Signals of a Medium in Conflict

Right now, sitting at your desk at home or at work, you can use your computer to listen to a radio station broadcasting traditional music from Turkey. Or you can hear a ball game from Boston. Or you can tune in a program catering to tastes you share with only a handful of people around the world.

Every day, the use of Internet radio--the transmission of broadcast radio programming as well as audio programs carried only on the Net--is growing rapidly. Dallas-based Broadcast.com serves up hundreds of U.S. radio stations via its Web site, as does Real Audio, whose RealPlayer is one of several popular software media players available for free download. And Microsoft’s latest version of its Internet Explorer browser includes a radio feature for its Windows Media Player, with stations hooked in from Europe, South America, Asia and Africa as well as North America.

In the past six months, the number of people saying that they had tried out Internet radio jumped from 6% to 13%, and the pace continues with that figure expected to more than double again in the next six months.

But if you want to hear alternative-rock leader KROQ-FM (106.7) or oldies giant KRTH-FM (101.1), you still have to do it the old-fashioned way--turn on your radio. Alternative-rock from Poland and oldies from the Czech Republic, sure. You can even hear KNAC, the L.A. hard-rock station that left the airwaves in the early ‘90s but has been resurrected in cyberspace. But not KROQ and KRTH.

That’s because they are owned by Infinity Broadcasting Corp., the radio division of CBS Corp., which has prohibited any of its stations from “streaming” (sending their live programs) over the Internet, preferring to wait until strategies and technologies are more advanced before spending money on exploring such relatively unknown territory.

Meanwhile, rival Disney-owned ABC has launched head-first into the World Wide Web, with most of its major stations on the Net, including local talk outlet KABC-AM (790) and rock station KLOS-FM (95.5), along with the national Radio Disney network, heard here over KDIS-AM (710).

It’s a tortoise-versus-hare race that, in many ways, will shape the future of Internet radio, a territory that most everyone in the business agrees will be the dominant force of audio transmission in the future.

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At stake for these mega-corporations is a huge prize: potential access to a truly global audience that offers not just potential advertising revenues beyond the wildest dreams of today’s radio owners, but also opportunities for broadcasters to join the e-commerce parade selling music and other products directly to their audience. Like this record? Buy it now!

But they also face the challenge of a truly free market--something that doesn’t really exist in broadcast radio, where a finite number of signals is licensed and regulated by the Federal Communications Commission, with prices for stations in major markets having broken the $100-million mark. On the Internet, anyone can play, from a giant Microsoft or America Online to any kid with a PC in his room. Want to start a station devoted to Tuvan throat singing and nothing else? Go right ahead.

So looking into that open-field future, it’s hard to get predictions about whether ABC’s or CBS’ approach makes the most sense--or even any kind of guess as to how the shape of radio and the nature of listening to it will change. The only certainty: It will change.

“This is like Jell-O--no one can get their fingers around it,” says B. Eric Rhoads, publisher of Radio Ink, a new trade magazine that will be holding an Internet radio conference in October in Silicon Valley.

“Up until 18 months ago, there was no large strategy for broadcasters about the Internet,” says Rick Mandler, vice president of new media at ABC, charged with developing Internet broadcasting for both radio and television.

Mandler is overseeing an aggressive launch into cyberspace, but he acknowledges that the results are inconclusive thus far.

“In May, we served up 1.8 million streams [of programming],” he says. “But we had an average concurrent audience of just 1,300 listeners total, listening for an average of about half an hour. That’s all our stations combined, with a total audience on the Internet equal to a medium market broadcast station. But you’ve got to start somewhere. We want to move our brands into this space and establish programming for it.”

Those rooting for the hare note that 20 years ago, ABC made aggressive entries into the young cable TV world, and quickly became a leader in that market, while CBS was slow to get going and has never earned the money that ABC has from its investments in ESPN and other channels.

Those backing the tortoise approach, though, feel that ABC now is spending a lot of money on Internet models that could well be outdated soon.

“When the day comes that it’s right to make that jump--and I don’t pretend to know when that is--we’ll have all the tools in place,” says Dana McClintock, director of communications for CBS’ radio division. “At this point, to have a radio station heard in Peoria when it’s coming out of L.A. with advertising from a car dealership in Orange County doesn’t make sense. So much of radio is local.”

But look at cable TV, where Ted Turner took his local Atlanta station WTBS and, with not much more than Braves baseball and “The Andy Griffith Show” reruns, turned the outlet into a national superstation. Why not move that way in radio, and what better candidate than KROQ, which already has a national identity as the leading edge of rock music radio programming? Or turn such Infinity personalities as Howard Stern or Don Imus into star attractions of an Internet venture?

That may well be coming.

“Mel Karmizin, chief executive of both CBS and Infinity, has been alluding to something of the idea of Infinity.com,” says McClintock. “It’s a question of investigating all the options and creating a business model that makes sense.”

Meanwhile, numerous models for the future of Internet radio are being built.

Mark Cuban, co-founder and chairman of Broadcast.com, has a lot at stake in the matter. His company, recently bought by Yahoo in a deal valued at $5.7 billion (it was started with just a $2,900 computer purchase only four years ago), has pioneered the access to radio via the Internet.

Cuban sees a near future in which radio will be everything from global superstations to neighborhood dialogues.

“Radio has been essentially unchanged since 1921,” says Cuban, who started his company after missing basketball broadcasts from his alma mater, the University of Indiana. “Until now. People pooh-poohed FM in the ‘60s: ‘You can’t get FM in cars.’ ”

Soon Internet and satellite signals will be as mobile as FM long ago became. Ford and General Motors are making satellite receivers available for their cars starting next year, with a subscription package of music, sports and talk channels offered. When wireless Internet technology improves, even more choices will be available at no subscription cost.

There’s also new territory opened by the Internet that radio doesn’t penetrate well: the office.

“About 99% of people in white-collar offices have PCs on their desk,” Cuban says. “Only 9% have TVs and just 32% have radios.”

Will traditional radio stations become obsolete in the brave new world?

No, say many on the front lines, including Cuban, who reminded broadcasters at a recent Radio & Records convention in Los Angeles that they are the ones who know how to program and market radio, and that expertise is just as valuable on the Internet as over the air.

In any case, radio transmission may change, Radio Ink’s Rhoads says, but listening habits could stay much the same.

“There’s still a mass listening audience out there, and though there will be a lot of ‘niching,’ that will still be hard to get to,” he says.

But only for the time being. Bandwidths are getting wider, signal compression getting smaller, routers getting less expensive and better. So crank up the PC, download a player and tune in the top morning team in town--Bangkok, that is.