Tuesday, March 24, 2009

What Does Internet Radio Mean: Technological Implications for the Larger Media

I have written a couple of times now about the arrival of internet radio: The devices that look like old school radios and use a wi-fi connection to deliver tens of thousands of radio stations from around the world. Similar solutions are hitting the streets for iPhones and other portable devices.

The arrival of internet radio and the looming death of satellite though is not what media companies need to focus on. It already happened and, if their planners know what they are doing, they've made the necessary adjustments and are already there.

The important thing to look at, as with all new technology, is what it means. What does it imply for what's coming down the road? The answer here is a fairly easy and obvious one. First it will shortly mean internet television : television delivered directly via the internet (and of course the ability to use your television to access other internet services). If it can be done with radio it can be done with TV - to a 'television' or a mobile device but internet radio and television delivery is just the start.

The more important signal here is the end of the need to store media on a portable device. Customizable audio and video libraries and playlists stored in the clouds and accessible from anywhere will shortly follow. This means unlimited storage capacity and much smaller portable devices.

For content producers this is great news. It is a huge opportunity and maybe the last shot at redemption for 'big media.' Because none of the media people consume will be stored locally people will largely get their content via streaming. They will be able to have their own libraries of media and stream it to themselves but you may be able to save them the work.

Think of the cable model, with a provider giving consumers access to hundreds of 'channels' for a fee. This could work on the same basic model, with content producers bundling their content into libraries and a content provider providing bundles of those libraries to consumers who can then pick and choose from the available content and access it via customized playlists or on demand.

Yes consumers could do this on their own but if you can save them the time of downloading everything and storing it somewhere you will have an audience. If you can provide them a library containing everything and available all the time most consumers, I believe, will pay a monthly fee for that service rather than creating their own. The pitfall to be aware of though is overplaying your hand.

1) Do not overcharge. The more you charge the more consumers will go around you.

2) Don't try to strengthen your position by blocking out your competitors and/or smaller companies - the idea here is to offer consumers everything they are looking for and trying to strengthen your hand by limiting their choices will be fatal - it's the kind of priggish arrogance that caused the problems you are facing now.

Who gets paid how much is something that producers and distributors will have to work out between them. It is also important to remember that technology will continue to change and something could happen that alters this. However, there is finally the semblance of a potential business model emerging. Old/traditional/big media has, over the last few decades, acquired a well earned reputation for being slow to move, for turning opportunities into liabilities and for trying to legislate their way back in time. Can we take a shot at breaking that mold?

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