Continental Europe and the US may have been enjoying a flourishing net radio industry for nearly two years, with big corporate sites such as Spinner, Launch.com and Imagine Radio attracting massive audiences, but here in the UK - where licences have been almost impossible to obtain - the scene has been barren.
But things are changing and a plucky little pirate station called Interface Radio, which went on the net to escape the DTI, is leading the way by attracting hundreds of thousands of hits each month from its small studio in London's east end.
The success of Interface shows that there is a potentially huge audience for net radio in the UK. By identifying an audience that is not well served by terrestrial radio - namely underground dance music mixed by DJs - Interface has shown that there is an appetite for niche music channels outside the narrow confines of UK commercial radio. Interface has no sponsors, nor does it take ads on its site. It makes money by charging the DJs who provide the music £10 per hour to play (it can stream more than one DJ at a time) and webcasting events for big clubs such as Gatecrasher.
The reason why Interface's success has not been replicated by terrestrial radio stations so far is that obtaining a licence to broadcast music on the internet in the UK has proved nearly impossible. Although existing terrestrial radio stations have always been able to "simulcast" (stream the same content that is available on air) their output on the web, they have not been allowed to change the programming to make it web specific. And that, say the stations, is the fault of the UK record companies.
In order to be allowed to broadcast music on the radio in the UK, a company used to have to obtain three separate licences. It had to sign with the publishers through an organisation called the Performing Rights Society; obtain a licence from the Mechanical Copyright Protection Society to allow it to store music, and, finally, it had to find a way to pay the record companies - usually through a company called Public Performance Limited. Effectively this has made commercial transmission an unappealing proposition, and stations in the US and continental Europe which have no such difficulty have been able to capitalise because most of them are available over here.
But all that is about to change because the record companies have relaxed their regulations - and this has allowed Virgin Radio to improve on its existing online operation, and it could be the first of many. So far the site has been operating on a simulcast basis, but now the plan is to package it with different ads. Scottish Media Group, owners of Virgin Radio, say that eventually this will lead to a series of genre channels.
John Ousbey is head of Ginger Online, the new media arm of the Scottish Media Group. He says: "People who are listening to streaming media are twice as likely to buy online. They're more likely to click on banner ads, they've been online longer and they have better connections. They are basically a very net-literate audience and that opens up channels for us. Basically we can give advertisers a route into these very valuable customers."
But it is not just new media upstarts who have designs on converting your PC into a radio. Bruno Brookes, onetime presenter of Radio 1's Top 40 show, recently set up StormLive.com - a net radio station hoping to tap into a market of 40-something listeners. Storm announced has just announced a deal with Sky Digital to broadcast its radio show via interactive TV, and Brookes says that the company plans to move into Wap "very soon". But for Brookes Storm is very much about taking traditional expertise from terrestrial radio and putting it online. "The word radio has been hijacked by the internet," he says. "At the end of the day radio has to be a mix of music, information, competitions and entertainment. It is not just 1,000 tunes back to back delivered by a computer server. That can be done in a back bedroom if necessary." Brookes thinks that net radio is "no different from terrestrial radio. All we are doing is finding an audience on the internet to listen to a radio station". But not everyone agrees. Keith Pringle MD of Ride the Tiger, a subsidiary of Chrysalis, thinks that the real point about net radio is that it is nothing like old radio.
He says: "When television first came on air the BBC put on vaudeville shows. It took the BBC years to realise that it could define itself by producing things like sitcoms. The same is true of new media. Internet radio is different from old radio because it has the ability to speak to people individually and to be interactive."
Ride the Tiger is due to launch on October 31. Pringle is making very bold claims about what he calls "personalisation". He says that their new site will operate on a one-to-one basis - user tell Ride the Tiger about the kind of music they like, and Ride the Tiger feeds back a personalised stream. However, Pringle is being very coy about how that will actually work - he will not even reveal the domain name yet. He likens the site to Launch.com - the US site which "remembers" what a listener has been hearing and then customises the audio stream appropriately. This kind of customisation has huge potential benefits for advertisers. In telling a net radio station what your preferences are, the site can amass information about you, and pass it on to advertisers.
"We've been able to associate music tastes and lifestyle interests together," says Pringle. "This gives you a very good understanding of your customer which means we are worth so much more to advertisers."
But the UK companies will have to move fast the internet knows few geographical boundaries, and if they cannot cater for diversifying music tastes, users will simply seek sites overseas. New US companies like Echo.com are already building a user base in the UK and US giant Viacom is about to launch a SonicNet site in the UK and Germany next spring. But the UK might already have lost out. Jason Franklin-Stokes is co-founder of BeSonic, a music delivery company operating in English out of Germany. The site has already built up a sizable audience in the UK. And Franklin-Stokes gives the difficulty of acquiring a licence here as the reason for locating to Germany. "If the UK cannot sort out its licensing problems, net radio will simply migrate to other countries in the EU."
Where all of this will leave terrestrial radio no one is sure. But one thing you can take for granted. With commercial radio in the country currently pumping out a variety of channels all playing the same Britney Spears record, the migration to net radio will not come soon enough for many listeners.
Useful links Interface Spinner
Virgin Interactive
Imagine Radio
Storm Radio
BeSonic
Echo
Sonic Box
