WBEB Philly Takes Streaming Radio Detour

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. "Our streaming audience has grown 17 percent last year compared to 2007," said Evan Harrison, president of online radio and executive vp for CCR.Just last week, CCR's iheartradio iPhone application hit 1 million downloads. CBS Radio/AOL Radio has seen comparable station audience growth; the number of downloads for iPhone application has surpassed 3 million."You can't tell listeners where to go. We need to be everywhere our listeners are," Harrison said. "Within a couple of years, I think half our listening will take place on a combination of mobile and Internet. The pie is being reshaped."The dilemma for radio, as for other traditional media, is at what point does the increase in audience translate into a proportionate increase in revenue. Right now, the investment stations are making in streaming is clearly paying off in bigger audiences, but the revenue has some catching up to do, perhaps giving Lee some comfort in his decision. "Do I wish [streaming] was less expensive? Sure. But ubiquitous distribution across multiple devices can't happen without streaming," said David Goodman, president of digital media & integrated marketing for CBS Radio, who added that in-stream advertising is "taking off like a rocket."Reliable figures for in-stream audio advertising isn't available, but some sources estimate that CCR's online advertising, including in-stream advertising represents close to 5 percent of the total $3.3 billion in radio revenue."Web radio is one of the bright spots; dollars are migrating there," said Brad Adgate, senior vp and director of corporate research for Horizon Media. "The future for Internet radio is perhaps brighter than over-the-air radio."Lee doesn't expect any other stations or groups to follow his lead. But he isn't completely alone. "We feel vindicated," said Rick Cummings, president of programming for Emmis Communications, which has refused to stream many of its biggest station brands, including WQHT-FM in New York and KPWR-FM in Los Angeles. "We never viewed it as a monetizable business." --with additional reporting by Ken Tucker, Radio and Records

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WBEB Philly Takes Streaming Radio Detour

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