CBS has teamed up with AOL Time Warner to create a massive online radio partnership, according to CNN.com. The proposed deal will allow CBS Radio to advertise to AOL’s large online audience, and the merger is expected to pump new life into online radio, and perhaps even threaten the dominance of satellite radio stations.
Under the new deal, CBS will provide advertising, local news, sports and entertainment content to AOL radio. AOL’s online radio site has become one of the most visited web sites for streaming audio over the past year or so, and a partnership with CBS should help solidify AOL’s radio dominance online.
The teaming up of AOL and CBS should, in theory, be good for both companies. CBS has reported declining profits in their radio division for more than a year, and AOL has considered selling or splitting off its Internet radio division. By combining their efforts, the new CBS/AOL online radio should shake up the market considerably.
AOL’s radio web site averages 1.2 million listeners per week, according to the Arbitron results for January, 2008. This will provide a sizable market to receive advertisements developed by CBS, and the inclusion of CBS news, sports and entertainment content should increase listener-ship significantly over the next year.
The concept of Internet radio first began to capture the imagination of broadcasters back in the 1990s. Unfortunately, at that time bandwidth was so limited that streaming audio was a dicey proposition at best.
But these days, with broadband Internet access being nearly ubiquitous, Internet radio is poised to make a serious dent in the market, and could even pose a real threat to satellite radio providers. It wasn’t so many years ago that all the experts predicted satellite radio would dominate the marketplace by now; but the huge number of subscribers predicted for online radio has not materialized as yet.
Even the jump from terrestrial to satellite radio by massively popular shock jock Howard Stern did not attract the number of subscribers predicted. The reasons for satellite radio’s lackluster performance are varied. Terrestrial radio has proven to be a stubborn business model to defeat, and now with the Internet set for an explosion of high quality online radio, satellite’s troubles are likely to only get worse.
The new CBS/AOL merger will create the most powerful, wide-reaching online radio station yet. And with AOL radio already capturing a respectable number of listeners every week, the addition of CBS content could be the straw that finally breaks the camel’s back, ushering in a new era of Internet radio.
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