Mixed Signals in Web Radio

Radio's online audience is growing at an impressive pace at a time when the beleaguered radio industry needs all the ears it can get. But radio companies, suffering their third straight year of revenue declines, are having trouble turning that audience into the cash they crave. More than 42 million people each week listen to radio streamed over the Internet, more than double the rate from five years ago, according to market-research firms Edison Research Inc. and Arbitron Inc. Many of those are either new listeners or people tuning in at times when they never listened to regular broadcast radio. But radio has been slowest among the media industry to turn its Internet audience into cash. Gordon Borrell, who runs consultancy Borrell Associates Inc., calls radio the "C" student of the Internet. Radio gets only an estimated 2.4% of its revenue from online, while TV gets 3.4% and newspapers 7%. One of the big problems is that the market for Internet radio is bifurcated between listeners who tune in to streamed versions of existing, terrestrial radio stations and people who listen to Internet-only radio startups. Of the 42 million people who listen to Internet radio, 24 million are tuning in to Web-only radio.