Mark Hardie, technology analyst for Forrester Research, points out that listenership for Web radio is generally small, rarely reaching more than 50,000 listeners. Even Internet radio's biggest audiences are too small to make it onto the Media Metrix top 100 list of Internet sites. As for advertising, a recent Forrester study found that so far, few Web radio stations reach even six digits in annual revenues from advertisers. Banner ads don't make a lot of money. Hardie even doubts the commitment of the radio industry itself to merging the country's oldest electronic medium with its newest.
Radio is in the throes of major consolidation.
Broadcasting on the Web is not broadcasters' top concern at the moment. But this summer's media deals clearly show that the Internet's major players, at least, are betting a small fortune that Web radio will be a lasting and lucrative partnership. That is, if two competing companies have their way. Both CD Radio and XM Satellite Radio are busy building digital systems that will be able to transmit 100 channels of CD-quality music and other programming to listeners throughout the United States. One of the thorniest issues involving audio on the Internet concerns the growing impact of MP3 on the music business.