- The Washington Times - Monday, July 3, 2000

Mike Hays goes no farther than his basement in Orange, Va., to program a play list for his country music radio station.

But his fans won't hear those songs over the airwaves.

Mr. Hays has a studio equipped with a personal computer that connects him to an Internet service provider and streams all of those songs to a Web site.

Mr. Hays and Gary Miller run www.twangcast.com, one of a growing number of Internet music stations that don't have a radio signal but are on the radar of an increasingly technology-savvy audience worldwide.

For Mr. Hays, a 45-year-old guitar player with a day job as a disc jockey at the Culpeper, Va., country music station WCUL, his Internet station lets him play songs he feels best represent the traditional country music he loves.

"Country music has gotten so saccharine, you just can't play the good music anymore on a terrestrial station," said Mr. Hayes, who also goes by the name "Mr. Country Music."

About 600 Internet-only stations like www.twangcast.com program original content and stream it to Web sites, and another 1,200 U.S. radio stations rebroadcast the same pro-gramming heard over the airwaves onto the Web, according to ratings service The Arbitron Co., based in New York.

Web radio is a growing trend that new Internet-only stations hope to use to steal traditional radio audiences. Radio stations hope to boost corporate revenue by offering their programming on the Internet.

Web radio may not displace terrestrial radio stations, but even rural stations like twangcast.com are proving the Internet can help them attract listeners.

Streaming radio

On-line radio stations make music and news available on the Internet by streaming it to the Web. Streaming describes the transmission of data audio and video over a network. But users don't store streamed audio and video in a file.

That's different from down-loading music, which lets consumers actually receive a file. The practice of downloading music has much of the recording industry in a pitched battle against tech companies like Napster.com.

Napster is a Web site that lets users download recorded music, which could be a violation of copyright law.

Streamed music isn't compli-cated by such legal issues.

About 43 million people known as "streamies" have listened to streamed music on the Web, according to Arbitron's most recent study in January.

Joan FitzGerald, director of marketing at Arbitron's Columbia, Md., Internet research office, said streamies like logging onto Internet radio because there are so many songs available on line that consumers can find even the most obscure genre of music.

Streamies also find that Internet radio is a good workplace alternative to radio, said Bob Jenkins, director of Internet operations for ABC-owned 107.3 FM and 105.9 FM, both of which began streaming content heard on the air to Web sites last year.

Signal strength on the Web is not an issue. Streamies in the District can log onto an on-line radio station in San Francisco as easily as they can log onto a Rockville Internet radio station.

That makes radio over the Internet popular among the 9-to-5 group, which often cannot get a signal in an office building.

"We have found a lot of people are listening who couldn't get us on the radio. They're in basements or in big buildings, and they can't get the signal," Mr. Jenkins said.

More ears, more radio

The public's embrace of on-line radio has terrestrial stations rushing to the Internet, and has new Internet companies popping up.

Terrestrial stations are starting Web radio stations because they don't want to be frozen out of the market, said Mark O'Brien, vice president of Chantilly, Va.-based radio and television industry consultant BIA Financial Network.

For stations like twangcast.com, the Internet is an easy way to start a radio station and reach a potentially wide audience.

Bonneville International Corp., the Utah-based company that owns and operates WTOP-AM and WGMS-FM, started WTOP2 in February. The new station is one of the only all-news sites on the Internet, and its target market is made up of federal government workers who work in the United States and overseas.

Gordon Boone started the Timonium, Md.-based Internet-only station OnAirSports.com in April to broadcast information about local sports.

If traditional radio stations feel worried that on-line stations are about to overtake them, their concern may be a bit premature. Consumers are logging onto Web stations for just minutes at a time.

"People have not developed the habit of listening to music over the Internet," said Bill Pearson, chief executive of Chicago-based Radiowave.com, which develops ads for on-line radio.

An Arbitron study in May indicated people listen to the terrestrial radio in their car, at home and at work for an average of 10.2 hours per week. But people listen to Internet radio just one hour a week, on average.

The Web station of ABC's 105.9 FM www.smoothjazz1059.com was the 12th highest-rated U.S. Internet radio station in January in terms of the length of time people listened. Listeners tuned in for an average of three hours 24 minutes a month, according to Arbitron.

The top-rated station www.kpla.com in Columbia, Mo. had listeners tuning in for just six hours 30 minutes during January.

In terms of the number of people logging onto on-line radio stations, the top-rated sites are Internet-only stations, not Internet radio stations with radio-dial companions that rebroadcast radio signals to the Web.

That's because Internet-only sites have more songs archived and can deliver multiple streams of music than radio stations, which have just a single stream of music for people to listen to the one on the air.

America Online Inc.'s Web radio site, www.spinner.com, has 140 separate channels with more than 300,000 songs in rotation consumers can listen to any time.

"Traditional radio doesn't get it. You have to be in the business of aggregating streams," said Patrick Cosson, Spinner.com director of brand marketing.

The top station, according to Arbitron's January study, was www.virginradio.co.uk with 173,200 listeners. Second was www.mycpr.com, a Christian radio station based in Los Angeles, with 81,000 listeners during the month.

High listenership of Internet-only radio stations shows that people crave music they can't get on the radio, Mrs. FitzGerald said.

But their early dominance is surprising because Internet-only stations don't have the advantage of a radio signal from a terrestrial station they can use to market their Web sites.

"Listeners are moving to the Internet. What remains to be seen is whether terrestrial stations can capture them on line," said David McKie, spokesman for live365.com, a Foster City, Calif.-based Web site that lets people set up their own radio station on the site.

Money, the great equalizer

While the most popular on-line radio stations now are the Internet-only sites, none of the Web radio stations appears to be ahead of the pack in the race for money.

Analysts say no Web music or news site is profitable yet.

"It's tough for everyone right now," Mr. O'Brien said.

That's due in large part to the fact Internet radio at least those without a radio-dial companion is nearly free of ads.

"As far as people busting down the door to advertise, it isn't happening. But I don't think the Internet-only stations are interested so much in profit as in getting the music out there," said Bob Shaw, program director for the second-highest-rated station, www.mycpr.com.

Whether ads should even appear on Internet radio is open to debate among people in the industry.

"Internet radio should be cleaner [than traditional terrestrial radio]. I don't see people listening to a lot of ads on the Internet," said WTOP2 news director Marlis Majerus.

WTOP2 airs only four minutes of commercials each hour. Christian rock station www.mycpr.com airs six minutes of commercials each hour.

ABC's smoothjazz1059.com and mix1073fm.com have 12 minutes of ads each hour, the same as their radio-wave companions. But ABC views its Internet radio sites differently from how WTOP2 views its own site. Internet radio stations should mirror their terrestrial partners and provide stations with another source of revenue, Mr. Jenkins said.

A banner mistake

Ads will provide on-line radio with its main source of revenue, analysts say, but everyone agrees banner ads aren't the long-term answer. That's because Web radio users typically log onto a site, but don't look at it because the music serves as background while they do other work on their PCs.

The future of Internet-radio advertising is in audio ads, said Tom Des Jardins, chief executive of Alexandria-based start-up Lightningcast Inc.

The difficulty in introducing audio ads to Web radio has been figuring out how to insert them into audio streams.

"All the money spent on banner ads is effective in some ways, but it's much less effective when audio content is being delivered," Mr. Des Jardins said.

Using what's called audio ad insertion, Lightningcast lets Internet radio networks place ads in audio streams. The company also lets stations collect personally identifiable information from listeners so they receive audio ads they are most likely to be interested in, based on the demographic information provided.

"Audio ad insertion is really the direction that Internet radio is moving," www.live365.com's Mr. McKie said.

Even after companies like Lightningcast or Chicago-based RadioWave.com make audio ad insertion the standard for Internet radio advertising, they still have to convince advertisers to place ads on Web radio.

At the moment, so few people listen to Internet radio that getting advertisers to the Web stations could prove difficult.

When Arbitron completes a new Internet radio study later this summer, Mrs. FitzGerald said, it's unlikely to find that the total number of people who have listened to on-line radio stations increased much higher than the 43 million streamies they reported logging onto the stations in January.

Without listeners, companies are hesitant to advertise, and without advertisements, the stations won't make money.

It's not a death blow.

The cost to get an Internet radio station up and running is low compared to the cost of getting a terrestrial station on the air, and WTOP2 could be profitable as soon as the end of this year, said Scott Levy, director of business marketing for Bonneville's Washington division.

How long other on-line radio stations have to wait remains to be seen.

In the meantime, Mr. Hays will keep the CDs spinning at his country music Web station.

"We're not making money yet," he said. "We're covering our costs, and as a music lover, I can accept that for now."

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