Who Killed Internet Radio?

To start this story about the end of something, we have to go back to 2005 or so, when it was just beginning — when American radio was widely regarded a vapid, cultural wasteland, and when people actually cared about that.

Electronic music had been driven off the airwaves for years at that point, its once irreplaceable slot in the “urban market” (think Friday and Saturday night mixtapes) replaced by centrally programmed playlists of commercial pop and hip hop. If you grew up without it, you’ll never know what you missed when you lost the idea of a live DJ on the radio getting everyone ready for the loft, the rave or the club.

Nearly every interview I had with an old school DJ in those days would inevitably circle back around to this absence, this culture void. For them, the issue of radio was central to why and how house music had been driven back underground.

It was also a starting point for bringing it back around.

Fast forward to 2010, when it seemed like every DJ in the world had their own internet radio show and half of them had their own station, too. 5 Mag wasn’t a month old when we had our own show on the late DJ Izrael’s Chicago House Radio.

This resurgence wasn’t spontaneous. It was happening across multiple scenes, aided in part by a legal loophole passed by Congress and several tech companies that were heavily invested in exploiting it.

By 2010, it seemed like every DJ in the world had their own radio show & practically half of them had their own radio station, too.

Live365 was one of these companies and perhaps the greatest catalyst for the mushrooming spread of live internet radio, enabling small to medium broadcasters to exist on a somewhat similar technical level as their much larger competition.

Platforms like Live365 were enabled in turn by a little-remembered piece of legislation designed to empower broadcasters on the internet then challenging terrestrial and the emerging satellite radio industry. The Small Webcaster Settlement Act of 2002 enabled small broadcasters on the internet to pay discounted rates for licensing the music they played. Many of the emerging tech companies took this up on behalf of their broadcasters in exchange for selling ads on their streams. For many small broadcasters, it was seamless, and cost them little to nothing to operate their stations.

As a result, forms of music that had been ignored on terrestrial radio for a decade were heavily represented. House music undoubtedly saw a resurgence in part thanks to the hundreds, even thousands of individual stations and the tens of thousands of individual shows they played. It was almost too much, but that was by design. I once asked my friends why so many of them were playing for audiences that might have peaked at 30 listeners when they could have teamed up and claimed a larger audience. That was when I learned not just that “small is beautiful,” but cheaper, too. A larger audience could lead to larger licensing fees and threaten the broadcasters’ exemption as part of the Small Webcaster Settlement Act.

The End Of It All.

Live365 is gone now — has been gone for years — and most of the similar pioneering platforms have followed suit. With them the era of legal, small and hobby broadcasting is passing into history.

The last holdout was a company called Radionomy. Like Live365, Radionomy promised to take care of technical matters as well as licensing for small broadcasters (though this may have only been a promise: the company was sued by the record companies for unpaid royalties in 2016).

Radionomy had a rather interesting business model and robust ecosystem for its products. Radionomy owned Targetspot, a digital advertising company, and Radionomy seemed to exist primarily to create inventory for Targetspot to sell ads against. In 2014 Radionomy also purchased the venerable WinAmp application and Shoutcast — the pioneering software used for creating internet radio streams.

With this in place, you would think Radionomy could have gone on as long as they could aggregate a large enough collective audience on the platform to serve ads against. In reality, their business model has been doomed for years. Rival internet broadcasting platforms hadn’t been replaced by larger competitors or the ubiquitous spread of streaming music via Spotify or Apple Music. They hadn’t been replaced at all. That same Small Webcaster Settlement Act which enabled the spread of internet radio had expired in 2016, ending the discounted music licensing fees and killing the platforms that relied on it. Live365 shut down almost immediately following an exodus of investment from the internet radio space.

Radionomy held on by their fingertips, withdrawing from the American market only this year. But just before Thanksgiving, the company announced that Radionomy would be ending as everyone knows it.

Radionomy has been presenting this as a “merger” with their “Shoutcast for Business” product, and somewhat disingenuously as an exciting new prospect for users. While Shoutcast has a monetization option for broadcasters, what is really ending is Radionomy paying for each station’s music licensing fees. Buried six paragraphs into an eight paragraph press statement (and mid-paragraph at that), Radionomy warns readers that unlike their old service, “Shoutcast does not manage broadcasting rights. It will, therefore, be up to the producer to go to the various licensing agencies in his country to pay the fees directly.”

That one simple model that lead to the explosion of internet radio — the platform taking care of licensing fees in exchange for selling ads on the channel — is now functionally obsolete.

Tear It Down And Start Again.

With the demise of Radionomy, this marks the end of that wild world of legal internet broadcasting by small and hobbyist stations serving small markets. Some that used these platforms will likely try to manage licenses and reporting requirements on their own. (There’s probably an opportunity for a modest business handling this kind of thing.) Some will probably stop broadcasting altogether.

But that’s going to be the minority, I think. Being unable to afford legal broadcasting, most, I think, will simply switch to illegal broadcasting, if they had been broadcasting legally at all. (Ironically, many will become “pirates” against their own interest as artists, given how many DJs are also producers today.)

As we’ve written in the past, the world of pirate radio is alive and well — and like everything else, it’s migrated to the internet, too.

All along, some small broadcasters have been skirting the law, technically in default of the law by avoiding paying licensing fees. Now that will be most of them. Perhaps they’ll take advantage of YouTube’s free streaming option to “broadcast,” which has lured tons of pirate streams with the promise of the site’s gigantic potential audience.

YouTube’s version of pirate radio is far more casual than internet radio at its most relaxed — stripped of ads, bumpers, sometimes even identifiable names. Instead, users chat with one another as broadcasters fill the screen with images or simple animations. And some of them are insanely popular. Forget playing live to 30 of your friends. There are channels that attract thousands of simultaneous users tuning in at any time of day in any part of the world.

It is, in a way, the fulfillment of a vision that internet radio promised but never lived up to. And it’s entirely illegal. Interestingly, I’m not sure that really upsets people anymore. Spotify & Co. have absolved fans of the moral hazard of “stealing” by dispelling the notion that the dollars they pay for music is any way connected with “supporting” a specific artist anymore. Who joins Spotify to “support” an artist they like?

In the end, internet broadcasting in its original form turned out to be a business that no one could make money at. And now they — and we — are all pirates.