Which vendors are still active in the Internet radio space? Our new "RAIN Vendor Guide" will reveal the companies that have at least a limited marketing budget and want your business in 2002!

BY KURT HANSON
For over a year now, RAIN's crack team of interns has been learning how Internet radio works by building its own Internet radio station. (For the previous installment of this story, click here.)

The purpose of this project when we launched it was to help us become more knowledgeable about how this industry works. (I believe that it's tough to write about something you don't actually know about personally.) Hopefully, the knowledge we've gained from this project is one reason RAIN not only does a reasonably good job of reporting the news in our space but can also add insightful commentary and analysis.

The story so far
In our last installment (here), we officially launched the RAIN Radio service (available since then for your listening pleasure by clicking the RAIN Radio logo in the right-hand column). We described the ideas that went into programming and designing the player, selecting music for the channels, and assembling CD cover artwork. We also brought up some questions about DMCA rules regarding music rotation.

Today, I'd like to write about why we chose to offer a dozen "niche" channels rather either (A) doing one format right (ala 3WK or Beethoven.com) or (B) offering the complete spectrum of possible formats (ala Spinner or the old Radio Sonicnet).

Why offer twelve channels? Why not ONE done well?
There were several reasons we chose to offer more than a single channel on our Internet radio station.

First, we've had interns with a variety of musical tastes. Ralph likes avant-garde classical, David knows piano jazz, Yvonne was into boy bands, Scott is a fan of indie rock bands and electronica, Brad knows and likes Brit rock, and none of the interns was a fan of the "Swingin' Pop Standards" with which we debuted RAIN Radio. Multiple music formats allow us to provide a better experience for more interns.

Second, if we were to only offer one channel, we speculated that the marketing costs would be tough to amortize. We could blanket, say, the University of Wisconsin-Madison campus with thousands of flyers for a "Twang" Internet radio station -- but 80-90% of the people who see the flyers would have no interest in that format, so there would be a lot of wasted spending and effort. By offering a reasonbly-large variety of format choices, we can theoretically offer something appealing to virtually every person who picks up a flyer.

Why offer twelve channels? Why not HUNDREDS?
On the other hand, we speculated that there may be a perceptual problem with offering consumers too big a variety of format choices.

Specifically, we speculated that the multichannel broadcasters who offer 100+ channels have this problem: As consumers of Internet radio ourselves, we've noticed that if a webcaster offers dozens upon dozens of channels, it may be tough to believe that any of those channels have really great quality to them. (In reality, some of them in fact may have great quality, but it's a perceptual thing: It's hard to imagine it.)

Somewhere between five channels (our original plan) and twelve channels (where we are today, although we may have gotten carried away), we believe there may be a middle ground where we could offer most consumers something they like, yet they could believe that their chosen channel is carefully constructed and of high quality.

On the other hand, we may be offering the worst of both worlds. Like a restaurant that offers Italian food, Mexican food, and sushi, we may have stumbled onto an approach that appeals to almost no one. (How good could the sushi be in such a restaurant?) We'll see in future installments of this story once we begin some test marketing.

Final reason for a dozen channels
And finally, we wanted RAIN Radio to be something that no one else is doing.

There are lots of webcasters (including most terrestrial broadcasters who stream) offering one great channel, and when we started there were about a dozen webcasters offering 100+ channels (including the aggregators like SurferNetwork) -- but there was no one operating in this range of about a dozen channels.

But why all "niche" formats?
Finally, why have we chosen to offer a dozen "niche" channels rather than the obvious major formats? Another good question.

Here's our thinking: If a broadcast radio station offers a format called "Classic rock" or "Smooth Jazz" or "Country Hits," it's likely to be the only game in town -- and thus it makes sense to offer the most mass-appeal version of the format possible. There would be no reason to offer a niched version (e.g., "Young Country" or "Smooth All-Saxophone Jazz") unless there was already a leading player in the field.

But on the Internet, could there possibly be anything sexy about a RAIN Radio channel called "Classic rock"? We couldn't see an angle. Every multi-channel operator offers it. Dozens of radio station being simulcast on the web offer it. Imagine Cosmo Kramer's voice as you read the next two words:"It's ubiquitous!"

However, if we put up a channel called "Motel California" that plays classic rock from or influenced by the Southern California rock scene of the 1970s -- well, at least that's something nobody else is doing on the Internet -- and it's certainly nothing you'll find on the FM band.

Analogously, this is why Friskies doesn't sell expensive canned cat food in a flavor called "Fish." It's more effective to offer "Pacific Salmon in Sauce," even if some cats might not be salmon fans. By the same token, "Jazz" may not work as well for our purposes as "Piano Jazz," even if some jazz fans might not particularly be piano jazz fans.

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From Reuters: "Sony Music Entertainment on Monday announced a licensing deal with online music company Listen.com, becoming the third major recording firm in a week to make its music available to Listen's Rhapsody subscription service...

"The Sony deal follows Listen's agreements announced last week with EMI...and BMG...underscoring the recording industry's new willingness to cut deals with independent online music distributors...

"The recording giants have begun to feel pressure from a U.S. Department of Justice antitrust probe aimed at these two services to determine if these big music companies have colluded to set rates and terms for their own services."

Read the entire article here.

From the press release: "In one of the fastest technology rollouts ever at General Motors, XM Satellite Radio will be offered on 23 models this fall -- from the Chevy Cavalier to the Cadillac Escalade EXT...

"Beginning this fall, the start of the '03 model year, the XM option will be available on the following models:

"Buick: Rendezvous, LeSabre; Cadillac: Escalade, Escalade EXT, DeVille, Seville; Chevrolet: Avalanche, Cavalier, Impala, Monte Carlo, Silverado, Suburban, Tahoe; GMC: Denali, Denali XL, Sierra, Yukon, Yukon XL; Olds: Alero; Pontiac: Aztek, Bonneville, Grand Am, Sunfire."

Read the press release here.