It's hard to believe that top-rated Adult Contemporary WBEB-FM in Philadelphia shut down its Internet stream. It's even harder to believe the move is permanent when there's every indication that streaming is part of radio's future business model.
WBEB stopped streaming March 15 in protest over the new SoundExchange rates for songs streamed on the Internet. Negotiated by the National Association of Broadcasters, the agreement provides a 16 percent discount on previously-set rates for 2009 and 2010, but then the rates rise nearly 67 percent by 2015. Jerry Lee, the maverick owner of WBEB who is often credited as an innovator in the business, estimated that as much as half of the revenue generated from his station's stream would go to SoundExchange in royalty fees.
"We're just shooting ourselves in the foot," said Lee. "Enough is enough."
While Lee may save some money in the short term, he may limit his potential for a second revenue source in the long term. With a few exceptions, radio stations have embraced Internet streaming as part of doing business in the digital age.
"Most [stations] realize the tower down the road won't be the sole distribution medium," said Andy Lipset, co-president of sales for TargetSpot.
There's little doubt streaming has incrementally grown station audiences. Clear Channel Radio, which has been developing its online presence for four and a half years, has seen streaming make up between 10 and 15 percent of station audiences.
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