Online radio such as AOL Radio, Slacker, Pandora and Last.fm have gained popularity recently. In addition, several wireless devices including mobile phones support these platforms. I will look at the influence of online radio on conventional radio broadcasters to determine if this means the end of local radio stations.

Local radio stations do seem to have a difficult time these days. Satellite radio has been cutting the market share of conventional radio stations relentlessly in the past couple of years by offering mobility, a substantial number of commercial-free music channels in addition to news and entertainment channels. In particular, online radio has become pretty popular by providing a virtually unlimited amount of radio channels.

Pandora in addition to other online radio services have become accessible on wireless audio transmitter and portable products by installing the appropriate app. This raises convenience and mobility of online radio. Mobility has to this point been the biggest benefit of local radio.

AOL Radio offers over 200 music channels in addition to 150 national CBS radio stations because it uses CBS radio as its platform. The underlying platform “play.it” also has a feature that permits listeners to make their own radio stations by entering preferred albums, artists and so on. The individual tracks of each music channel are also available for storage on an iPod via 3rd-party software such as iGetMusic.

Pandora and other online radio services have equally begun to offer customized music. The user can enter music-related details such as artist, track or album name. These channels will then select tracks which are similar to the information entered. Thus far, however, competing music services have fallen short to offer similarly fully customized radio channels.

Are traditional radio stations destined to become extinct by the constant reduction of market share due to online radio? Specifically 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 difficulty acquiring frequency spectrum licenses from the FCC. On the other hand, rising royalty charges have made the life of online broadcasters more difficult recently.

Online radio broadcasters have found it difficult to be lucrative. The major reason is the vast number of competiting channels which is diluting listeners. However, online radio has less pressure to insert commercials which has made the content more appealing to listeners.

One big benefit of local stations however is local content such as news or current events. One drawback of local radio has been the inferior audio quality of FM broadcasts. On the other hand, that is being remedied by the recent introduction of digital radio broadcasts such as HD radio. It is difficult to predict a clear winner in the battle between online and local radio because both offer their own unique content and high mobility which are the essential aspects that will determine the destiny of each service.