By Adam Tanner
Bill Goldsmith has converted the upstairs floor of his two-story
California home into a radio studio that broadcasts his favorite rock,
blues and folk tunes over the Internet.
What started six years ago as a labor of love has turned into a viable
business, and the recent introduction of stand-alone Internet radios
could bring even greater success as people change how they receive
their radio music and news.
"So far it is working out very well for us," the former FM radio disk
jockey said, explaining that he lives off listener donations. "People
really enjoy our programming enough so they feel its worth paying
for."
On Radio Paradise, he offers about 59 minutes of music per hour,
compared to about 40 to 50 minutes per hour on most conventional
commercial FM stations. Even former commercial-free FM areas such as
National Public Radio now repeatedly air sponsorship announcements
akin to advertising.
The flood of ads on traditional radio and the subscription costs of
satellite radio are driving listeners to Internet radio, whose
stations either rely on government funding (such as the
commercial-free BBC), donations (such as Radio Paradise), or
advertising (including FM stations that also stream on the Internet).
Some companies are also hoping to earn money through Internet radio
subscriptions.
Enthusiasts with fast connections have been able to tune into Internet
radio through their computers for a decade or more. But now the
long-delayed arrival of stand-alone Internet radios from equipment
makers such as Roku or Philips could greatly expand the market by
making it easier to tune in.
At its best, Roku's $400 SoundBridge Radio allows users to listen to a
station at the touch of a button.
"As time goes on, everyone is going to have Internet radio," said Roku
head Anthony Wood, 40, who invented the digital video recorder at
Tivo-competitor ReplayTV and started Roku four years ago with $9
million of his own money. "It's a huge market but for some reason it
is under-recognized."
According to a survey by Arbitron and Edison Media Research of 1,925
people earlier this year, more than one in five Americans over the age
of 12 listen to Internet radio monthly.
NOT PERFECTLY SEAMLESS
Even though Wood considers Roku his sixth company (Roku means sixth in
Japanese), the place still has the feel of an Internet start-up. He
showed off his offices dressed in shorts and a T-shirt, and unpackaged
Internet radios lined the office hallway in this Silicon Valley
bedroom community.
The unfinished process of creation sometimes manifests itself in the
firm's music streaming and Internet radio products. As with many
software programs, sometimes things go mysteriously wrong, making
Internet stations or audio ripped onto your computer unavailable. Still,
the products are a hit with hardcore audio enthusiasts and other patient
music fans.
"It's a lot better than it was two years ago," Wood said. "It's got a
little ways to go before it's perfectly seamless."
The reward for the occasional snafus are a huge choice of Internet
stations, which range from global media corporations to enthusiasts
operating from their garages.
Some stations focus narrowly on bands such as the Beatles or Grateful
Dead. Others offer music from Cuba, Iran, China or even Antarctica, from
where Anetstation.com broadcasts guitar blues music. Others focus on
talk, from the sacred, to more profane topics such as on YNOT Radio,
which focuses on the adult film industry.
Some are small hobbyists with few listeners, others are real businesses
which pay royalties on the music they play.
"We're not coming from a basement at this point," said Sandy Shore of
Smoothjazz.com, which has been on air since 2000. "The cream of the
crop of Internet radio will rise to the top."
The path to finding new stations involves searching Internet sites such
as AOL's shoutcast.com, vtuner.com or live365.com.
Shore, who broadcasts about five minutes of ads and talk per 55
minutes of music, started in FM radio. "I was growing more and more
frustrated by the direction radio was going," she said.
At Roku, Wood sees his company's future in licensing its software at
the heart of a $25 wireless computer chip to make Internet broadcasts
a standard feature on radios and stereos within five years. Such
components soon will make possible the $99 Internet radio, he
Roku started to turn a profit in the last few months, Wood said. His
firm had revenue of $4.2 million in 2005 and expects $5.8 million this
year and $10 million next year. Retailer Best Buy is Roku's biggest
outlet.
One obvious obstacle to growth is limited mobility of Internet radio.
But the spread of citywide Wi-Fi networks may one day make car Internet
radios and other devices possible.
"As the Internet becomes more and more of a mobile medium," Goldsmith of
Radio Paradise said, "the increase is going to grow rather more rapidly."
Copyright 2006 Reuters Limited.
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Adam Tanner (reuters@telecom-digest.org)