Streaming Out to Crush Radio?

A recent Adweek cover with its smashed radio and bent antenna has all the earmarks of another hatchet job on radio.

The screaming title Is Streaming Music Out to Crush Radio Advertising? appears just one more example of the “radio is dead” meme that dogs broadcast radio.

So it is particularly ironic that the story by Erin Griffith is one of the more balanced looks at the battle between broadcast radio and its digital competitors. While most writers gush unfettered excitement over Internet radio’s future, Griffith captures the painful reality:

(Streaming services) pay a hefty rate each time a song is played. The services will never outgrow their costs, an unfortunate arrangement commentators have dubbed a "suicide pact."

Online radio's very survival depends on stealing ad dollars from its traditional counterpart, and it needs to do it fast.

Radio Insights made this point last August pointing out that the clock was ticking for the dozens of streaming services that want a piece of radio. In Is it Time for an Internet Radio Shake-Out? we noted:

Venture capitalists are still pouring money into music services and Internet radio providers. Pandora's successful IPO seems to have fueled even greater interest in the space.

VC money doesn't continue indefinitely, however. At some point, investors want to see a return on their investment, generally through an IPO. And there aren't any more Internet music IPOs in the pipeline.

That means these services are going to have to become profitable soon. That may be difficult.

We suggested that Internet radio was nearing a peak and that consolidation was inevitable, so it shouldn’t come as a surprise that cnet reports that MOG is being shopped.

Digital Music News notes:

MOG has always been a huge underachiever in the subscription market, though we've heard that the MOG Music Network (MMN) is actually quite lucrative. Either way, it looks like all or part of MOG is now being plumped for sale.

The website points out that the company has received $33 million in funding and has yet to make a profit.

After pumping hundreds of millions of dollars into streaming services, venture capitalists may finally realize that taking a piece of broadcast radio’s $17 billion (let alone becoming profitable) may be more difficult than they thought.

Comments

[Dave Mason]

Good stuff, Richard. It's not too soon to point out the benefits and drawbacks to online streaming, not to mention it's lack of mobile accessibility. The rights people will soon learn that they're killing the golden goose. Of course until we get more than a "do nothing" administration in Washington this will not be fixed. Common sense must be reinstated in all forms of our business.