From the Wall Street Journal Interactive Edition: "Is iWon destined to be a loser? The CBS-owned portal promises prizes for clicks, but analysts wonder if the site can generate enough revenues to pay off the winners..."

"Visitors to the site (www.iwon.com), a Web portal that gives users the chance to win cash by checking their e-mail and surfing the Web, increased 72 percent in November to 3.04 million unique visitors, making it the 10th fastest-growing site on the Web..."

"But analysts call the cash giveaway a cheap shot at entering the portal market. Despite the traffic figures, they remain skeptical that iWon will ever make more money than it has to spend to lasso customers...

If you visit the iWon portal (click screenshot above to do so), note that the site announces a new promotional tie-in with CBS TV programs starting next week: "Watch the featured show each night on CBS. Look for the Club CBS 'Star of the Day'" Then log on to iWon for chances to win a trip to this year's Grammy's!"

In this case, rather than using the TV network to drive viewers to the website, CBS is now apparently also attempting to use the website to drive viewers to the TV network!

Click here to read the full story in the WSJ Interactive Edition (subscription required) or here for an excerpt in ZDNet News.



From eRadio and Yahoo! News: "It looks like the online music industry, grappling with concerns over digital formats, piracy and technical woes, will have to wait until next year for Santa to deliver a merry Christmas...

"Companies like MP3.com Inc. and EMusic.com Inc. that let users download music to their computers have generated a lot of buzz and attracted the attention of Wall Street. But complicated software, pricey portable music devices and a battle over how easy it should be to copy songs means it will be some time before the PC replaces the stereo system..."

Sales of MP3 players to date are apparently closer to 750,000 than the 1,000,000 expected. Due to lack of copyright protection, record labels are still unwilling to release most material in the MP3 format, despite its attractively small file size. And right now downloaded music seems constrained to be listened to on generally "tinny" PC speakers. Click here to read the story in eRadio or here in Yahoo! News.

Essay below is reprinted from Thursday's edition. It's a response to the article at left. (Click screenshot to read it.) New comments from readers follow immediately below the essay.

BY KURT HANSON
Clearly, the actual audience sizes of streamed radio station webcasts, as revealed in this newsletter, are lower than most of us would have expected.

(Click here and here and here to read the original stories and here for reader comments on those stories.)

Does this mean that we can stand down from red alert -- that the Internet is going to have no effect on radio and that we can safely just ignore it? Au contraire. (I think.)

Here are some of the possible interpretations of the InfoStream results:

Perhaps this will just take more time.
Right now, WPLJ/New York may have 500 people listening to its webcast during peak periods (which I imagine would include middays). As more people get higher-speed modem connections and more-reliable audio players, I imagine that number could grow by a factor of ten before too long. 5,000 new webcast listeners would mean a 5% increase in WPLJ's midday audience...which could be worth significant money to advertisers! (Especially if those listeners are being fed visuals to compliment the station's spots.)

Broadcast.com may have all the listeners.
Mark Cuban's firm (now Yahoo! Broadcast) chose not to participate in the InfoStream report. Maybe that's where most Internet users are going to find webcasts. (Maybe you were smart to sign up with Broadcast.com!)

On the other hand, maybe they know otherwise and that's why they didn't participate. At the moment, we simply don't know.

Or maybe broadcast radio is in BIG TROUBLE.
For all we know right now, maybe no one is listening to streamed broadcast signals because the vast majority of Internet radio listeners are listening to the "pure plays" of Spinner, NetRadio, SonicNet, Radio DAER, and so on.

Some of these operators offer incredibly fine distinctions in genres ("So you like pop standards: Would you prefer jazz-oriented vocalists, artists with a strong Sinatra influence, more of a Hoagy Carmichael bent, or perhaps a slightly more pop version?"). Most of them offer easy button-punching from format to format. Some of them let you design a customized sound of your own -- or skip past songs you don't like.

And all of them offer extremely low spot loads. Maybe any sane Internet radio listener would prefer their version of Internet radio to ours.

Maybe radio stations aren't promoting their webcasts properly.
Perhaps it's simply a matter of giving more mentions per hour. Or giving listeners a stronger reason to listen to the webcast. Or promoting the webcasts to Internet users who are not current listeners of the broadcast signal.

Or the problem may be in the accompanying station websites.
It seems to me that there are synergistic effects between the webcast (the audio stream) and the station website that accompanies it. Perhaps station sites need better design and/or more compelling content than they currently have. (Maybe jock photos and "What's Playing" and a community calendar and trivia contests and a request form and a CD store aren't enough.)

Maybe there's profit on the Web, but it's not in streaming.
Maybe it's in providing a website that serves as a useful accompaniment to people who are listening to your station on their stereos. (Some CBS stations are taking this approach.) You tell them what song is playing now, have contests going on, give them visuals for your spots and links to your advertisers, let them chat with your on-air talent, and so on.

Maybe there's profit in streaming, but not your broadcast signal.
Some radio stations, like WRIF in Detroit and Star 100.7 in San Diego, are streaming variations of their main formats. Maybe that's the way to add 10% or 20% to your audience size -- and protect yourself from encroaching competitors in the process.

Aggregation may be necessary.
Maybe streaming a single station doesn't cut it when you're competing with a operation like Spinner that allows listeners to set 21 presets (out of dozens and dozens of alternatives) for easy "punching around."

Might it make sense to offer listeners a single website where they can punch around between all of the AMFM-owned stations in their market? Or maybe, to go horizontally rather than vertically, where they can punch around between all of the CBS/Infinity rock stations across America? Or perhaps -- and I think this is Emmis's concept -- where they can punch around between all of the radio stations in their market (as an alternative to the market's newspaper's website)?

Perhaps national radio stations now make sense.
The Internet is most specifically not a local medium -- remember, it's the World Wide Web! Maybe the traditional broadcast model (live disk jockeys, a tight playlist, good promos, and a reasonably-high spot load) would work on the Internet if it were positioned as a big, national or world-wide station.

(National radio stations have seldom been attempted in the U.S. in the past -- ABC and Rick Sklar's "SuperRadio" got aborted at the last moment, John Tyler and Lee Abrams tried it with "Z-Rock"... I can't think of many other examples of 24-hour stations that specifically tried to sound national).

Or maybe the big play is in spot sales.
I'm thinking here that, in reality, radio is the best possible medium to drive people to the dotcom advertisers, since it's the only medium that people use simultaneously with using the Internet. Maybe we need to figure out how radio can do a better job of accomplishing this task. Then promote it.

Then, assuming the dotcom advertisers are actually going to be around for a while as American business transforms itself, maybe radio could eventually get 30% or 40% or 50% of the dotcom dollars. That would be signficant in itself...and it would apply upwards pressure on spot rates in general, too!

Hopefully that's some food for thought. More next week.



Your comments on this article are invited.
Which interpretation above makes the most sense to you? Or is there an #11 you'd like to add? Click here.

Kurt, I just wanted to respond to your article on streaming audio.

I, for one, am a BIG believer that we are hurting ourselves by streaming audio of our existing radio stations. If you monitor the average listener's real life usage, they don't listen to local stations on the web. They listen to out of market and Internet stations.

Whether we like it or not, Internet stations are here to stay and will only grow in numbers. However, streaming the thousands of existing radio stations only provides more competition for ourselves. It takes away from local radio listening...and ratings. We have enough competition coming without making it worse for ourselves.

I'm a believer that we should be concentrating on the strategy you mentioned being employed by KFMB-FM and WRIF. We should be starting our own Internet stations that are unique from extisting radio if we're going to be part of Internet audio. At least it can compliment our current product, not help to make it a thing of the ! past.

I just hope, as an industry, we get it before it's too late.

Interesting article. I think there may be a little bit of truth in most of your reasons. Mostly, though, I think traditional radio does not fit the web mode. Why listen to the local station on the web when you can personalize your own?

When it comes to the web, it's not so much that radio is "in trouble," as you put it, but that radio needs to throw out the conventional broadcasting model for an unconventional medium.

Add to that unlimited potential competition (no tower required) and a tiny available audience at this time and, well, you get .4 listeners.

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