I’d rather keep the debate about the Internet radio royalty fee increase out of this thread if possible even tho the topic is related. My question is about how such stations make their money.
I listen to several Internet radio stations such as Lucky Seven, which has about 20 channels, each devoted to a musical genre. My favorite is KKJZ, an all-jazz site run by Cal State U at Long Beach.
All of these have no advertising except for themselves, or 6 small Google-generated ads on the main page of the Lucky Seven site. So my question is, how do they fund their operation? Do these 6 small ads pay enough?
Perhaps the two I mentioned are different – the Cal State site may not have to turn a profit, but don’t they have to pay royalties like everyone else, and per listener? Can they exist merely on donations?
I would call those “advertisers” if the site is intending to make money, and the advertisers have a reasonable expectation to get something in return, like ads that lead to more customers. But I don’t see any ads (or very few) on the sites I mentioned.
I can’t see sponsors for a for-profit site. Why would anyone donate money to MacDonalds?
In the case of existing commercial over-the-air stations, advertising pays for the streaming, just as advertising pays for everything else.
KKJZ probably gets a certain allocation from the university and, being non-commercial, does not have to show a profit. They also have corporate underwriters, so they receive income and defray expenses with that money, as well. They do have to pay royalties, but I believe there are different rates for non-commercial stations. I can find out and get back to you with the answer. Streaming is a different kettle of fish, and royalty rates for that are different.
Live365 sells packages to potential broadcasters, and they offer paid subscriptions to listeners. That’s how they make their money and how they keep their operation ad-free for the listener. I’m not sure about Lucky Seven, though.
That still puzzles me. I’ve used Live365 to play KKJZ (there are 4 possible player options, all free), and I can’t see Cal State Long Beach paying Live365. The LuckySeven group plays automatically thru my default Windows player (no ads on that), and if they are ad-supported, they only have 6 small google ads on the page, which doesn’t get refreshed even tho I change genres/channels.
Cal State’s radio still has to be cost efficient, though. At least, in Cal State’s radio station, they have at least three sources of funding: taxes, tuition, and sponsor.
Any radio station that streams has to pay the company that hosts the stream, or it has to pay for the bandwidth it uses if they host their own. So KKJZ probably pays Live365 for the service it uses. Otherwise, Live365 can’t exist. My own station uses and pays for StreamGuys for its streaming. (it’s here if you’d care to check it out.) We have to pay for that service, even though it’s free to listeners. It’s really no different from paying the electric or phone bills, really. If you use a service, you have to be willing to pay for it.
I still don’t know about Lucky Seven. It could be an amateur-run site whose biggest expense is bandwidth, so their operating costs are probably low enough that Google ads are enough.
3 : a person or an organization that pays for or plans and carries out a project or activity; especially : one that pays the cost of a radio or television program usually in return for advertising time during its course
Colleges love radio stations because they bring in alumni dollars. Alumni listen and write checks. They’re also a good marketing tool because they attract prospective students. My own station can’t receive money from the marketing department, but we can get equipment paid for out of their budget for various services rendered.
That’s the best explanation I have come up with. Since I don’t know what google ads pay, and I don’t know the costs of simultaneously streaming 20 channels of 24/7 music, I certainly can’t say that it is impossible.
I think MsRoby has it right. I don’t know what is the cost of streaming music, but the site mentioned by the OP only has four pages of content and 23 music choices. I am assuming the costs are streaming, royalties, and web hosting. Perhaps the ads by Google are enough.