from the Wall Street Journal 


   July 23, 1998

Radio Stations Make Plenty of Waves
As They Find Homes on the Web

   By WILLIAM M. BULKELEY 
   Staff Reporter of THE WALL STREET JOURNAL
   
   The artists at Phoenix Pop Productions, a San Francisco graphic-design
   studio, used to work with the radio blaring all day. Now, it's their
   computer that's blaring.
   
   Last year, the company discovered Spinner.com, a 100-channel Internet
   site operated by Spinner Networks Inc., of Burlingame, Calif. Among
   other things, the Web site offers music, packaged in formats borrowed
   from traditional radio, such as '90s rock, classic rock and reggae --
   but without as many commercials and yammering disk jockeys. There are
   some odder formats, too: "Lava-lamp listening," for example, or
   "modrockgrrls," "Just-4-Kids," or seven separate blues channels.
   
   There is even the El Nino channel, offering a steady menu of weather
   songs (lots of "Raindrops Keep Falling on My Head" and "Here Comes the
   Sun"). "We have it plugged into the office stereo, and we play blues
   all day," says Bruce Falck, Phoenix Pop's chief executive.
   
   Appealing to All Tastes
   
   Audio pioneers are counting on Mr. Falck and listeners like him to
   drop out of FM radio and tune in to cyberspace. The Internet offers a
   radio station for every taste, no matter how weird, offering listeners
   more options than anything since FM stations took off in the 1970s.
     _________________________________________________________________
   
                         Good Morning, Cyberspace!
                                      
   Channel    What It Plays
   El Nino    Weather-related songs
   Melancholia    Sad pop songs
   Latter-Day Saints    Mormon music and theology
   Imagine Talk    Abductions and conspiracies
   Parrot Radio    Continuous Jimmy Buffett
   Chants    Gregorian and other chants
   Kidz Radio    Tunes from 'The Lion King' and 'Flubber'
   CCN Hit Radio    Christian rock, ska and hip-hop
     _________________________________________________________________
   
   How high hopes are running for the new radio technology was evident
   last week, when Broadcast.com Inc., a Dallas company that retransmits
   radio and video over the Internet, made an initial public offering of
   stock. The company's share price tripled on the first day of trading,
   achieving a market capitalization of more than $1 billion -- despite
   no foreseeable profits and revenue of just $8.9 million in the 12
   months ended March 31.
   
   One Internet radio channel plays Gregorian chants 24 hours a day.
   Another offers gavel-to-gavel coverage of trade shows. Many Web sites
   take local radio-station feeds from around the world and rebroadcast
   them, an invaluable service to ex-Ohioans in Seattle who can't get
   Ohio State University football any other way.
   
   There are still plenty of obstacles. Internet advertising totaled
   about $1 billion last year, and less than 1% of it went to Internet
   radio sites, analysts estimate. Although Webcasters can target ads to
   individual listeners, there aren't enough of them -- even in Silicon
   Valley -- for stations to afford ad salespeople to solicit local
   restaurants and car dealers. And unless they are played on PCs with
   high-speed modems, sound quality for Internet stations isn't up to
   FM-radio standards.
   
   Still, anyone with a personal computer equipped with a modem, sound
   card and speakers (and most PCs these days are) can check out Internet
   radio. First-time listeners need to download software, such as the
   program a Seattle company, RealNetworks Inc., gives away on its Web
   site (www.realaudio.com). RealNetworks also gives away software for
   Webcasting music, letting virtually anyone run his own channel from
   any PC on the Internet.
   
   Jim and Wanda Atkinson -- he a veteran programmer, and she a business
   manager of top-40 radio in St. Louis -- see the Internet as a way to
   run a mom-and-pop radio station. "We could have bought one in a
   medium-size market, but then we'd need mass appeal. On the Internet we
   can focus on the music," says Mr. Atkinson.
   
   Some 5,000 people a day listen to their adult alternative-rock
   station, 3wk.com. Like many other Internet broadcasters, the Atkinsons
   aren't making money yet. But they do have advertising, and hope to
   make more money from it as their audience grows.
   
   DJs on the Street?
   
   If the Internet is radio's future, many disk jockeys could be looking
   for work. Most cyberstations don't have them. The DJ's job, after all,
   is to tell listeners what is playing. But on Internet channels, if a
   song, let's say, "Indian Reservation," comes on, you just click on
   your PC screen to see it was sung by Paul Revere and the Raiders.
   Often, you can even buy one of their albums, by clicking an icon for a
   Web music retailer. (The stations get 5% to 15% of the sales generated
   at their sites.)
   
   The content of some Internet channels resembles that of pirate
   stations on traditional airwaves. DeadRadio.com Webcasts Grateful Dead
   songs 24 hours a day. At various times fans have Webcast nothing but
   songs by the Beatles or Jimmy Buffett. Internet broadcasters must pay
   royalties, based on audience size, to artists and composers, just as
   over-the-air broadcasters do. But for now, Internet audiences are so
   small that the payments don't present much of a problem.
   
   Other companies present the content of existing over-the-air
   broadcasters. Broadcast.com is an aggregator that now carries 345
   commercial radio stations plus game broadcasts for 350 college and pro
   teams, and video signals from 17 television stations. But bandwidth
   limits on modems mean Internet TV audiences receive tiny, jerky
   images.
   
   Internet radio is breaking through at a time when investors have
   started recognizing the medium's resilience. Radio stations have been
   fetching record prices in the takeover market. An estimated 95% of
   Americans listen to the nation's 5,000 local radio stations, which
   drew in $13.64 billion in advertising revenue last year.
   
   "Radio has never gone away." says Peggy Miles, president of Intervox
   Communications Inc., a Washington consulting firm. "Now it's going to
   go off in lots of new ways."
   
   Pay Radio
   
   Another new direction is satellite radio, which may become available
   within 18 months or so. Unlike Internet channels, which are free,
   listeners would have to pay to hear satellite radio. But satellite
   radio would be broadcast digitally, with the same high-quality sound
   as compact-disks now offer.
   
   Perhaps even more important, people would be able to listen to
   satellite stations while driving. That could be a decisive factor,
   considering 40% of all radio listening is done in cars, according to
   Yankee Group, a Boston research firm. But satellite will also require
   listeners to invest $200 upfront for an antenna and radio card.
   Subscriptions are expected to run about $10 a month.
   
   The first satellite broadcaster expected to hit the air is CD Radio
   Inc., whose $960 million network will be launched in 2000. The New
   York company and another one, American Mobile Radio Corp., of
   Washington, D.C., each paid the Federal Communications Commission more
   than $80 million last year for nationwide satellite-broadcasting
   licenses.
   
   CD Radio plans to transmit 50 channels of music and 50 channels of
   talk and entertainment all over the country, based on a subscription
   system like those of cable television. Among the talk formats is
   Classic Radio Network, featuring rebroadcasts of old-time radio shows
   like "The Shadow" and "The Green Hornet."
   
   Another, dubbed Personal Achievement Networks, features author
   seminars and "positive talk" segments with personalities like
   motivational guru Anthony Robbins.
   
   Surveys by Yankee Group indicate some 20% of consumers would be
   willing to pay for satellite radio. But among trend-setting young
   audiences, the free Internet stations may have the edge. "Mainstream
   radio is so twentieth century," says David Poe, a Sony Corp.
   alternative-rock recording artist. "Internet radio is being forged by
   kids who all say that mainstream radio sucks."
   
   Mr. Poe listens to Imagine Radio Inc.'s Internet radio station, based
   in Brisbane, Calif. Imagine Radio's 16 music channels tailor
   broadcasts to individual listeners, who can rate each selection on a
   scale of 1 to 10, indicating preferences: If you listen to Imagine's
   New Rock channel and rate Verve Pipe songs a 0, you will probably
   never hear them again. Imagine also has talk channels with programs
   such as "Cyberwomen"; "the I-Files" (about abductions and
   conspiracies); and PC Games.
   
   Cort Dugan, an industrial-products salesman in San Francisco, says
   Imagine Radio "enables me to listen to the newer stuff that's out
   there." Recently, he got home, turned on the Internet radio and heard
   something he had never heard before-the song "Kate" by a trio called
   Ben Folds Five. He went to the Web retailer CDNow and bought an album.
   "It's an impulse buy," he says, " ... and I could click right there."
   
   Over-the-air broadcasters are watching anxiously. An estimated 5% of
   U.S. radio stations send their broadcasts over the Internet, but many
   of the others are leery. Industry leader CBS Inc. actually prohibits
   its stations from Webcasting as a matter of policy.

   Copyright © 1998 Dow Jones & Company, Inc. All Rights Reserved.


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