The debate over Internet versus on-air radio has been going on for nearly a decade now.  Traditional, on-air radio has largely been formatted and micromanaged into mediocrity.  Many stations don’t even employ on-air talent like DJs and much of the radio broadcast industry seems to have lost the plot.

Internet radio on the other hand is an exciting and burgeoning new format.  Internet radio stations are cropping up constantly.  Formats are as diverse as imaginable with Internet radio stations dedicated to everything from dub reggae to Dutch pop music.

And streaming an Internet radio station is relatively easy in comparison to launching an actual broadcast radio station.  However while it is technically possible to launch an Internet radio station from your bedroom with a laptop, it could still be very expensive to do so.

Internet radio stations, like terrestrial radio stations, must pay artists royalties for the songs they broadcast.  While the debate over Internet radio royalties has raged for more than a decade, the issue remains unresolved to a certain degree.  Currently their exists something of a sliding scale with smaller web stations being able to pay a percentage of their total annual revenues rather than standard calculated royalty rates.

Revenues from online streaming radio grew from $49 million in 2003 to more than $500 million in 2007.  However in spite of those impressive numbers many of the most successful of today’s online streaming radio stations still face a difficult time covering their royalty payments.

In the debate over Internet radio versus on-air radio, traditional on-air radio is still the more viable business model.

However in 2007 for the first time ever, advertisers spent more money on Internet advertising than they did on radio advertising.  By the year 2011 the money being spent on Internet advertising will have doubled the amount being spent on the radio advertising.  Clearly this shift of revenues represents a shift in the publics focus.

However while the public may be listening to Internet radio, it does so primarily because Internet radio is devoid of the commercials and corporate ties that have made on-air radio so difficult to listen to.  Unfortunately if Internet radio is to become viable, it may need to incorporate the very commercialism and corporate responsibility it seems to despise.

So while it may seem clunky, loud and cheesy, on-air radio is still the more commercially viable business.  Internet radio may be like many other forms of Internet media: free, exciting, accessible and very difficult to make a profit from.

Until someone figures out the balance between innovative content and commercial viability the debate over Internet radio versus on-air radio looks set to continue.

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