Internet radio experienced a sea change in the middle of the last decade that washed away many independent broadcasters, and changed the atmosphere for others. While the medium continues to sail on, it is also more fractured – and more diverse – than ten years ago. That’s why this evolution is one of the decade’s most important radio trends.
Internet Radio’s Indie Roots
Independent broadcasters have been a cornerstone of internet radio since the very beginning. Looking back 26 years to the very first internet broadcasts, we see that – much like terrestrial radio – they were initiated by hobbyists and experimenters, not big media companies.
In fact, one can argue that the U.S. commercial radio industry largely neglected internet radio for a good portion of its first two decades. I think we can mark the founding of iHeartRadio as an app and platform in 2008 as the turn, when American commercial broadcasting finally embraced the internet as a useful and profitable medium, rather than a pesky nuisance. I don’t mean that commercial stations weren’t streaming before then. Rather, that streams were treated as low priority obligations.
During that time thousands upon thousands of independent internet radio operations were founded, taking advantage of a very low cost of entry and an absence of any sort of governmental licensing. Esepecially in the late 90s and early 2000s, it was mostly a matter of getting a Live365 account, loading up some music, and going for it.
The DMCA Takes a Bite, but not a Mouthful
Beginning with the passage of the Digital Millennium Copyright Act in 1998, internet broadcasting transitioned from its anything goes days to being a little more regulated. This was due to being required to pay royalties to songwriters and musicians for playing their music.
However, thanks to lobbying efforts on their behalf, small, independent and hobbyist webcasters got a break from Congress, twice. The Small Webcaster Settlement Acts of 2002 and 2009 established reasonable performance royalty rates for internet broadcasters not intent on going commercial, making much income, or serving large audiences. In effect, they were for webcasters that are akin to a small community LPFM or college station.
While this meant running a legit internet radio operation in the U.S. wasn’t free, the costs could be low enough to be comparable to, or less than, any number of other hobbies. Live365, then one of the biggest platforms offering streaming radio services, make it particularly easy by bundling those royalty payment in with the hosting costs. Some of the smallest webcasters could be on the hook for less than $100 a year – less than the cost of cup of Starbucks a day.
2016: The Year of the Great Seachange
The independent internet radio train ran off the rails in the middle of this last decade, January 2016 to be exact. That’s when the medium was dealt two massive blows: the expiration of the Small Webcaster Settlement Act of 2009 and the closure of Live365. Though the expiration of the Settlement Act was perhaps the final nail in the coffin, Live365 had been struggling for some time before hand, largely due to the loss of key investors. Its demise on January 31 of that year left some 5000 internet broadcasters of all sizes scrambling for new hosts.
Despite the hopes and prayers of many a small webcaster, Congress never took up their cause again, and their royalty rates skyrocketed. Instead of paying a percentage of revenue as under the Settlement Act, they would started having to pay royalties based upon tracks streamed per listener. That meant a station that averaged 100 listeners tuned it at any time – not a huge audience – playing an average of 15 songs an hour, was on the hook for as much as $22,000 a year.
An untold number of independent internet broadcasters called it quits. That number is untold because there’s no central authority or accounting. But anecdotal evidence from looking at the Shoutcast directory of internet radio stations and monitoring internet forums indicated that the reduction was pretty substantial, especially amongst stations that served narrow niches and very small audiences.
Many mid-sized independent broadcasters seem to have been able to hold on by virtue of fundraising or ad revenue. SomaFM is one such group, which survives on listener contributions. Back in 2016 founder and operator Rusty Hodge told me that he anticipated his costs to jump to as much as $20,000 a month, and he would be implementing automatic stream time-outs for people listening for more than a couple hours, to be sure SomeFM wouldn’t be streaming music to empty rooms.
Non-commercial terrestrial stations dodged the bullet because the royalties for their online streams are negotiated separately by groups like National Public Radio and the National Federation of Community Broadcasters. Commensurate with their non-commercial and non-profit status, their rates remained reasonable, though only as a result of careful diligence.
Short-Lived Alternatives
Many small U.S. webcasters left homeless by the closure of Live365 migrated to the France-based Radionomy service, which acquired the Shoutcast internet radio server technology and Winamp media player app from AOL in 2014. That’s because Radionomy offered free streaming hosting, even covering royalties, to broadcasters who could maintain a minimum audience size. In exchange broadcasters agreed to have a few minutes of advertising inserted into their streams every hour.
However, the bloom started to fall from that rose pretty quickly. In February of 2016 four major record labels filed suit against Radionomy claiming non-payment of royalties since “late 2014.” The service soldiered on, but stopped serving U.S. based listeners and broadcasters earlier this year. At the end of November the service shut down altogether.
Radionomy broadcasters were offered the opportunity to migrate their stations to the Shoutcast for Business service. While it’s reasonably priced – starting at about $15 a month – that doesn’t include any royalty coverage. Accounting for and paying royalties is up to the individual broadcaster, and that’s where the significant costs set it.
After Live365 closed in 2016, other U.S. webcasters turned to a company called StreamLicensing.com. The company offered to cover a station’s royalties for a cost lower than paying them directly. It seems the way they did this was probably by aggregating all the member stations into one license and single payment, using the economy of scale to reduce the liability of individual broadcasters. Stations had to find their own stream hosting – which is easier, with costs very proportionate to audience size – and StreamLicensing.com took care of royalties beginning at about $60 a month. Though more expensive than the lowest cost pre–2016 Live365 plans, that $720 annual rate was still on par with cable TV or a gym membership.
But beginning last year I started hearing scuttlebutt that not all was well with the company and that the numbers weren’t adding up. Whatever the case really was, StreamLicensing.com shut down in May of this year, again setting dozens or even hundreds of small webcasters adrift.
The Re-Birth of Live365 Is a Bright Spot
The story for small webcasters hasn’t been all doom and gloom since 2016. In 2017 Live365 was resurrected by a young internet entrepreneur named Jon Stephenson. The new service also offers internet radio hosting and royalty coverage for one monthly fee. The costs begin at $59 a month if your station runs Live365-placed ads – not much more than the old StreamLicensing.com alone without hosting – or $79 a month if you want to remain ad-free.
These introductory plans limit a station to 1500 total listening hours a month – equivalent to an average of 2 listeners per hour. But since the reality is that listeners tune in and out, and few should be listening for more than a few hours at a time, this is more than enough to sustain a small niche webcaster.
Of course, that adds up to $708 to $948 a year, and still might be too much for some would-be broadcasters. The price is not the fault of Live365 or other similar providers because their costs are pretty well fixed, especially the royalties. But small webcasters do still benefit from the economy of scale and and the convenience of one-stop-shopping these platforms offer.
If we’re being honest, spending $1000 a year or so to be a broadcaster is still a bargain compared to the costs of starting and running a terrestrial broadcast station, even a low-power FM. Many folks will spend more on a set of golf clubs, a digital camera or a couple cases of wine.
Early Promise Tarnished
It’s the contrast with the early promise of internet broadcasting that makes the situation feel unfair. In 1997 it seemed that all you needed to be a broadcaster was an internet connection and a few bucks a month to host the stream. The realities of intellectual property and commerce quickly caught up, but for a while – about 14 years, actually – the scrappy indie webacaster caught a break. But by 2016 it seems like folks stopped caring, especially Congress.
It’s not really clear why no congressperson saw fit to try renewing the Small Webcaster Settlement Act. Maybe the rise of streaming music services like Pandora and Spotify, music hosting sites like SoundCloud, or on-demand music show and podcast services like MixCloud made it seem like there were plenty of other opportunities for folks to get their audio out across the interwebs, whether by playlist, DJ set or podcast.
The opportunity hasn’t gone away. Live365 and similar services still offer the most cost-effective way to start broadcasting on the internet legitimately. But it’s probably not the sort of thing you do on a whim. At the same time there are many more outlets for casting out audio on the internet, and that is a net good.
Internet Radio Is Fundamentally Changed
That doesn’t change the fact that internet radio in the U.S. fundamentally changed in 2016. I’m certain many of the broadcasters who found themselves high and dry that year just gave up. This doesn’t mark the end of indie internet radio, just a major shift.
It should be mentioned that it’s conceivable to run an internet radio station without any costly royalty obligations. If you only run talk programming, with no music, then you bare no liability. But no music means you’re not using any commercially released music at all, not as bumpers or stingers or music beds. Now, podcasters manage to do this by relying on royalty-free music libraries, contracting directly with musicians or making their own music. So it should be possible for a talk-only internet station to pull this off.
Another option is to work directly with artists and labels to obtain permission to play their music royalty-free, or pay them directly. Note that this may not be as simple as it seems. If an artist is signed to a label it’s not good enough for them to say you can use their recordings, since the label will own some portion of them. You’ll need the label to give the OK, too. If an independent artist also self-releases, then you’ll have an easier time.
The Free Music Archive was actually founded to provide community and other non-commercial terrestrial radio stations high-quality royalty-free music alternatives back in the early days of the DMCA, before separate negotiations brought their rates down to a reasonable level. While the FMA’s ownership has shifted twice in the past 12 months, experiencing some downtime in the process, the music uploaded there from 2009 to 2017.
Also keep in mind that beyond the performance royalties, there are royalties owed songwriters via rights organizations like ASCAP and BMI. If an artist owns their songs and recordings, then again you’re free and clear. But if they’re playing cover versions or their label shares in the composition ownership (not unusual), then you’ll need more stakeholders coming to agreement. It’s not impossible, but it’s also not straightforward.
Some internet broadcasters have skirted the royalty issue by pivoting to video. Last year I wrote about the new breed of “YouTube pirates” who run live streams of music accompanied by static or looping images. They’re kind of the internet equivalent of FrankenFM channel 6 TV stations that maintain the bare minimum amount of video service to qualify as television stations, while primarily functioning as radio stations.
In harmony with my advice above, it seems that many YouTube stations survive by relying on independent music that falls outside the mainstream music industry’s royalty structure. For instance, the Netherlands-based Chillhop Music channel streams “jazzy beats / loft hip hop” that’s mostly devoid of recognizable hits.
Other channels that skirt closer to major label tunes end up playing a cat-and-mouse game with YouTube. The only real penalty seems to be having your channel shut down, which results in the loss of a potentially large listener and subscriber base. But there’s no indication that a bill from SoundExchange or other royalty collections authority will show up in your mail, in part because you don’t need to provide any legal identity to set up a YouTube channel.
The irony is that YouTube isn’t a radio platform, and that hosting streaming video is more expensive that streaming audio by a significant margin. But YouTube is free, and there are few free radio streaming options out there. In particular, there are none even remotely as prominent as YouTube.
The Future Is Fractured
So maybe the future of internet radio is video? I know that many podcast listeners actually consume their favorite shows – like Joe Rogan’s – on YouTube and think of the platform as the place to find podcasts.
In reality that’s probably overstating things. Like all online media, internet radio has become more fractured in the last decade. While some platforms and opportunities have disappeared, others have come to the fore.
If you’re looking to create a traditional 24/7 live streaming station using copyrighted music, services like Live365 are there to help you do this legally at a variety of price points. YouTube is there to let you stream for free if you don’t mind dealing with that platform’s restrictions, and the likelihood that you’ll need to rely on underground, independent and unsigned artists if you want your channel to stay up for the long haul.
If you don’t mind confining yourself to an on-demand show, DJ set or virtual mixtape, then Mixcloud is a pretty good alternative, since the service is free and covers all royalties.
Both YouTube and Mixcloud are largely confined to the web and their own apps on mobile devices, and platforms like Chromecast, Roku and Apple TV. That does give audiences a fair number of ways to listen, though not appearing alongside pure-play streaming radio stations, like on iHeartRadio or TuneIn.
I will note that the Sonos wireless speaker system supports Mixcloud. It also supports YouTube Music, which sort of lets you access the music available on YouTube, but I haven’t yet figured out how to hear any of the live streaming stations – just their archive streams.
The last decade was marked by a significant shake-up in internet radio, and I don’t think we’ll ever turn back the clock to the heady days of the mid–2000s, when it seemed like medium would be the new “pirate radio,” as the mainstream press often proclaimed. That doesn’t mean there isn’t ample opportunity to broadcast online.
Rather, our definition of radio has expanded. If the platform is about getting audio programs out to an audience, then we can argue it’s radio. If it’s on the ’net, then it’s internet radio. It may change, and morph from platform to platform. But it’s still here as we enter the third decade of the 21st century.
