As we and others have observed, the rise of Internet radio has many parallels to the coming of FM.
For example, both began with fixed receivers in the home or workplace only, followed by portables and in-car receivers. Other similarities include all the new content available, and lately, even the higher audio fidelity.
A big difference, though, is that the fledgling FM band was largely under the control of incumbent AM broadcasters (in the commercial sector, at least).
Existing radio stations were by rule the only candidates for commercial FM success. Even then, however, they were forced into that ultimate success by regulation, too, when the FCC required the cessation of AM/FM simulcasting in the early 1970s. So the regulation was both carrot and stick; but were it not for the stick component (and the new formats it generated), FM may have died on the vine.
This time it’s market forces, not regulators, that are pushing broadcasters to explore the next fertile field.
Yes, Internet radio’s barriers to entry are far lower, so the competitive environment is much more populous. But as in the previous transition, we believe there is still no one better prewired to succeed in Internet radio than local radio broadcasters.
To be sure, Internet radio is a different game, but just as in the AM-to-FM shift, those who best understand and leverage the differences between the old and new processes will win the day.
And that success does not necessarily mean total replacement. In any transition, the “incumbents” should always be concerned with cannibalization of their existing service and the possible loss of investment value. The best definition for success is therefore “maximum new growth with minimum legacy loss.”
We note that the AM-to-FM transition itself is still in progress, and so it is that some broadcasters continue to succeed with stations in both bands, by optimizing the content and service delivered on each to their respective technologies and user behaviors.
Today, this lesson encourages the embrace of Internet radio’s differences, and the application of local radio’s considerable amassed assets, to provide a winning suite of services online — while maintaining the best of what works on-air.
The easiest place to start is with new streaming audio services, a hugely popular and fast-growing sector.
Why simple streaming, as opposed more interactive services? Because this form of straight-ahead Internet radio is reaching a great demographic that still values the curatorial expertise and well-connected nature of radio presentation — a proxy for the listener’s taste, if you will.
The broad choice of streams and their lighter commercial loads also are key attractions. For many listeners brought up with local radio, Internet radio streaming keeps what’s right and fixes what’s wrong with AM and FM — and it’s therefore an optimal service.
While some activist listeners may still want to select their own content and shuffle it (e.g., iTunes), or interactively tweak streams (Pandora, etc.), a lot of listeners seem to like plain old Internet radio.
A recent New York Times article underscored this in quoting Tivoli CEO Tom DeVesto, who compared it to a wine lover who “doesn’t want to make his wine; he wants to open a bottle.” Tivoli is now adding to its established line of AM/FM radios with some fancy, wood-cabinet Internet radios.
We think broadcasters should follow suit, keeping the on-air shelves stocked with the big sellers, and going with the boutique stuff in many variations online. It’s a great way to get back to the future and enter radio’s next golden age.
— Radio World