Do you want to start an internet radio station and make money? If YES, here is a complete guide to starting an internet radio station from home with little money and no experience.
Okay, so we have provided you an in-depth sample internet radio station business plan template. We also took it further by analyzing and drafting a sample internet radio station marketing plan backed up by actionable guerrilla marketing ideas for internet radio stations.
Table of Content
What Does It Take to Start an Internet Radio Station Successfully?
The first thing you would need to do is to get a legal permission, if you intend to play any copyrighted music or other sorts of media. The license would need to be obtained from the individual or company holding the distribution rights.
However, if you intend to use your radio station to broadcast media that has a creative commons license, which means that it falls within the public domain, or your intended media broadcast is one you already have copyright to, then you won’t need to bother with legal permissions.
Advantageously, most record labels fall within the umbrella licensing services domain, which means once you get a copyright under the umbrella you get the rights to media from all the labels under the media. It is worthy however to note that even though you can pay a one-time fee that grants you unlimited playbacks of covered labels, licensing rules vary. So, you should endeavor to make your findings first.
Starting an Internet Radio Station and Make Money – A Complete Guide
- Internet Radio Industry Overview
According to research by Global Industry Analysts, advertising revenue is projected to reach $2.3 billion by 2020 globally, which is expected to driven by an increase in internet radio listeners. Also, few of the factors that is expected to contribute to this increase in internet radio services, is the falling internet bandwidth prices as well as the launch of 4G networks.
Even though internet radio usage is currently highest among young adults and teenagers, it is expected to gain ground amongst other age groups especially as there is rising familiarity amongst such age group users with the internet.
- Interesting Statistics About the Internet Radio Station Industry
According to a new market research report on internet radio, even though the united states has the largest market globally, Asia-Pacific is expected to emerge as the fastest growing market with a CAGR of 22.1%. The growth is expected due to rising broadband penetration, an increase in the use of internet radio for advertisement by advertising firms, an increase in demand by the younger generation for their own kind of music services, as well as a shift towards advanced platforms.
According to IBIS World, the internet radio broadcasting industry has experienced a rapid growth pegged at 42.9% between 2009 and 2014, with 190 internet radio businesses employing 2,011 people. One of the reasons why demand for internet radio consumption has increased is the rise of smart phones.
The industry is however still expected to grow till 2019 but at a much slower rate than the previous years, as the user base is expected to reach saturation. The industry is dominated by Pandora who has a 70% share of the total internet radio traffic. However, iHeartRadio is providing strong competition as well.
According to Asymco, iTunes download sales dropped by an additional 40% in 2014. Also, while the sales of MP3 is crashing, there are also less and less people spending time to listen to radio broadcast, which has seen an astonishing growth for non-broadcast IP-delivered radio/music services. It was projected that by 2015, 170 million will listen to internet radio.
40% of listeners have said they prefer listening to internet radio and that they preferred it to broadcast radio. 75% of young listeners between the ages of 12 and 24 have said they listen to internet radio monthly, while two-thirds have said they listen weekly. According to Borrell Associates, internet radio listening time will grow by 38 minutes over the next four years, while that of broadcast radio will decline by 42 minutes over the same period.
Market Feasibility and Research
- Demographics and Psychographics
The demographic and psychographic composition of those that listen to internet radio stations, it is mostly teenagers, and young adults, growing adults. Also, advertising agencies and marketers who need an advertising platform for their clients.
Young adults who have smart phones and do not want to be bound to a spot listening to traditional radio broadcast, but would want to listen to radio that suits their taste, preferably one with less talk and advertisements.
List of Niche Ideas Within the Internet Radio Industry
The niches within the internet radio business isn’t much as there really isn’t much available services that differentiate one internet radio from the other except for their target audience. Some of the areas of specialization in the internet radio business include;
- Religious music services
- old school genre and music services
- hip hop, pop and rock music services
- jazz music services and so on
As a radio station that is starting out, you would need to decide if you intend specializing on just one or two niches or if you would give each genre different segments that would cater to them all.
The Level of Competition in the Internet Radio Industry
According to research, starting the internet radio business is not difficult and expensive, but neither is it a business that is so easy. The amount needed to purchase your equipment is negligible and can be gotten by anyone. For now, it is much easier for those already in operation than a start-up.
The industry is seriously fragmented with just one or two radio stations topping the whole internet radios in the United States, and so if you intend to venture into this area, you would face stiff competition from the major brands already dominating the industry. However, if you remain consistent, you could carve out a share for yourself out of the market place.
List Of Well – Known Brands in the Internet Radio Industry
Well known brands are those that have performed better than their counterparts in the same sector or industry. This might be possible due to different winning strategies that would have worked so well for these brands regardless of how turbulent the business environment is. Listed below are some of the well known brands in the internet radio business in the United States of America;
- Pandora Media Inc.
- AOL Radio
- AccuRadio LLC
- Rhapsody International
- 977 Music Inc.
- Spotify Ltd
If you are interested in going into the internet radio business, then you should know that it is a different ball game from the traditional radio business especially as the source for your internet radio business is a computer. Before starting this business, you should know what topics you would need to discuss to appeal to your target market, and what kind of business you would be concentrating on.
If you won’t be playing general music but concentrating on a niche then you would need to be knowledgeable about past and current trends regarding your niche, as well as current popular bands and hidden bands that are noteworthy. If you would be discussing topics as well as playing music, then you would need to strike a balance between talk and music.
To be able to play music via your internet radio, you would need to obtain a music license, however, you would need to ensure that prior to your filing for a license, and you did not play any copyrighted songs as this could lead to a substantial fine.
Also, the license is given to those who have generated less than a certain amount in a year, and those who generated more might need to seek for licenses that would cover them. Also, you must find out how you intend to fund your internet radio station, especially as there will be overheads for you to budget for.
Is an Internet Radio Station Worth Starting from Scratch or is Buying a Franchise Better?
Starting a business from scratch is obviously a grueling affair and not all succeed at it. However since this is a business that is fairly easy to start, it might not be too tasking starting from the scratch especially if you are sure that this is the business for you, the only thing you would need to put more effort into is the attraction and retention of listeners.
While starting out, you could obtain a limited band and see how it goes before obtaining an unlimited band. This business virtually has no franchises as of now, so the only option is to start from the scratch and hope for the best.
Possible Threats and Challenges You Will Face When Starting an Internet Radio Station
There are always challenges and threats that every business encounters, it doesn’t matter whether you are a new business or have previously existed. In the internet radio business, as a start-up, you are likely to face stiff completion from those radio stations already in operation, and who have captured a large share of the market.
Also, another challenge to your business would be getting listeners to your station. Every challenges and threats can be overcome if you have effective strategies in place to counter any challenge and threat.
- Best legal entity to use for an Internet Radio
This is a peculiar form of business, and so while other business start-ups might consider the sole proprietorship or partnership structure, as an internet radio entrepreneur, you are most likely better off considering a Limited Liability Company (LLC) or a Corporation regardless of the scale you intend to start off with. However, you would need to consult with an attorney so as to be guided on which legal entity would best suit you and your business.
An attorney might recommend that you choose an LLC, and then select S-corporation status so as to maximize your tax benefits. This means that you only get to pay taxes on wages that the company earns. There are other benefits attached as well which your attorney will let you know of, but even though there is a C Corporation, there will be no reason for you to use that as a legal structure.
However, in choosing to merge the LLC with the S corporation, the LLC must follow the S corporation’s ownership rules. This therefore means that there will be no single class of ownership, no alien non-resident members, and no partnerships or corporations can be members. So, before choosing this structure, ensure that you are clear as regards the ownership details of your company or it might not work for you.
Catchy Business Name ideas Suitable for an Internet Radio Station
- SpottyTunes Inc.
- Spanz Band
- Ono Music Services
- Avees Music
- Slugz Sound
- Spiral Music Inc.
The Best Insurance Needed for an Internet Radio Station
Even though the internet radio business is also a business that needs insurance like any other, the insurance for broadcasting professional is a bit more complicated, especially as you are prone to more liabilities and would therefore need more insurance.
An insurance policy is in your best interest and that of your business. However, you could focus on getting the basic insurance that will be suitable for you and your business, while you consult with a professional insurance broker that will guide you on the best insurance policy that will suit your internet radio business.
Listed below are some of the basic insurance covers that you might need to consider getting if you intend to start your own internet radio business in the United States of America;
- General Liability Insurance
- Property Insurance
- Workers’ Compensation Insurance
- Business Owner’s Policy
- Umbrella Insurance
- Errors & Omissions Insurance
- Cyber Liability Insurance
- Commercial Auto Insurance
Does an Internet Radio Station Need Intellectual Property Protection?
For those that intend to go into the internet radio business, you would not need to apply for an intellectual property protection; however you would be required to pay for copyright media that you will be using in your business. The payment for copyright music protects you from liability.
If you however decide your business brand or logo is worthy of protection, you could apply for an intellectual property protection, however, you should consult with an attorney who would advise you on the proper thing to do.
Is Professional Certification Needed to Start an Internet Radio Station?
If you intend to start an internet radio business in the United States of America, you would not be required to get a professional certificate. You would however be required to acquire a legal license so as to be able to use any media especially those that are copyrights. This is a regulated industry that serves to protect the music artists and their labels, and so you would need to abide by the regulations.
List of Legal Documents You Need to Run an Internet Radio Station
Listed below are some of the basic legal documents that you would require to successfully start your own internet radio in the United States of America;
- Certificate of Incorporation
- Business License
- Business Plan
- Operating Agreement
- Insurance Policy
- Other Licenses and permits
- Contract Document
- Non Disclosure Agreement
Writing a Business Plan for Your Internet Radio Station
Every business requires a business plan. If you are serious about your internet radio business, you would need to write out a guiding document for it. This document will enable you compete with already existing internet radio stations strategically, while also growing your business.
You might not need to write out a comprehensive business plan for your internet radio business, but you could write out a draft that would present a clear picture and also show how serious you intend to take your business. The business plan for your inter radio station will allow you to properly size up the project you intend going into, and also have an estimate of its intended economic impact.
Having a business plan in place is to help investors see if your project is worthy of their investment, and so you shouldn’t write a fictitious budget that is intended to show only how rosy the business would be. An investor would need to know what obstacles and challenges your business would face, how you intend to overcome these obstacles, and remain profitable. If you do not carry out proper research before starting this business, it might end up affecting your business in the future and causing you and your investors to lose money.
When writing a business plan, you should follow a structure such as the one that has the following components;
Introduction and executive summary: this is a brief summary of the whole business plan that is intended to capture the interest of your potential investors. It should also contain a brief summary of your competition, which includes the existing stations, their strategies, weaknesses, strengths, and also competitive advantages.
You would also need to include the mission and goals of your radio station as well as the professional experience that the team has. How you intend to carry out your audio streaming activities, as well as the different milestones you intend to reach and when.
Every investor is interested in your marketing strategy which your business plan should include; such as the positioning and differentiation of your online radio station, the activities and resources that is necessary to achieve the level of audience that is desired, how you plan to gain traffic in the short and long run; and also your financial projections for the business.
Writing a business plan might be considered a burden especially if you do not have the required skills to write out a comprehensive one. You could employ the services of a business plan writer that would help you in writing out a comprehensive business plan, or you could go online to download a business plan template that would act as an aid in helping you to write out your own business plan.
A Detailed Cost Analysis for Starting an Internet Radio Station
The cost of starting this business according to research is not one that is minimal, as most of the equipment can be gotten for almost the same prices anywhere or for even less depending on what equipment you are looking to get. Also, in getting your license to play copyrighted media, you would be required to pay only once.
This means that your start-up capital can be as low or high as you want it. The good thing about this business is that you most likely would be operating from home and so most of the expenses that you would require if it were a facility would be non-existent.
If you intend to start this business in the United States, you would basically need to tick off some of these requirements which include;
- Total fee for business incorporation – $2,000
- Insurance policy, licenses, and permits – $1,500
- Amount needed to acquire equipment (microphone, computers, sound card) – $5,000
- Amount need to acquire utilities (phones, lighting, server) – $2,000
- Amount needed to acquire a small office facility for a year – $10,000
- Launching of an official website – $800
- Additional expenditure such as business cards, fliers, and other miscellaneous) – $500
Going by the above report from detailed research, you will need an average of $22,000 to start a small scale internet radio station business in the United States of America.
If you intend to start a medium scale internet radio station business in the United States, you would need nothing less than $45,000. And if you want to start a large scale internet radio station business in the United States of America, then you should look towards raising well above of $90,000 as your start – up capital.
Financing Your Internet Radio Station
Financing is very important for any business regardless of if the business is a profit making organization or non-profit making organization. Even if your business idea is the best, without financing it would remain just that – the best idea.
Financing is required so as to bring that business idea of yours to reality as well as ensure the business’ continual existence. Even though financing is usually regarded as a difficult process by most entrepreneurs, it is not a task they can evade.
This is where the importance of a business plan comes in. a well drafted business plan ensures that those investors whose financing you would need are able to see in clear terms why they should give your business money. If your business plan is comprehensive enough and your projected financial numbers are good, it will help in convincing investors to take you and your business seriously.
Even if you approach a bank, you would be required to present a workable business plan, as there is no avoiding it. The options available when it comes to raising money to finance your internet radio business include;
- Raising money from investors and business partners
- Using money from your personal savings or sale of personal properties or stocks
- Sourcing for loan from family and friends
- Approaching crowdfunding sites for funds
- Pitching your idea to angel investors
Choosing a Suitable Location for your Internet Radio Station
When it comes to choosing a suitable location for your internet radio business, you would not need to bother yourself too much as most start-ups usually operate from home, as not only does it save overhead costs, it is a business that you can run efficiently from home. What you should be concerned about is how many people are globally able to access your radio station.
Those that are concerned with choosing a location are those that intend to run the internet radio business on a medium or large scale. If you fall into this category then you might need more hands in helping you run the business and so would need to choose a location that is convenient for your DJs and other staff that you would employ. Even though the location is less important, it doesn’t mean that it should be located in a place that is not convenient for people to get to.
Another reason why you might need a facility is so that you have a brick and mortar structure where advertising agencies can come to in order to acquire advertising time on your radio station. Not all business can be transacted online and not all businesses can be transacted from home either.
The good thing about this business is that you do not have to break the bank in getting a facility as you could get a small place so that you pay less than if you got a big facility.
Technical & Manpower Details
Even though the equipment that is used in starting the internet radio business is not much, it is advisable that you do not skimp on your equipment so that your business can run efficiently, especially as the clarity of your sound makes a huge difference by making your station sound professional.
While you might be tempted to go for fairly used equipment, you shouldn’t, get new quality ones so that they could last you for a long time, thereby saving you the cost of getting one every now and then. Some of the equipment that you would need to successfully launch your internet radio business includes;
- Computers (for streaming and server)
- Filing cabinets
If you are starting this business on a small scale, then it is something that you can run from home, especially if you subscribe to the right streaming service and use a good server and software. However, if you must lease a facility, it should be purely for reasons such as; you running medium or large scale radio stations therefore requiring more hands, and also to allow your advertisers get in touch.
Regarding the number of people that would be required to run an internet radio business, it varies depending on the size of the business. While one person can run this business effectively, the business would need more hands especially if the size is bigger than what one person can efficiently handle. You would need to employ professional DJs, Front Desk Officer, and Marketing Executives. This is about 5 to 7 people.
The Service Delivery Process Involved in Running an Internet Radio Station
The processes involved in the process of delivery music services required by the customers via the internet radio business are as follows:
Creating a stream of audio from vice and music, which is then converted to data and then sent along to the internet connection to a distribution server that is located in a data center and then streamed to many computers worldwide. This then connects the listener to the distribution server, so that they are able to tune into your radio station and listen to your programmes.
The Marketing Plan
- Marketing ideas and Strategies for an Internet Radio Station
Any business that is looking to generate income for their business must look towards marketing the said services or products of the business. The internet radio business is a peculiar one and so as an entrepreneur you must leverage on all conventional and unconventional means of marketing so as to generate income for your business.
If you are running a medium or large scale internet radio business, then you would have more hands – Marketing Executives – who would be required to ensure they get the necessary advertisements that would ensure the continual operation of the business. The good thing about marketing is that it also helps to raise the profile for your business.
Some of the marketing strategies and ideas you can adopt for your internet radio business include;
- Hand out your fliers in music stores and in targeted areas such as school campuses
- Advertising your internet radio business in forums and blogs
- Listing your business in online directories
- Word of mouth marketing
- Using social media platforms such as Twitter, and Facebook to promote your internet radio business
- Making use of your official website
Factors That Will Help You Get the Right Service Pricing for your Internet Radio Station
The factor that would enable you set the right rate for advertisements on your internet radio business will be dependent on your overhead. You would need to acquire equipment of high quality when starting out the business, which would increase your overhead for a while, but your operating overhead, should determine your advert rates. You should also look into how much your competitors are charging for their rates, as this will enable you to know if you are charging more or less.
Possible Competitive Strategies for Winning Your Competitors in the Internet Radio Industry
Before going into this business, you would need to understand the market and what most of your target customers would require; this would help you favorably compete with existing as well as potential competitors in the industry. Knowing the wants of your customers will enable you to package your radio station in such a way that would appeal to them and give you an advantage over your competitors.
Another way at favorably competing is in ensuring that you get infectious professional DJs if you aren’t one, this way they would engage your listeners and have them hooked to your radio station. Finally, you can also ensure you get entertaining content asides the music that would inform your listeners thereby broadening the knowledge of your listeners. This would make them prefer your radio station to any other one.
Possible Ways to Increase Audience Retention for your Internet Radio Station
Like any business, your internet radio business would only grow and expand if you increase your customer retention rate. Customers will tune in to listen to your internet radio if they get to hear what they want. This means that you would need to anticipate your customers needs so as not to lose them to your competitors.
If you are catering to a niche like the old school, you would need to dig up records that would suit your listeners, while also regaling them with tales of legendary icons in an infectious way.
Customers stay with businesses that they feel value them and see them as stakeholders in the business. Customers would stay with your internet radio if you appreciate your dedicated listeners once in a while. You could encourage them to send you mails, and then either read the mails out or call their names to show them that you read the mails.
Strategies to boost your brand awareness and Create a Corporate identity for your Internet Radio Station
As a business you would require strategies to boost the awareness of your brand as well as create a corporate identity for your internet radio business. These strategies are important as you would need to be noticed in an industry that is dominated by few major players in a field that has hundreds of players. If necessary, you could bring in a brand expert that would help you with best strategies that would propel your business.
Below are some of the strategies that you can use to boost the brand awareness of your internet radio business;
- Encourage your listeners to spread the word about your radio station
- Use your official website to promote your radio station
- List your business in online directories
- Use online forums and blogs to promote your radio station
- Use social platforms like Twitter and Facebook to ensure people are aware of your radio station
- Pass out fliers in target areas
Creating a Suppliers/Distribution Network for your Internet Radio Station
The suppliers and distributors for the internet radio business are digital. This doesn’t mean that you would not interact with humans, but except for few issues, you most likely would be dependent on servers and computers.
In starting this business, you will need a distribution server from online streaming services so that you could easily stream your audio. The distribution server is a powerful computer, with a fast internet connection, which is located in a data center with the capacity to stream to other computers worldwide.
This enables your listeners to receive your audio stream. You would need to look for a company that has a good server; this can be done by checking reviews from other internet radio owners, or checking what your servers your strong competitors are using.
Tips for Running an Internet Radio Station Successfully
In running your internet radio business successfully, you would need to have the right software and marketing tools. Going mobile is a great idea to make your business successful as it will help you attract listeners who are on any device.
However, your listeners would only be attracted if you have great music automation as well as fresh and original content. This ensures your listeners that you are paying attention while also continuing round the clock without any interruption.
Another way to become successful is to select a niche that you feel you would best cater to and stick with them. This can be according to age, locality, or genre. Your niche will also determine what kind of fresh content you would need to deliver, while not interrupting too much – even with adverts – the flow of music that your listeners expect to enjoy from your site.
Lastly, you would need to hire some professional DJs who will interact with the listeners. The DJ isn’t to only give the listeners good music but also ensure that they interact with them in such a way that they help build a loyal fan base for your station.