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They’re Hoping for a Net Gain

Makers of Internet Receivers Aim for Bigger Things

Internet radio receivers — standalone radio-like devices that connect to the Internet to access thousands of online broadcasters. either by Ethernet cable or Wi-Fi — are making the move from niche novelty to mainstream product.

“Best Buy currently sells our Grace Digital Internet radios in their stores on a nationwide basis,” said Greg Fadul, Grace Digital co-founder and chief marketing officer. “Additionally many regional electronics stores such as Fry’s and J&R have proven successful for us.”

Grace Digital isn’t alone: The Sonoro Internet Radio “is being sold by Saks Fifth Avenue online and many of their stores,” said Deanna Dal Pos, Sonoro’s international marketing director. Specialty retailers are also selling the Sanyo Wi-Fi Internet Radio, Tangent Quattro and Tivoli Audio NetWorks among others.

The market

How big is the U.S. market for Internet radio receivers? That’s a hard question to answer.

In terms of listenership, “Sixty-nine million Americans per month listen to online radio, according to Arbitron and Edison Research in their Infinite Dial report in 2009,” said Jake Sigal, principal of Myine Electronics, maker of the IRA Internet radio.

The Sonoro Elements Wi-Fi Internet Radio Fadul of Grace Digital said, “According to a J.P. Morgan study published in 2008, Internet radio listenership was estimated at 62 million by the end of 2007.”

Most of this listenership is through Web-connected computers. So what is the market for Internet radio receivers?

“I have seen it estimated at around 100,000 units for 2009,” says Bob Crane, president of C. Crane Co. and maker of the CC Wi-Fi Radio. “It is a growing market.”

Who listens

The audience for Internet radio receivers is based on “the iPod generation,” said Deanna Dal Pos, “the young who have grown up with the Internet (both male and female) and the older generation (typically men) who are curious and willing to experiment with technology.”

Maybe so. But at C. Crane, “Our number one purchaser wants to improve their reception of their favorite station,” said Crane. “This may surprise some station owners who do not stream.”

Fadul says that there are many reasons consumers are buying Internet radio receivers. Besides the obvious — being able to hear a favorite Webcaster while away from their computers — consumers of these products want more than what is on local AM and FM stations, without having to pay for premium services, he says.

Other reasons include poor over-the-air signal strength, a desire to have an Internet radio as their bedroom clock radio and access to personalized music services such as or to international stations or local stations “back home.”

Also, “They enjoy music that is seldom played from standard AM/FM stations — different language, less prolific genres; bluegrass, barbershop quartet, dixieland, fusion, reggae, western,” Fadul said, or “they want a higher-quality audio source. Many Internet radio stations are 64–128 kbps which is higher quality than analog and even most HD Radio stations.”

A promotional image for Grace Digital’s GDI-IR1000. Growth factors

Even with their availability at Best Buy and Saks Fifth Avenue, Internet radio receivers are far from selling at the same rate as iPods and HDTV sets. Besides increased visibility with consumers, what would help boost the penetration on Internet radio receivers?

A price drop would be nice. Typically, Internet radio receivers sell for $150 and up, although prices have been dropping in recent years.

“Price reductions will always drive demand and a 10-figure advertisement budget wouldn’t hurt either,” said Fadul. “In the meantime, word of mouth, customer referrals and integration with premium Internet radio content providers — Pandora, CBS Radio, Sirius — are starting to create an awareness of the advantages of standalone Internet radio devices.”

“Hands-on experience will help the technology get out to the masses,” said Sigal. “Our products cater to the average busy nontech-savvy user who wants fast setup without all the bells and whistles.”

One area where dedicated Internet radio receivers will not likely grow is in the mobile market. The reason: Lacking any portable technology that can deliver Internet radio to the 2009 equivalent of a transistor radio, today’s consumers are accessing Internet broadcasters through 3G wireless devices.

“Mobile Internet requires a mobile Internet receiver like an iPhone,” said Sigal. “Unless there is a free Internet receiving device [available], using your mobile phone — which you already pay a monthly fee for — seems like the logical way to go.”

An Internet radio receiver in every home?

The idea seems outlandish. Yet there was a time when people might have scoffed at the notion that every home would have a PC, a television or an analog AM radio.

Fadul is bullish about the future of Internet radio receivers. “Currently, when a consumer leaves their computer, the only source for real-time audio is a FM/AM clock radio/tuner,” he says. “It is only a matter of time until consumers will not accept that. We are seeing today that consumers are demanding the same music choices they have on their computer in every room of their house. Those needs can be satisfied most effectively by a dedicated Internet radio audio device; in other words, an Internet radio receiver.”