Internet radio needs to find a viable business model in order to continue its growth and secure its place in a competitive and fast-changing media landscape. Although many business models and potential revenue streams exist, such as subscription services, brokered programming, and merchandising, it seems that in the short to medium term, advertising will be the primary source of revenues for the majority of internet radio stations.
In regards to advertising, station owners are naturally torn between the desire to limit the amount of interruption to their content (and therefore risk losing audience) and the need to earn money in order to have a viable business. However, for stations to be able to provide the top-quality content needed to attract and keep listeners in the current market requires increasing amounts of money for the best hosts, DJs and of course music rights - making the need for a station to generate income a matter of survival.
The key to maximizing revenues and becoming sustainable is to use the full potential of digital streaming technologies – to understand and monitor listener interactions, monetize each listening hour, and to grow and extend the reach of the station.
Advanced statistics and analytics
Internet radio has the potential to give station managers a much deeper understanding of their listeners and how they are interacting with the station. Nowadays, a station audience can be tracked down to the level of each stream to provide a clear picture on the listener and their needs. This allows stations to segment their audience into listener types. Types can be based on geography, demographic, listening platform, session duration or any other categorization that may be applicable. This means that stations can immediately understand the impact of content or formats on the listener base, but perhaps more importantly it allows stations to experiment in order to quickly find what works best in order
Stations have a wide range of potential sources of revenues, but similarly with terrestrial radio, at the moment advertising is the main source of income for most internet stations. This means that maximizing station revenues broadly means making the most for each ad break and increasing the number of ad breaks. Increasing the number of ad breaks without impacting the listener experience should be focused on increasing the listener base and is touched upon below.
There are a few straightforward options for increasing revenue per break including:
a) providing detailed information on the number of listeners and ad impressions to advertizers (and accurate information, possibly through a credible third party) to help advertizers plan and justify their campaigns;
b) segmenting audience by geography and location to monetize audience outside of the stations primary market or based on current presence;
c) segmenting audience by demographic characteristics to maximize value to advertizers.
Beyond these basic measures, internet radio also enables more innovative advertising such as coordinated display and audio ads or contextual advertising based on the mood or genre of audio content. Once the effectiveness of new and innovative internet radio ad campaigns is confirmed and quantified, it will have a corresponding knock-on effect on ad break value.
Finally, growing the audience is always an important objective for all stations that again can be greatly improved by maximizing the use of current technology. At a high level, the main options for growing audience are to integrate with other sites and platforms such as station directories and social media, and to ensure your station is available through different devices including mobile smart phones and eventually wi-fi enabled cars. It is also important to ensure the quality of your offering (in regards to audio quality and interruptions) is maintained across devices and platforms. Close monitoring of your listener data is required to ensure listeners remain happy as the number one requirement to growth your audience is to keep as many loyal listeners as possible.
Internet radio is an exciting offering that is just in its infancy and has a tremendous opportunity to change how media is consumed. To reach its maximum potential will require stations to quickly embrace the potential of online technologies, and Radiojar will be there to support stations and station managers.
Business development advisor