John C Dvorak is wrong about internet radio

I’m quite a fan of John C Dvorak. I was first made aware of him through the podcast “TWiT”, and his Cranky Geeks show now proudly adorns my iPod. I’m even prepared to forgive him the fact that his blog looks as if it’s yet to escape 1997.

Dvorak has a clever plan when he writes articles for PC Magazine and Marketwatch - to think of something insanely stupid, and then write a cogent argument about it, thus ensuring howls of outrage from the blogosphere and lots of links back to his articles, thus making him even more indispensable to a publisher (as well as giving us poor readers something good to read).

His recent column about internet radio is possibly a case in point; a straw man argument, waiting for people who write about radio and its place in the new media space to write huffy pieces claiming how wrong Dvorak is, and to link to his piece, thus ensuring that he continues to gain new readers. And I’m falling for it, clearly.

He claims ‘traditional radio is doomed’, and says there are three reasons for this. “Reach” (since internet radio has no boundaries), and “on demand” (for example, the BBC Radio Player). His third reason, though, he reckons is the death blow:

LOW COST The death blow, though, always comes down to money. The expense of streaming over the Internet is a fraction of what transmitter-based broadcasting costs. There is no big antenna, no transmitters, no special studios. Nothing within reason can change this metric.

…except reason itself.

Internet radio is, by and large, cheaper to broadcast than transmitters: because, by and large, few people listen. Live 365 offers broadcasters services to broadcast on the internet - and the most popular package offers a whopping great 30 simultaneous listeners - 30 people who are listening to your broadcast at the same time. That’s not particularly great, really.

So, traditional radio, which has rather more than 30 listeners, is doomed? Let’s compare BBC Radio 1, a UK national station on FM (for youth) here in the UK. To be charitable, we’ll take the network’s live and on-demand hours online; and compare this with what RAJAR says are the overall figures. (As a wealth warning - it’s not entirely correct to compare these figures in this way).

BBC Radio 1 - monthly total listening hours
Listening online: 5,973,049 hours (June 2007)
Total listening, all platforms: 466,519,000 hours (Q1 07)

So, for BBC Radio 1, only 1% of listening is done online.

Now, you could claim these figures are meaningless. After all, doesn’t Radio 1 have access to a fine FM network across the UK, so why would people listen, after all, online? Virgin Radio is hard on Radio 1’s heels in the online space, and they don’t have the benefit of an FM frequency across the UK. They don’t publish their online listening figures, but if you give them the same live online listening hours as Radio 1 (which I suspect is being rather generous), then their online listening could be 6% of the total. Which, while a good figure for advertisers, is still not the amazing figure you might think.

So, at least 95%-ish of the traditional radio audience is not listening online.

A visit to Shoutcast shows that many of the top-rated stations have a maximum simultaneous listener limit of less than 5,000. Internet stations serving more than 20,000 simultaneous listeners are a rarity, not a norm.

Live 365’s custom solution, used by some large broadcasters apparently, is $84 a month for 100 simultaneous, with $2 per every additional simultaneous listener you want above that. For 100,000 simultaneous listeners (the average for a large local-market station’s breakfast show), you’re looking at a monthly bill of $199,884.

And that’s the big problem that Dvorak has ignored; that for every new listener on internet radio, there’s a new cost. The penalty of popularity isn’t even as simple as that - as you continue to grow and chew up more bandwidth, you also need additional servers to cope with the load. And before long, you also need to upgrade your bandwidth itself; buy more space in a colocation facility, start discussing peering deals, etc.

There are two truths about internet radio that Dvorak ignores:

• if you want to reach the level of listening that traditional radio has, the costs can be way higher than a transmitter network
• but nobody has reached the level of internet radio listening that traditional radio has yet

That’s one reason why DAB, satellite, and all these other platforms are more exciting. And why those that breathlessly claim traditional radio’s death are ever so slightly premature.