#DigitalSkeptic: No One Knows How to Make Money in Local Online Radio
NEW YORK (TheStreet) -- The way Jason Finkelberg sees it, online streaming services such as Pandora
"We compete with Pandora every day," Finkelberg told me on the phone last week. "And I absolutely assure you, it has yet to be figured out how money is going to be made selling local advertising with online radio."
Finkelberg has the choreography down cold for the ad-supported, radio business song and dance. He's a general manager at Pamal Broadcasting, an Albany-based independent radio station group with roughly $40 million in revenue from a couple dozen AM and FM stations throughout lower- and mid-New York State, Vermont and Western Florida.
And over his 20-some-odd-year radio career, Finkelberg has been able to evolve with the changing digital radio environment free from the shackles of short-term, expense-hostile, publicly traded radio station groups such as Clear Channel Communications or Cumulus Media
For Finkelberg there has never been a tension about if his stations would move to digital platforms. It was rather when and how.
"We understand that digital is the future," he said. "We will follow our listeners on any platform." He is proud of the fact that his stations support a full suite of modern Web offerings including a sophisticated website, an online feed, complex tie-ins with social media and ad inventory for on-air and online. But even after six or seven years of trying to make digital radio fatten his bottom line, he's still struggling to make Web radio as profitable as its on-air relatives.
"At leaston-air you are serving a local community," he said, "The audience and the profits run away if you start doing radio on the Web."
The high cost of selling "no-cost" radio
Profit margins for traditional on-air radio spots still fetch the same 50% they always have, he said, but online streaming radio is at best, a break-even business.
"We've been making money on the radio side for eight of the last 10 years," he said. "And while we do cover the costs for our digital products, the digital side of the business is not something we've figured out."