In
ternet radio has transformed radio, the Federal Communications Commission’s new report on media observes. But it isn’t clear whether the medium’s economics will facilitate the growth of local online radio journalism.
There are two economic/technological impediments, the FCC’s newly released Information Needs of Communities notes. First, bandwidth costs—a problem we’ve discussed here as well:
“We can reach 14 million people in Los Angles with a transmitter that runs on 600 watts of power,” the report quotes Bill Kling of American Public Radio explaining. “If we tried to reach 14 million people with broadband . . . we’d be bankrupt. We spend now $500,000 a year in our company alone on broadband spectrum in order to serve the audiences, and I don’t think everybody realizes that every time you download a podcast or stream audio . . . it’s a collect call to us.”
Second, Internet audio websites offer far less local advertising:
“Currently, if a local business wants to reach a local radio audience, they have little choice but to go to a local radio station,” the report contends. “As Internet radio gains popularity, they will have another option: to place ads on websites that target local listeners without necessarily offering local content. This may be good for local businesses but could harm the business models of local radio.”
The survey also isn’t sure if ads that are somehow connected with content streaming at the moment will be able to bring in the amount of money that AM/FM broadcast advertising currently delivers.
This is similar to the problem that newspapers face. Print advertising revenue has historically brought in much more money than online ads. “Print dollars were being replaced by digital dimes,” publishers noticed as the trend developed.
And so, ironically, the Internet has allowed radio stations to go national, while limiting their ability to be local.
“Given its origins as a fundamentally local medium, it is ironic that radio now excels at national programming,” the study’s section on radio concludes:
In some ways, radio should have an easier time adapting to the Internet economy than TV. It is far cheaper and faster to transmit audio online or through a phone than video. In that sense, the question is not whether audio will be popular in the new media world. It already is. What is less clear is whether commercial business models will emerge that will once again make local “radio journalism” seem profitable.
