Web Surfing for the Next Wave in Radio

Internet radio may be grabbing listeners and generating a lot of excitement, but is anyone actually making money?

Not yet, say industry experts. But the promise of future payoffs is driving companies to invest now. In June, America Online picked up Spinner Networks and digital audio software company Nullsoft in a $400-million, all-stock deal, creating an audio powerhouse by combining AOL’s more than 17 million subscribers with Nullsoft’s 15 million WinAmp users and Spinner’s 1.5 million monthly listeners.

And Lycos and Yahoo have claimed a piece of the field that includes Viacom’s Imagine Radio and Rolling Stone Radio, which grabbed David Bowie to deejay an online channel.

Behind the music, such deals underlie the nascent belief that the PC will become the radio tuner of the future. And as analysts pointed out at Jupiter Communications’ recent music and Internet conference in New York, both entrepreneurs and corporate behemoths are testing different means of persuading people to open their ears--and wallets--online.

Take Spinner.com (https://www.spinner.com). Founded in 1996 under the name TheDJ.com, the company offers 120 “channels” of different styles of music. Visitors download a free audio player--dubbed Spinner Plus--and can tune in to genres ranging from funk to gospel to swing.

Like traditional radio stations, Spinner.com licenses the songs it streams at a per-play fee from the music industry’s various publishers.

In turn, Spinner.com makes its money by several means: displaying banner ads on the site and the player; embedding commercials within the audio programming and taking a cut of all e-commerce transactions when visitors buy music at the site.

Rival Imagine Radio (https://www.imagineradio.com), which was acquired in February by MTV Networks, creates individually customized radio stations that allow visitors to the site to choose the genre of music they want to hear and vote for artists they would like to hear more or less often.

Imagine insists that such customization also can attract more advertisers than its competitors because marketers can target and track consumers’ tastes.

Like Spinner, Imagine Radio links to e-commerce sites that sell music and to related network programs that pay the company a small fee for all purchases made through these links.

Then there are the scores of “indie” radio companies, such as Electric Radio Co.’s GoGaGa (https://www.gogaga.com), that are using word of mouth to draw funding from the investment community.

In addition to its own programming, the site encourages people to launch their own stations. One show, “Music for Cubicles,” has amassed a loyal following each weekday afternoon with its “music to ward off management” hodgepodge of rock tunes and witty chat.

The company holds down costs by using volunteer producers and deejays.

But GoGaGa faces serious competition from Nullsoft (https://www.nullsoft.com), whose Shoutcast MP3 streaming technology was one of the key reasons AOL bought the Arizona firm, analysts say. Shoutcast, the creation of then-20-year-old University of Utah dropout Justin Frankel, was released in December. Since then, it has spawned a grass-roots movement, drawing tens of thousands of users to its streaming music, comedy and talk shows.

Shoutcast allows anyone with a computer and modem to become an MP3 radio deejay. People flocked to the shareware program because of its ease of use and price tag--$10 for noncommercial use and about $300 for a commercial license.

Nullsoft also represents a different kind of Net “radio” company in the already crowded field. Instead of creating its own on-air content, Nullsoft merely acts as a conduit for people who use Shoutcast to create their own pirate radio stations.

That means the company, unlike Imagine or Spinner, can avoid paying fees to the music industry.

While Nullsoft officials have acknowledged that they are benefiting from underground Webcasts, they say they don’t support music piracy. The Shoutcast site includes a link to the Recording Industry Assn. of America’s site, which discusses licensing issues for Webcasting.

Times staff writer P.J. Huffstutter can be reached at [email protected].