Brave New Radio

OFF IN A FAR CORNER OF A converted Capitol Hill warehouse, a group of young men spends a warm Sunday afternoon struggling with a paradox. The group runs Groovetech, one of the first Internet radio sites aimed exclusively at dance music fans and DJs, and given the surge of investor interest in this new medium, the kids should be drowning in cash. But the latest digital gold rush has rushed around rather than through them. In other words, Groovetech needs to figure out how to make money. One of the people charged with tapping into the cash flow, a lanky 23-year-old named Jon Cunningham, excuses himself from the meeting and walks across the airy space. He passes a glassed-in booth where a DJ is spinning a bass-heavy type of music, called hard house, that emits a subtle thump felt throughout the office—and that can be heard around the world on www.groovetech.com. "We look for what our audience wants," Cunningham says with a glint of idealism. "People want to listen to music that rocks them." He and his partners, RealNetworks employee Zach Jenkins, 23, and DJ Brian Pember, 25, have mastered the art of rocking their audience. Since starting Groovetech as a Web guide to Seattle's dance music community in 1995, the site has gone on to include recorded DJ sets from clubs such as ARO.space, which users can listen to in streamed audio feeds. During the past year, with help from a silent investor Cunningham refuses to name, Groovetech moved into the warehouse, began streaming live DJ sets from the space 12 hours a day, and, in its first attempt to generate some cash, established an online record store specializing in electronic music titles. Like any other Internet company, Groovetech is faced with the trick of converting happy visitors into paying customers. Cunningham and his friends have reason for hope: At last month's Plug.In music and technology conference in New York, analysts and industry types agreed that radio is one of the Internet's Next Big Things, if not the future of radio itself. In an amazingly short time, the Net has eliminated the barriers of the Federal Communications Commission-controlled AM/FM band, allowing thousands of stations to bloom. But as the industry players note and as Cunningham himself acknowledges, the niche stations that have developed won't last long without a revenue stream. "I give serious props to anybody who's out there in their bedroom with their computer and their DSL line pumping stuff out," Cunningham says. "But to try covering all the bases that we're covering, this has to pay for itself."

Groovetech, then, is a bellwether for Internet radio—a small, young company (with eight employees in Seattle and two in a new London office) that may or may not reconfigure the landscape.

IF 1991 WAS The Year Punk Broke, as a documentary film title summed up the Nirvana-led revolution at the outset of this decade, then 1999 will go down as The Year the Internet Broke. Ironically, this isn't because technology faltered, but because it progressed. During the first half of the year, better broadband and faster computers propelled the downloadable form of music known as MP3 into the nation's consciousness. Now, Internet radio is poised to follow.

It's just as easy, if not easier, to experience an Internet radio broadcast as it is to download a song. RealNetworks and Microsoft both offer free software on their Web sites in the form of a player (Apple debuted its own last month) that allows computer users to transform a portion of their desktop into a high-tech variation on the AM/FM dial.

Once a user downloads Real's G2 Player, Microsoft's Windows Media Player, or Apple's Quick Time, he or she can visit one of the thousands of online radio sites and sites of traditional radio stations that have made the transition to the Web (see sidebar at end of article). With a single click, a user can listen to near-FM quality Webcasts from around the globe, covering every imaginable type of music and talk shows, news, sports, and weather.

The only catch is that the listener has to be attached to a computer that in turn is attached to the Internet. At the moment, this means that users tune in at home or at work rather than in their cars.

One of the people who helped develop Microsoft's applicable technology, lead product manager for Windows Media Gary Schare, says that so far the benefits of Webcasting have outweighed the limitations for both listeners and the companies that stream audio. "Every day I talk to people who have found a favorite radio station that is somewhere else in the country or in the world," he says. "They make time to listen, whether at home or on their PC at work."

A recent study by the radio ratings company Arbitron lends credence to Schare's observation. A poll of more than 1,500 Webcast listeners found that nearly 50 percent use their computer as a glorified radio at work, and that many of them also tune in at home.

This hasn't escaped the notice of those in the radio and technology industries. In the past few months, nearly everyone has jumped on the bandwagon: Yahoo shelled out $5.7 billion for Broadcast.com, a sort of radio portal with links to traditional and online-only stations; America Online purchased the 120-channel original content site Spinner.com as part of a $400 million deal; Viacom, the owner of MTV, bought Imagine Radio, which allows individuals to create and then broadcast their own playlists; and recently the largest chain of offline radio stations, Dallas-based Chancellor, changed its name to AMFM in part to help redirect the company toward an expansive online strategy. The companies are shuffling for position to cover themselves in both the near and long term.