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Will Internet Radio Drown Out DAB?

June 19, 2008

By Donnelly, Alison

The platform is steadily building its listener base, leading brands to examine its potential, writes Alison Donnelly The uncertainty surrounding the future of DAB has given a timely fillip to internet radio, which is slowly, but steadily, growing in popularity as a listening platform.

While just 2.1% of all radio listening in the UK during the first quarter of 2008 occurred via the web, according to Rajar, listener numbers are climbing, albeit gradually. They now account for about 21m hours of online listening weekly, up from 17m last September.

As well as providing radio stations with a welcome additional revenue stream, other non-traditional media owners have realised the potential that web radio has to offer, demonstrated by recent deals between MySpace and Mars Planets and AOL and Last.fm.

Given the less-than-wholehearted support that DAB is now receiving from media owners, underlined by GCap Media’s complete retreat from the market, it is likely that the focus will shift to online services. They are cheaper, offer universal coverage and have the capacity to provide podcasts and other interactive elements – all things that DAB cannot.

‘Radio needs to focus on providing excellent content and then ensuring it is available on as many platforms as possible,’ says Ross Nestar, head of radio at Mediaedgeicia. He adds that the internet will have a key role to play. ‘Radio has always been an interactive medium so online is a natural platform for it. Commercial radio stations have been slow to exploit it, though, as they don’t have the same resources as the BBC, which has done so very well.’

MySpace’s tie-up with Mars highlights the opportunities that exist to create branded radio content specifically for the internet. MySpace has produced a weekly show fronted by Alex Zane, which is sponsored by Mars Planets and heavily led by usergenerated content.

The show provides another way for users to consume content, according to Dom Cook, marketing director at MySpace. ‘Radio offers us a very good opportunity to include a strong usergenerated element,’ he says. ‘Within two days of launching the profile page for the show, we had almost 2000 bands sending in tracks to be played, as well as about 2000 friends of the page.’

The opportunities for brands in this arena are plentiful, says Mark Story, Bauer’s managing director of national brands. ‘We’ve done it with magazines such as Q and Kerrang! and you can create radio online to promote brands in this way,’ he says. ‘We rarely refer to the industry as just radio any more; we prefer to say audio, because everything is cross-platform, from digital to online – it is a very progressive area and the internet has a big part to play.’ He claims that all Bauer’s stations, including Magic and Kiss, have a solid online listener base.

Virgin Radio’s digital director, Andy Grumbridge, sounds a similar note. ‘Internet listening has a double upside for us. People can listen more and we benefit financially from their engagement. Our website is profitable through a combination of display advertising, affiliate deals and sponsorship, and we consider ourselves a multi-platform network,’ he says.

As online listening grows in popularity, so the opportunities for brands to exploit the medium will increase. MySpace and Mars, and AOL and Last, fm, could well provide the commercial blueprint for others to follow as online prepares to take on DAB as a viable challenger for listeners.

Data file Internet radio

Listening growth

Total hours (m)

September 07 17

December 07 19

March 08 21

Weekly reach (%)

September 07 5.1

December 07 5.7

March 08 6.2

Platform share (%)

September 07 1.6

December 07 1.9

March 08 2.1

Source: Rajar

Web radio: while It accounts for just 2.1% of listening hours in the UK, weekly duration is up from 17m hours in September to 21m now

‘We rarely refer to the industry as just radio any more; we prefer to say audio, because everything is cross-platform’

Mark Story

Bauer

Copyright Haymarket Business Publications Ltd. May 28, 2008

(c) 2008 Marketing. Provided by ProQuest Information and Learning. All rights Reserved.




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