramatically.

Costs associated with bandwidth when co-locating are too varied to place into a simple chart, but there are several metrics a broadcaster should understand when negotiating with these companies in order to assure the most competitive rate possible.

The first is the Megabyte Transfer (MT) rate. This is a standard measuring tool among bandwidth providers that varies between 1.5 and 5 cents in cost, with discounts for high usage.

A hosting company will likely use a different model that is based on available bandwidth to the server(s), whether or not the bandwidth is being used. Typical capacity charges are sold in units of 1 Megabit Per Second (Mbps) per month.

Prices can vary from $500 to $2000 for each Mbps/month based on volume and performance guarantees. Be sure to understand how the host calculates this cost.

When broadcasters co-locate servers they will be charged rent for space in the hosting facilities, so the monthly cost of rack space must also be determined. The method hosts use to determine this cost varies widely.

Several companies have a minimum monthly space rental charge (usually one-quarter of a rack). Other companies will only charge for the space used. In many cases a specialty 1 or 2-unit high rack-mount server will cost much less to host than less expensive “tower” servers.

Broadcasters should consider this cost trade-off before purchasing hardware.

Other considerations to look for when choosing a hosting provider include: performance guarantees or Service Level Agreements (SLA), burstable bandwidth (to handle an unusually large demand for a short time), security (both physical and network) and 24/7 support and monitoring (in the unlikely event that a server needs to be restarted in the middle of the night to restore service).


As with any tool, a business must be able to produce profit with it or it will be discontinued. Radio broadcasters have several techniques available today to help realize a return on their streaming investment.

Reporting & Measurement

The first step to develop an ROI model in streaming media is to engage a credible, third-party measurement system.

Based on transmitter strength, a broadcaster can estimate the coverage area of their transmission. This simple formula is not available in the transmission of streaming data.

Specialized streaming performance monitoring companies are needed to measure the effectiveness of bandwidth providers and co-location providers.

Streaming listener reports are analogous to conventional terrestrial broadcast reports. The difference in these reports is the level of absolute detail of a listener base. These reports will be able to pin down exactly when a P-1 audience is listening and to what.


The next step to develop continued ROI on streaming is to change the way you currently sell your time slots to your advertisers.

There are two techniques used to incorporate streaming and online advertising into the sales people’s rate cards.

First, use the fact that the station is streaming as a vehicle for increased advertising rates. This technique is only successful after an effective reporting and measuring system has been put into place.

The sales people of the station are then capable of providing proof on additional streaming traffic to the advertisers.

Second, incorporate online advertising into the advertising package of the station. For example, when an advertiser purchases spots for the station, request their banner ads and logo buttons for placement on the station’s Website.

This reinforces connections between the streaming listener and the advertiser. Internet specific ad insertion can also effectively double your ad inventory and create a possibility for national ad sales

Finally, drive traffic to your Website through the station’s broadcast. Successful streaming radio stations mention the station URL in the morning and evening drive time as many times as possible each day.

In fact, the most successful mention it hourly or more and place the URL on all promotional material. This benefits the online advertiser by giving them another avenue to the listener and it increases the non drive-time streaming audience.

Traditional revenue sources

Streaming broadcast content can and should have a direct effect on the rate card of a radio station. Several radio stations across the country have proven that an effective streaming solution produces increased advertising revenues.

Figure 7 illustrates the fluctuation in advertising rates throughout a normal broadcast day.

(click thumbnail)Figure 7
Online ads

The peaks represent the drive time hours of the day. Radio stations that have been successful in selling streaming to their advertisers have used one of the two following techniques.

The first is increasing your advertising rates across the entire broadcast day as illustrated in Figure 8.

(click thumbnail)Figure 8
It’s a money maker

The leaders in streaming have been successful in increasing their advertising rates as much as 5 percent to 10 percent with the addition of a strong streaming audience. The second technique used by successful streaming stations is increasing their daytime rates as illustrated in Figure 9.

(click thumbnail)Figure 9
By increasing their daytime rates, these radio stations have been able increase the amount of traditional revenues generated by the station. The primary reason for the type of increase is the ability to reach the P-1 audience during working hours when they are working at their desk.


Selling banner advertisements and logo buttons is an opportunity for revenues where none existed. These advertising vehicles do not cost as much as on-air advertisements, which opens the chance to sell advertising, space to smaller prospects in the community.


Streaming is developing into a profitable tool for the Radio Broadcast industry. The adoption of MP3 as the standard format has allowed the opportunity for easier deployment, greater reach and increased profitability in streaming broadcast content.

Many radio stations are already successfully producing a profit through streaming, and more are beginning each day.

Stations considering streaming or considering changing their streaming systems, should look for standards based MP3 streaming systems to minimize their short- and long-term system costs and provide the best experience for their listeners.

Streaming is much like new on-air talent. It must be promoted to both the audience and the advertisers in order to be successful.

I thank those who contributed information for this white paper, who are named in the online version of this article. We’ll complete our discussion and cover streaming economics, encoders, servers, bandwidth, ROI, hosting providers and how to sell streaming in the July 18 issue.

Do you have a story to tell about your station’s start-up streaming experience? Send a brief outline of your tale to Internet Radio editor Laura Dely via e-mail to [email protected]