'Good morning, good afternoon and good evening listeners': The dawn of WiFi radio
Analog radio makes a tough competitor. Most media is steadily going digital. But radio has remained resolutely analog.
There are 2.5 billion analog radio sets in circulation worldwide66. The majority of radios produced are still analog. The majority of the world's 44,000 radio stations broadcast predominantly in analog67. Most new cars built in 2009 are likely to incorporate analog radios.
Radio has tried going digital. Digital terrestrial and satellite radio services exist in various countries around the world, although they remain the poor relation to analog in terms of listeners68.
Radio has also gone digital online. Indeed, radio broadcasts have been available online since the early days of the Internet. Audio and the Web are a good fit, as audio requires little bandwidth. However, while there are more than 10,000 online radio stations69, demand is niche compared to traditional radio.
But in 2009, Internet radio, particularly in the form of WiFi-based, portable sets, could take off, in terms of audience and revenues.
Internet radio's addressable market could increase 20 percent in 2009, drawing from a base of almost 1.5 billion Internet users worldwide, of which twothirds have broadband access70 71. Furthermore, people listening at work represent a growing audience for Internet radio72.
The dedicated Internet radio set should also fall further in price, with portable WiFi radios already available for under $100 at year-end 200873. More significant could be the growing installed base of smart phones, equipped with WiFi, that are able to act as radio Internet radio sets74.
Retailers may push WiFi radios in 2009 as service is mostly subscription free, making it easier to sell than a device requiring a subscription75.
But the largest factor driving the adoption of Internet radio may be the integration of the three axes of audio offered by the format.
It spans geographies, through enabling access to stations around the world; it spans time, by providing access to archived audio around the world; it affords continuity, through allowing listeners to remain tuned into local radio stations.
The biggest impetus for Internet radio in 2009 may be the combination of all three dimensions in a portable, easy-to-use unit that resembles a typical household radio set, but which offers far more choice.
In 2009, Internet radio may not just reinvigorate the medium of radio. It may reinvent it.
Bottom line
Broadcasters should determine whether Internet radio is a strategic imperative for them and if so, which content, schedules and functionality can exploit its power. A station's online version should not be a carbon copy of the existing channel.
Broadcasters should ensure that channels are widely available via aggregators, and are appropriately formatted for the various devices that may relay content, for example PCs, standalone Internet radio sets or even smart phones.
They may also want to consider offering spoken word content via Internet radio. Talk shows are already a popular Internet radio format76 and they do not expose broadcasters to possible variation in the royalty fee77.
The industry needs to make the growing volume of stations easy to search and select. A combination of an electronic program guide and a recommendation engine could be required to make sense of the vast choice of stations.
Internet radio manufacturers could consider how user information, in aggregate or individually, could be useful for advertisers. Internet radios have the potential to allow accurate monitoring of what, when and how often consumers listen to different forms of content. The listener's location, suggested by the IP address, would be required to serve local advertising.
Advertisers may benefit from monitoring the growth of Internet radio closely. Radio's advertising spend has fallen in recent years, but online spending has risen. As radio becomes a more established medium online, it could become a powerful platform78.
Related service offerings:
Audit
Consulting
Corporate Finance Advisory
