08/02/2001

By DOUG BEDELL / The Dallas Morning News

The impending arrival of satellite radio subscription services such as Sirius and XM Satellite Radio finds another form of music delivery – Internet radio – in the throes of radical change.

Technical problems with early efforts to send digitized music uninterrupted to computers – known as streaming – have been largely overcome. And with the arrival of faster Internet connections, music lovers are finding listening satisfaction from Webcasting stations across the globe.

By most accounts, Internet radio's popularity is swelling.

A March study by the Webnoize digital research firm showed 86 percent of more than 13,000 students had tried listening to Net music streams in February 2001, up from 27 percent in 1999. Forrester Research estimates 41 percent of U.S. consumers – 118 million Americans – will use Internet radio at least once a week by 2005.

"Consumers are somewhat frustrated by Internet radio, but they continue to use it," Mr. Black says. "They expect it to be like broadcast radio, but the breadth of content it offers is just so important to them, they don't mind its shortcomings."

But, like the rest of e-commerce, this young industry is wrestling with ways to make enough money to support high costs for streaming.

Adding to that hurdle are legal issues with the recording industry. It has successfully sought restrictions under the 1998 Digital Music Copyright Act that impose the same limits on Webcasters as traditional radio stations. That means legal, licensed Internet stations can't play entire albums. In fact, you can't stream more than three songs from any album and no than two consecutively within any three-hour block.

For companies such as MusicMatch Jukebox Radio MX that are attempting to produce more personalized streaming, it means being handcuffed to the same restrictions that are driving users from traditional radio to the Net.

Three distinct options for tuning in to Internet radio options have emerged:

• Web-based networks entered through portals such as Live365.com or Cablemusic.com.

• Free and subscription-based selections pulled in through music players such as RealPlayer, Windows Media Player and MusicMatch Jukebox.

• And Web sites streaming local radio stations such as Merge Radio 93.3 in Dallas.

More options are in the offing as the Big Five music companies move their own music download subscription models to the Internet under two main services, MusicNet and PressPlay. And major radio station conglomerates, including Clear Channel and Infinity, are only now experimenting with ways to bring their massive nationwide audiences to the Net.

Web portals

"In reality, radio stations were getting fed up with [having] their brands and identities buried under the Broadcast.com model," Mr. Black says. "All in all, while it was the right step early on, it's just not about those guys anymore."

Technology companies have produced a way to inject targeted, streaming ads into Internet radio music feeds, but it's not yet a trusted delivery system, analysts say. Webcasting works fine on a small scale with a limited budget, but costs for equipment and bandwidth increase with the number of listeners.

In general, Internet-only radio stations have struggled to gain huge chunks of listeners.

With the prospect of digital, per-copy downloads from the Big Five music companies on the horizon, some major Web forces have begun gobbling up portals.

AOL Time Warner, for example, has acquired Spinner.com. MTV aligned with SonicNet.com to develop its customized "Me Music" service. MP3.com will be wrapped into the future PressPlay enterprise from Vivendi Universal and Sony. Microsoft, meanwhile, has started up its own portal, MSN Music.

The rest have been left to struggle for themselves.

Several portals, including OnAir.com, eYada.com , RadioSpy.com, DiscJockey.com and BroadcastAmerica.com, have gone out of business.

But dozens survive, including NetRadio.com, CyberRadio2000.com, RadioJump.com, RadioTower.com, vTuner.com, World Radio Network (www.wm.org) and Live365.com , a hybrid portal that allows amateurs to create their own streaming stations.

Most portals allow very narrow searches for extremely customized streams, but with Live365.com, the choices are wide and eclectic. You want Indian trance music? How about barbershop Christmas tunes? Or Yugoslavian hip-hop? Chances are, Live365 has it.

Company vice president Alan Wallace, a veteran of Dallas and Houston FM stations, says there are more than 40,000 individual stations on his service. Unlike other portals, Live365 gives users the Web-based tools and storage space to arrange playlists from music they enjoy.

In June, Mr. Wallace says, more than 5 million hours of MP3 music was spewed to Internet listeners via Live365.com.

The company is built on the pioneering efforts of Shoutcast.com, which developed an easy-to-use software tool that turns home computers into self-contained Internet radio stations.

With Live365, users are given 365 megabytes of disk space on the company's streaming servers. They upload their favorite music, then manage their playlists on the company's servers.

Joe Ferguson of Sandy, Utah, had little radio experience, but his station – and many others – has struck chords with hundreds of daily visitors. Mr. Ferguson, a blues addict and Stevie Ray Vaughan freak, started Texas Flood Radio in May 2000 as a tribute to the late Lone Star legend.

"I started it just to listen to my own CDs without having to drag them back and forth all the time," says Mr. Ferguson. "After a week or two, I saw that other people were listening, too."

Texas Flood Radio gradually moved to a top spot in the blues genre listings at Live365, and Mr. Ferguson says he receives regular raves from listeners in the Netherlands and Japan. But even the most popular Live365 offerings usually attract fewer than 100 simultaneous users at peak hours.

The challenge for Live365 is to convince advertisers that niche programming is worthy of their bucks, Mr. Wallace says.

"We can actually give advertisers a very specific idea of who's listening and where," Mr. Wallace says. "What we have to do now – more than ever – is get the ad community to stop sitting by the wayside."

Music players

The Windows Media Player interface, for example, categorizes and allows searching of Internet radio stations by call letters, key words and genre. When the Big Five record companies begin selling digital tracks, customers will need a way to preview and sift through their offerings. Media players, say experts, are positioned as tools for that effort.

Right now, the recording industry fears that if consumers can request songs online, CD sales could suffer. It has gone to court to force the major Webcasters to adhere to strict limits on how much wiggle room users are allowed in selecting music streams.

MusicMatch Radio MX is offering a bold combination of a free music player, audio library organizer and CD ripper in its MusicMatch Jukebox 6.1.

With it, users can subscribe – for $5 monthly or $50 annually – to a service that lets them personalize streams as much as the law allows. A subscriber's on-screen window allows selection of music by tempo – slow, medium or fast. A second window lets fans create custom-listening streams from any year, decade or time span. Customers can also base their streams on a list of 25 favorite artists.

While a customer streams his music, the original album art appears in one window of the player. Places to get more information on specific artists also appear.

Beyond the flexibility, the streaming itself is innovative. The rate of music flow can be tailored to low, medium and high bandwidth connections. Because it uses a combination of streaming and file transfers, music is noticeably crisper and suffers fewer interruptions than other available options.

"We consider it a near music-on-demand experience," says MusicMatch spokesman Gary Brotman.

In the eight weeks since its release, MusicMatch Radio MX has attracted 18,000 subscribers, Mr. Brotman says. That figure may not bowl over the cynics, but it clearly signals that a segment of music lovers is willing to pay for personalization.

As record companies begin permitting sales of digital music, users will be able to drag and drop purchased tracks into their computer's audio library. From there, CDs can be burned with another click.

"Streaming seems to be the direction people want to go," Mr. Black says. "But I think the lines between the download and the stream will probably begin to blur over time."

Still to come

Mr. Black says that once the radio industry develops "Web hubs" for its properties, the Internet radio landscape may shift dramatically. Within them, experts say, well-branded local stations could develop "side channel" streams designed specifically for other musical genres.

Right now, these huge players have largely left their local affiliates to fend for themselves on the Net.

"But you can't rely on a local station to bring a strong Internet presence," says Mr. Black. "They're just strapped for cash." Webnoize surveys show that traditional stations largely assign interns and low-paid tech-savvy employees to their Web-streaming tasks.

That could all change if the major radio station groups can develop a comfortable way to arrange all their properties under a unified Web outlet.

Even though traditional radio streams aren't narrow enough for most Internet radio users, they may present an attractive option, experts say. Many predict that the radio conglomerates are about to develop strategies that feed off local stations' primary selling points: localized news and well-branded DJs.

It make take a couple years, says Mr. Black. "But when you're talking about Internet radio's future, it's all about the Clear Channels. It's all about the Infinities.

"It's about people who can really bring a lot of advertisers and relationships to huge, huge markets."

Write to Doug Bedell at dbedell@dallasnews.com.