Radio stations have long struggled to find a business model that will deliver revenue in the digital arena. Consumers are ready to use their mobile devices to listen to radio in new ways, a trend which explains the popularity of Pandora. But Pandora doesn’t own the digital radio market and new competitors hope to mark their mark and unlock more revenue for stations and their reps.
TuneIn and iHeartRadio are two new players signing up traditional radio stations and allowing listeners to access what they want to hear using digital technology. Consumers can select specific regions, genres and stations through apps that aggregate offerings.
Writing for the New York Times, Ben Sisario highlights the transition stations are experiencing in their digital shift. He notes that digital radio means paying publishers, labels and artists for each new listener. The less-expensive traditional radio model was all about paying a negotiated rate to play music in a market. Music is only part of the financial picture, though. Stations can develop unique content to draw a wide array of listeners nationwide in the online sector. By increasing their audiences, they will become more attractive to advertisers. But, they must still get advertisers to pay.
In the $17.4 billion industry, about $1.5 billion, or 9%, comes from digital sources. Currently, over half of consumers listen to at least some Internet-only radio. Both the digital revenue sources and the audience size are projected to grow. The digital revenue component should see a 15% increase this year. Until now, display ads have been the biggest part of digital radio revenue. But in-stream audio and video ads are expected to grow significantly in 2012. Radio stations also believe they are in a good position to generate revenue from trusted local clients by offering related services like search engine marketing and reputation monitoring.
As more aggregators come into the market to expand the reach of local stations, the question is how the ad revenue will be distributed as the industry goes digital in a big way. It will be fascinating to see if local stations can capture a larger share of revenue from national sources during this transition.[Sources: Santhanam, Amy. Audio, How Far Will Digital Go? State of the News Media. 2012. Web. 15 Aug. 2012; Pandora Be Careful What you Wish For. Radioinsights.com. 21 May 2012. Web. 6 Aug. 2012; Radio 2012 InsideRadio. Radcity.net. January 2012. Web. 6 Aug. 2012; Sisario, Ben. Aggregators Help Radio Reach Online Audiences. NYTimes.com. 5 Aug. 2012. Web. 14 Aug. 2012]