Will AOL Radio Cause The Extinction Of Local Stations?

AOL Radio, Pandora, Slacker and Last.fm are some of the online radio services that have become popular these last few years. Many of these are also accessible on portable products including cell phones. I will take a look at the impact of online radio on traditional radio broadcasters to find out if this means the end of local radio stations.

Local radio seems to be having a hard time in today’s radio landscape with competing satellite and online radio providers taking away listeners by supplying commercial-free music and entertainment. In particular, online radio has become quite popular by offering a practically infinite amount of radio stations.

While historically local radio has been the only truly mobile radio, online radio providers such as Pandora are now available on wireless audio transmitter and portable products such as mobile phones.

AOL Radio utilizes CBS radio as its broadcasting platform. It comes with in excess of 200 music channels. In addition it offers access to more than 150 local CBS radio stations. Listeners can also create their own customized radio stations at the CBS radio “play.it” website and save each track for playback on an iPod by using 3-rd party software iGetMusic.

Users can also create customized radio on other online music services by entering the artist and album names and these services will play songs based on that information. So far, however, competing music services have fallen short to offer similarly fully customized radio channels.

Is the end of local radio close? The rise of competition from satellite and online radio has started to take away listeners from local radio stations. Traditional radio seems to have a difficult time to halt this trend. In particular niche broadcasters have found online radio very valuable. The main reason is the low broadcasting cost of online radio in comparison with terrestrial radio. An additional cause is the problem acquiring frequency space licenses from the FCC. Nonetheless, increasing royalty fees have made the life of online broadcasters more difficult recently.

The big number of available stations is a big advantage for online radio listeners. However, this is a difficulty for online broadcasters. This large number of stations is diluting the number of listeners. As a result streaming radio broadcasters have found it difficult to be profitable. At the same time, however, there is less pressure to insert commercials because of the lower expenses of broadcasting in comparison with conventional stations. This has made online radio content more interesting than terrestrial radio.

Local programming such as news and local events, on the other hand, will remain one of the big advantages of local radio. So far the poor audio quality of FM radio has been a big drawback. However, new digital radio broadcasts are set to enhance the audio quality. One of these technologies is HD radio. It is difficult to predict a clear winner in the battle between online and local radio since both offer their own unique content and high mobility which are the crucial factors that will decide the fate of each service.