I just got done reading an insightful column by iBiquity Digital President/CEO Bob Struble. iBiquity Digital is the developer and licenser of HD Radio™ Technology.
In the column, Mr. Struble writes that internet radio is truly becoming tough competition for terrestrial broadcast AM/FM radio stations, but nevertheless, won’t entirely replace them. It’s a very similar situation to written news on the Internet becoming tough competition to traditional printed newspapers, but again, not completely replacing the traditional printed publications.
I’m doubly interested and vested in both of these issues because I am the publisher of a traditional printed newspaper (with an internet presence) as well as the co-host of a weekly internet radio show called The Becky and Joe Show on PDX.fm, an internet radio station in Portland, Ore.
One example of the internet radio receivers on the market right now.
Mr. Struble wrote his column after attending this year’s Consumer Electronics Show in Las Vegas (last month) in January, 2010. At the CES he witnessed the unveiling of products and services that continue to pose new ways to take away listeners and advertisers from traditional AM/FM broadcast radio stations. He made it abundantly clear that these new media will not replace AM/FM broadcasters, but will operate alongside them in the coming months and years.
I’m not going to reproduce his column; you can read it yourself if you’re interested; but his argument that internet radio and other new media will not replace broadcast was based on economics and network capacity limitations.
A couple of his many well-thought-out points are:
- The cost of expanding the number of listeners served is more expensive for internet-based radio stations than terrestrial ones. An AM/FM station just sets up a tower and broadcasts a signal. The number of listeners is not limited. A seemingly infinite number of radios can be tuned to a station’s signal. On the internet radio side, to get more listeners, the station has to buy more bandwidth, which isn’t cheap.
- Since internet radio stations don’t own or control the distribution system of their programming (the Internet), internet service providers, especially mobile ones like AT&T, can charge consumers for high bandwidth usage and put up financial barriers to listeners who want to hear internet radio programming — net neutrality arguments aside. There are some emerging network technologies that will enable multicasting which would allow more than one listener to tune into one stream, but none of that is certain and time-tested at this point. Terrestrial stations don’t have to grapple with those issues at all.
You can read the full column here to get his complete explanations.
I agree with Mr. Struble at this point that, at the most, internet stations will be functioning alongside AM/FM broadcasters and will bleed off some listeners and advertising dollars. However, if experience is any guide, the economic and technical calculations that lead one to believe this, will likely change drastically over time.
So for now, AM/FM and internet radio are brethren and competitors. In the future with currently unknown networking technologies, that may not be the case. We may be telling our grandkids that there was a time when we were listening to the radio, magically over-the-air, off-the-grid, back in the old days.
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