AOL Radio, Pandora, Slacker and Last.fm are some of the online radio services which have become popular these last few years. Many of these are also accessible on portable devices such as mobile phones. Are local radio stations doomed? I will take a closer look at online radio to attempt to answer this question. In particular I will study the effect of streaming radio on local broadcasters.

Local radio seems to be having a hard time in today’s radio landscape with competing satellite and online radio services taking away listeners by providing commercial-free music and entertainment. In particular, online radio has become quite popular by providing a virtually unlimited amount of radio stations.

While traditionally local radio has been the only truly mobile radio, online radio services such as Pandora are now accessible on wireless audio transmitter and portable products such as mobile phones.

AOL Radio uses CBS radio as its broadcasting platform. It comes with over 200 music channels. Moreover it offers access to over 150 local CBS radio stations. The underlying platform “play.it” also has a feature that allows listeners to create their own radio stations by entering preferred albums, artists etc. The individual tracks of each music channel are also accessible for storage on an iPod through 3rd-party software such as iGetMusic.

Users can also create customized radio on other online music services by entering the artist and album names and these providers will play songs based on that information. So far, however, competing music services have fallen short to offer similarly fully customized radio channels.

Does online radio mean the end of local radio? The rising number of alternatives clearly is going to shrink the market share of traditional radio broadcasters. Particularly niche broadcasters have found online radio very valuable. The main cause is the low broadcasting cost of online radio compared with terrestrial radio. Another reason is the problem acquiring frequency space licenses from the FCC. Nonetheless, rising royalty charges have made the life of online broadcasters more difficult lately.

While the variety of stations is a benefit to listeners, it is at the same time diluting market share and online radio broadcasters are finding it tough to attract a reasonably large number of listeners and be lucrative. At the same time, however, there is less pressure to insert commercials because of the lower expenses of broadcasting in comparison with conventional stations. This has made online radio content more interesting than terrestrial radio.

One big plus of local stations however is local content such as news or current events. Furthermore, local radio is now improving the audio quality by using digital transmission technologies versus traditional FM broadcasts which has been a big plus of online radio up to now. The big factors that will ultimately decide the destiny of each technology are content and convenience. Online radio and traditional radio each have their own niche in terms of providing exclusive content and both offer high mobility and convenience so there will probably be no clear winner.