Internet Radio Gets Turned On!

The future of Internet radio has been uncertain for several years since a significant hike in royalties threatened the viability of companies like Pandora and Last.fm. However, a new deal has finally been reached with SoundExchange, the group that collects royalties for music copyright holders. While this deal clarifies the situation – it will also put limits on how much free Internet radio will be available. The deal calls for Internet Radio services like Pandora to pay either 25 percent of revenue, or a given amount per song, starting at $.08, whichever is higher. The whichever is higher is an important distinction because it likely means Pandora will actually be paying more than the 25% figure.

Smaller services (those with less than $1.25M in sales) will pay 12-14 percent of revenue in royalties which might provide room for fledgling startups to make their way in the Internet world. However, according to Johnie Floater, General Manager for Live365, an aggregator of over 6,000 web radio stations manned by human DJs, there is also a minimum $25,000 fee imposed on all webcasters. That fee might not discourage startups that hope to gain a large audience, but niche services, like those targeting small ethnic groups, are going to have trouble.

At issue is the minimum $25,000 fee imposed on all webcasters, large and small. Floater said there’s simply no way Live365’s stable of niche Internet station operators can each pay that kind of money.

This deal represents a significant compromise from the $0.19 per song that rates were set to increase to next year – which is why the Internet radio business was troubled. However, it will still require some changes. For example Pandora posted this note on the Pandora blog:

“The revised royalties are quite high – higher in fact than any other form of radio. As a consequence, we will have to make an adjustment that will affect about 10% of our users who are our heaviest listeners. Specifically, we are going to begin limiting listening to 40 hours per month on the free version of Pandora. In any given month, a listener who hits this limit can then opt for unlimited listening for the remainder of that month for just $0.99. In essence, we’re asking our heaviest users to put a dollar (well, almost a dollar) in the tip jar in any month in which they listen over 40 hours.”

So people who listen for more than 40 hours a month will have to pay $0.99 or upgrade to the $36-a-year Pandora One service. Although it’s only been a few weeks, a few heavy users, like those who listen to Pandora all day are starting to run into the 40 hour cap. Most of the responses indicate that most of the listeners are clueless about companies having to pay license fees – but so far subscriptions are climbing.

Internet Radio Pays the Highest Royalty Rates

There is a fight to get passage of the Performance Rights Act, a bill that would make all radio providers, regardless of medium (Internet, satellite, or AM/FM radio) pay the same royalties. Currently, satellite pays significantly lower rates that Internet and AM/FM stations pay nothing. While there will be a hearing in the Senate on August 4th to discuss the bill – hopes of passage do not look high at this moment.

Internet Radio Overseas

Though even with these changes, many of these services remain either inaccessible or only available for-pay in many countries outside of the US because the cost of paying royalties simply exceeds the money that is being brought in through advertising.the outlook overseas. Pandora is not operating outside the US and Westergren, the CEO, has stated that there is still no feasible royalty structure abroad and, unlike the path taken by Last.fm, Pandora isn’t seriously considering any type of subscription program at the International level.

Expect more Internet Radio Widgets

Due to the uncertainty or royalties, there has been limited software development around Internet Radio. One software company, Wowza Media, has already started seeing a jump in interest in its Flash-based streaming solution for Internet radio.

Wowza, which has over 25,000 licenses, notes that a lot of online radio is still being served through the likes of software like Winamp but sees a clear trend towards doing everything with Flash, as the installed base is something like 98% just through the web browser. And it says it can easily convert stations that were going through solutions like WinAmp to be done in Flash. The hope is obviously that there will be more successful web radio services like Pandora — which is, of course, easier said than done.

But getting Internet radio streaming companies to star using Flash streaming solution is just the first step that Wowza envisions. The Wowza service has also been extended to provide solutions for Quicktime, Silverlight, and a host of other formats. This means opportunities to reach other kinds of devices like the iPhone.

Free online radio players

While Wowza and other are hoping to bring new online radio players to the market, there are many excellent and free programs on the market today.

RadioSure focuses on giving you you the smoothest radio listening experience. Their goal is that it should be simple, reliable and should just work – and that’s what they’ve done! The range of features is awesome – more than 1,200 stations in the package; supports most of the internet radio formats – mp3, wma, ogg vorbis, aac+ and there is a quick and reliable search for your favorite radio stations. The interface is pretty basic because 3rd party developers can add their own skins. RadioSure is a great example of the international flavor to Internet radio with the application available in Russian and English.

Screamer Radio is simple, Windows only, CPU-light which means it does not hog your computer’s memory and slow down your other program and it’s unconditionally free. It can handle just about any streaming format, your machine will hardly feel it’s running, and you can minimize it in the system tray. However, the fact that it has been limited to a release/update in 2006 and 2008 highlights how development has lagged in this marketplace.

Originally inspired by Apple’s iTunes, Rhythmbox is a free application that is for Linux users only – which is quite a shame as it has one of the best designed interfaces. Rhythmbox allows you to view your Play Queue, Library, Podcasts, Radio preferences and Last.fm streams. So, you actually get a lot more than radio streaming. If you a Linux user, this is a must have application.

Musicovery runs on Windows and Macs. It is highly interactive and customizable (or customisable – depending on where you are in the world). Musicovery is great for discovering new music because of the many ways you can define your tastes, do searches and get recommendations – it’s even mood-searchable. What you do is define the mood you want ranging from energetic, to dark, to positive, to calm – and anyway in between.

The most recent innovations to Musicovery have focused on iTunes instead of Internet radio. In early 2009, Musicovery released an Itunes plug-in that allows you to listen to your own music library according to the mood your are looking for. The plug-in displays on the right of the Itunes application window with Musicovery’s mood/dance matrix.

iRadeo is a free open source MP3 player and online radio streaming platform. If you are looking for a way to stream music or other audio from your website or blog than iRadeo could be for you. Essentially you can make your own Internet Radio Station.

You need to have a website, the ability to FTP files and edit files using Notepad or a similar ascii editor. You download the iRadeo files, open the config.php file to update your settings and preferences, then upload all the files and folders to your own web server. Then, you simply insert the iRadeo player code into any webpage and visitors can stream your playlist. The amount of maximum listeners is only limited by your web hosting limitations. While iRadeo is not for the casual user – it is a great tool for those with their own site.

Future of Internet Radio

For the first time in several years the future of Internet radio is looking up. All the financial issues are not solved – but there has been progress. iRadeo, which was just released in 2009, is a positive example of the things to come.

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