AOL Radio, Pandora, Slacker and Last.fm are a few of the online radio services that have become popular these last few years. Several of these are also accessible on portable products including mobile phones. I will look at the influence of online radio on conventional radio broadcasters to determine if this means the end of local radio stations.

Local radio stations do seem to have a hard time nowadays. Satellite radio has been cutting the market share of previous radio stations severely in the past few years by providing mobility, a big number of commercial-free music channels as well as news and entertainment channels. The internet has allowed access to a virtually indefinite number of online radio channels.

While historically local radio has been the only truly mobile radio, online radio services like Pandora are now available on wireless audio transmitter and portable devices such as mobile phones.

AOL Radio which features 200 plus music channels of 25 genres employs CBS radio as its underlying platform. It also provides access to 150 national CBS radio stations. The underlying CBS radio platform “play.it” also permits listeners to create their own customized music channels. This is done by entering the names of albums, tracks or artists. The tracks played on each music channels can also be stored on an iPod for later playback by using 3-rd party tool iGetMusic.

Pandora and other online radio services have similarly begun to offer customized music. The user can enter music-related information such as artist, track or album name. These channels will then choose tracks which are similar to the information entered. To date, however, competing music services have fallen short to offer similarly fully customized radio channels.

Does online radio mean the end of local radio? The increasing number of alternatives evidently is going to reduce the market share of conventional radio broadcasters. Specifically niche broadcasters have found online radio very practical. The main reason is the low broadcasting cost of online radio compared with terrestrial radio. One more reason is the problem acquiring frequency space licenses from the FCC. Nonetheless, increasing royalty charges have made the life of online broadcasters more difficult lately.

While the variety of stations is a benefit to listeners, it is at the same time diluting market share and online radio broadcasters are finding it tough to attract a moderately big number of listeners and be lucrative. The lower cost of online radio at the same time permits making of more appealing content than local radio by serving niche markets and inserting fewer commercials.

However, local radio has one big benefit over satellite and online radio. That is local content such as local news and events. One downside of local radio has been the poor audio quality of FM broadcasts. However, that is being remedied by the recent launch of digital radio broadcasts such as HD radio. The big factors that will finally decide the destiny of each technology are content and convenience. Online radio and conventional radio each have their own niche regarding providing exclusive content and both offer high mobility and convenience so there will probably be no clear winner.


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