Making money with Internet radio & TV stations using OTS

[JAylmer]

How do Internet Radio & TV stations make money?
I understand free-to-air stations, companies pay for advertising, consumers already have you on their tuning dial, all is good.

With Internet media the station and the listeners are not in the same geographic area so advertising may not work at all.
You are not on people's tuning dials.

Is Internet media a vanity thing where you do it just to satisfy a technical challenge?
Considering the work involved and the costs it would need to pay I would think.

I can see that various groups (eg. a religion) may pool their resources and have an instant audience, but that's not making money.

Sometimes I listen to Internet radio and most have no ads and no apparent income stream.  How does this work?

[JAylmer]

In guess that no response means there is no reason to buy Radio or TV broadcaster, currently 30% off.

[milky]

I can only answer without answering. I own a couple of commercial terrestrial stations, and we are facing pressure by listeners to stream as well, because they can then "pick us up" on their smart phone, or through their PC speakers when they don't have access to a radio.

We have, so far, resisted, because the costs are horrendous to get to even a fraction of the same market. Sure, we can offset some of our costs from the advertising we get from the free-to-air stations, but every model we have studied has indicated that the biggest stumbling block is the massive bandwidth required to service even a relatively small listener base, and the quality of the stream has to be compromised to squeeze as many listeners in as possible.

We can, of course, advertise on the internet too, but, as you say, the local butcher or baker isn't going to spend good money when the stream listeners can be on the opposite side of the world. So, unless we can attract an international client, we have all the similar costs associated with a terrestrial station (on-air staff, production staff, sales staff, equipment maintenance, performing rights etc), plus the streaming infrastructure, server costs and Telco connectivity. The numbers just don't add up at this stage.

[JAylmer]

Interesting comments, and answers my question.  Seems like nothing will happen until the data costs reduce to say 10% of what they are now.

Subscription  would be a plan that would work if you could get subscriber numbers but that would be doubtful where the expectation is free-to-air.

Because of data costs it could be that an Internet station would cost more than an RF station to operate?
The performing rights could be higher as the potential audience is higher, I wonder how they work that?
I suspect many Internet st

[JAylmer]

(hit TAB by mistake)
I suspect many Internet stations have not worried about performing rights on the basis that they do not make a profit.
Unfortunately this will not protect them, but it makes it harder for legitimate stations to compete.

[milky]

Yes, data costs and (in the case of in-the-country stations), reliable, fast bandwidth is the crippler right now. Special Interest Groups, such as religious organisations, "Fine" music stations, chat shows etc, (what we call "narrow casters"), could possibly make something out of subscriptions, but the big difference still comes down to bandwidth. One signal, sent from even a low-powered station, can be picked up by (potentially), thousands of listeners. On AM radio, with "skip" at night, signals can actually get around the world. I have a station in Tamworth, mid-New South Wales, and we have a regular listener in Port Lincoln, South Australia - several thousand kilometres away.

With internet streaming, EVERY listener who attaches to your stream takes a slice of your total bandwidth. Even at 128kbps streaming rate, fifteen or twenty listeners would nuke the average country internet provider, and certainly chew up any available data plan on offer at this stage.

The other thing is reliability. If you can pick up a terrestrial station, even if distant, you should get consistent program delivery. We all know how flaky the internet can be from second to second, as the traffic on the Telco's backbone ebbs and flows with demand. Drop outs can be a real turn-off, especially if the recovery time is prolonged and outside anyone's control. Maybe the NBN (if it every gets here) might help, but, bottom line, internet streaming just isn't there for us right now, especially in the country.

Of course, I should have prefaced this by saying that our research has been entirely based on an Australian model. In Europe, where even dial-up is faster than our original wired broadband, things may be different. In the US, there are ISPs who serve up "All you can stream for 20 bux a month", but I happen to know a long-time streamer in the States, and he has changed providers many times as a thousand wannabes swamp the ISPs network.

[markebenson]

I can only answer without answering. I own a couple of commercial terrestrial stations, and we are facing pressure by listeners to stream as well, because they can then "pick us up" on their smart phone, or through their PC speakers when they don't have access to a radio.

We have, so far, resisted, because the costs are horrendous to get to even a fraction of the same market. Sure, we can offset some of our costs from the advertising we get from the free-to-air stations, but every model we have studied has indicated that the biggest stumbling block is the massive bandwidth required to service even a relatively small listener base, and the quality of the stream has to be compromised to squeeze as many listeners in as possible.

We can, of course, advertise on the internet too, but, as you say, the local butcher or baker isn't going to spend good money when the stream listeners can be on the opposite side of the world. So, unless we can attract an international client, we have all the similar costs associated with a terrestrial station (on-air staff, production staff, sales staff, equipment maintenance, performing rights etc), plus the streaming infrastructure, server costs and Telco connectivity. The numbers just don't add up at this stage.

[markebenson]

Hi Milky!

         This is interesting to me! The question should be posed as: "Making money with Internet radio & TV stations Period"! My best friend is a chief engineer for I-Heart Radio. I asked him exactly that. How does the I-Heart phone app make the company money? They have no income from the phone app whatsoever. If they can figure out a way to have income from it, the ol' Clear Channel boys will sure do it. But for now the purpose is to brand I-heart radio in listener's minds so whenever they tune in to a terrestrial radio station they will default to an I-Heart Station.

[milky]

Advertising revenue is all about demographics. I own a terrestrial Country music station. That genre appeals to a certain demographic, and so advertisers targeting that same age group will be prepared to spend money and present products that resonate with that group.

The other factor is "reach". The local butcher would consider paying for advertising on a station that reached his potential customer base. Given that there is a meat counter in every supermarket these days, he either has to have a spectacular range of meats, or settle for the fact that many who hear his ad are not going to be motivated to go out of their way to patronise him.

Obviously, the corporate advertisers like your MacDonald's, Coca Cola, Nike etc have a greater reach (and more dollars to spend),  but they have to see a tangible return, and that is hard when the listener base is scattered all over the world from an internet station source. This is further exacerbated by the bandwidth mentioned before. If a station can't afford the bandwidth to service a significant number of listeners, the costs will explode and the income will implode.

[markebenson]

Understood. My point was I-heart is spending millions on internet radio and not making a dime on it. Is anyone making any money with internet radio alone?

[markebenson]

I guess not if no response.

Anyone can u make money on internet?