From Broadcasting to Bitcasting: The Cost of Streaming
Streaming Magazine, March 2001

By John Silliman Dodge

There's an urban legend about Harry Truman. He reportedly said, "I wish I had a one-armed economist so he couldn’t tell me, ‘But on the other hand... ."

When Radio GM's, PD's and Marketing Managers inquire about the cost of streaming their broadcast signal over the Internet (also known as Webcasting and my current favorite, Bitcasting) too often the response they get is, "Well, that all depends..." That's because like economics, the issue is complex and multi-factored. There are many alternatives and trade offs that can impact your budget. But essentially it boils down to two choices: either stream your signal yourself or pay somebody to do it for you.

There are dozens of service vendors and Internet service providers with whom you can create package deals, promotional mention deals and cash-plus-spot deals to defray the expenses of streaming. Each one of these arrangements is unique. But let,s begin with what services cost on the open market so you know how to value what you receive against the deals you make. In the end, you'll be able to create an informed budget with this information.

Streaming will cost you in four ways:

  1. Hardware/software
  2. Bandwidth from your Internet Service Provider (ISP)
  3. Rights/royalties (BMI, ASCAP, SESAC, RIAA)
  4. Personnel

Before we drill down in each of these areas, some quick definitions might be helpful:

Streaming: the act of breaking a large audio file or a sequence of audio files into smaller chunks and delivering the result to the end user/listener for a "just in time" listening experience. Imagine trying to force a tennis ball through a garden hose. Streaming breaks that tennis ball into marbles, pushes them down the hose and reassembles the original tennis ball at the other end. Unlike downloading, which takes time and creates a physical file on the user';s hard drive, streaming happens pretty much in real time and leaves practically nothing behind.

Encoding: in preparation for streaming, the broadcast signal needs to be converted into digits, then downsampled and compressed. This lets your tennis ball-size CD-quality sound files squeeze through a marble-diameter 28.8 or 56 Kbps modem. The media players, or "codecs" from RealNetworks and Microsoft are beginning to sound quite good when you consider how much manipulating they need to do to the signal.

Serving: your broadcast tower is a server of sorts, but in the case of streaming, each user/listener's computer makes an individual "request" for your stream. Like a dutiful butler, your serving computer (server) honors that request with custom-delivered signal. Unlike the one-to-many relationship between your transmitter and your radio listeners, streaming today requires a one-to-one relationship. It' this "private line" model between serving computer and receiving computer that's responsible for much of the cost of bandwidth.

Bandwidth: turn on every electric gadget in your house then run outside and watch the meter wheel spin. The more gadgets you turn on, the more juice you consume, the higher your bill. Bandwidth is a digital utility that's priced, measured and delivered by the bit. The more user/listeners you have, the more bits you deliver to them, the higher your bill.

Hosting: the source of streaming audio is known as the host. Whether you're streaming in simulcast mode or offering your morning show best bits, star interviews or live in-studio tracks "on demand," the audio has to reside physically on a hard drive at your place or elsewhere. That serving computer is referred to as a host.

Hardware/Software-

Now we know some vocabulary. Let's look at the simplified sequence of events:

boxes

  1. Take the audio output of your air console and connect it to the sound card of a Pentium III-class PC running at least 400 mghz and containing a minimum of 128 Megs of RAM. Factor $3K.
  2. The encoder software in that computer translates the audio from the sound card into a streaming format and then sends it to the next piece of software called a server. This software can be installed in the same computer or in a different computer; the more user/listeners you have, the more reason you have to deploy two boxes. Encoding includes digitizing the incoming analog audio signal and compressing the resulting information so that it can be efficiently sent over the Internet.
  3. The server sends a dedicated audio data stream over the Internet to each individual media player, a piece of software that sits on a listener/user's computer. Big player names include RealAudio's RealPlayer, Microsoft Windows Media, Liquid Audio and Apple QuickTime. Each of these companies will tell you why their software is best. This article assumes you'll go with one of the top two players, RealAudio or Windows Media.

You have your number for a good quality computer and sound card plus some cables. Now you need encoding and streaming software. You can go to www.real.com and download the encoding software call RealProducer, the basic version of which is free. While you're on Real's site, also download RealServer. This is another piece of free software that streams the signal that RealProducer has just encoded off to your ISP. Real's basic RealProducer and RealServer are good quality, certainly sufficient for experimentation and small station operations, but they're not designed to handle high volume. If you expect to service more than 25 concurrent listeners (streaming at 20 Kbps, kilobits per second, the current music standard), you'll want to upgrade to one of their more robust RealServers. The RealServer 100 handles up to 100 concurrent listeners, the RealServer 400 handles 400 listeners, the 1000 model serves 1000, etc. Real recommends that once you're serving more than 50 concurrent listeners you should separate the encoding and serving functions by adding a second PC and dedicating that box to the RealServer software. Also, the RealProducer Plus encoder ($150) also has more features such as backwards compatibility with older players and greater capability to encode audio at multiple bit rates.

Calculate $8000+ per year for the RealServer 100 license, which includes one year's worth of upgrades and support. You arrive at that number this way: $5995 gives you the license. $2398 is 40% of that number, which goes for the upgrade and support license.

An alternative to doing this yourself is going with the Real Broadcast Network, or RBN. Like Yahoo Broadcast (formerly broadcast.com), Intervu and Activate, this service handles the technology, staffing and capital for you for a fee. Depending on your staff, in-house expertise and your budget, this might be a good alternative. In RBN';s case, they'll take a $1000 retainer per month plus $1 to $5K per month depending on your audience size. They take the output of your board into a PC as described earlier, then out of the computer into something called a frame relay circuit. Think of this as a reserved electronic highway, a direct connection from your station in Boston to RealNetwork's headquarters in Seattle. They serve out to the Internet from there. Why might this be a better idea? Among other reasons, they push your signal out to the edges of the Net to avoid the congestion points like New York, Chicago and LA, resulting in smoother, more interruption-free transmission.

You'll need a piece of hardware called a router to deliver the encoded feed over the frame relay connection. It costs between $1 and $2K and sits between the PC and the jack in the wall.

Circling back for a second, the Internet is most easily understood using the interstate metaphor. There are predictable times of the day and the year when heavy traffic clogs even the best-designed freeway. In response to congestion, your signal (which never travels directly from the servers at point A to the user/listener's computer at point B) likely goes through a dozen "hops" or surface routes seeking the least traveled alternative of the moment. This can cause delays and "rebuffering" or interruptions of your streamed signal. The best vendors have direct connections to the Internet "backbone." Mixing metaphors, consider this like the trunk of the tree, dominated by companies like AT&T, GTE, UUNet and Sprint. They're bandwidth wholesalers, and the farther downstream your ISP is from one of the bigs, the more suspect your quality of service can be. The choice, as always, comes down to cost.

Gregg Makuch is a Segment Marketing Manager for Radio and Music for RealNetworks in Seattle. He's responsible for all broadcast services. I asked Gregg how a manager might project the number of concurrent listeners he or she is likely to have. He shared RealNetworks' formula that they derive from a station's average quarter hours and weekly cume. "Based upon RBN's experience with over 250 radio stations, we can estimate the Internet broadcast size given your over-the-air AQH (persons 12+)." Email greggm@real.com and he'll send you more detailed information. Meanwhile here are two hypothetical scenarios you can use to estimate your first year Internet audience:

Terrestrial AQH Estimated number of user sessions per month Estimated TSL per session in minutes Estimated Internet Broadcast Minutes per Month
Station A 2500 9167 30 275,000
Station 10,000 26,667 30 800,000

If this is already making your eyeballs glaze over and outsourcing looks increasingly attractive, consider a package offer such as RBN's Comprehensive Internet Broadcasting Package:

  • 275,000 broadcast minutes per month
  • Encoding and frame relay hardware
  • Frame relay connection to deliver feed to RBN Broadcast Center
  • 24x7 streaming, network management, and monitoring support
  • 16kbps G2 SureStream
  • RealProducer Plus encoding software
  • RealServer streams

There is a $4500 start up fee and $1900 per month for the service charges above. In this example, extra minutes over 275K cost $.0035 each.

Bandwidth-

Remember the image of squeezing the tennis ball through the garden hose. The most common metaphor for bandwidth is a pipe. You'll hear broadband referred to as a "fat pipe." That would be a fire hose compared to a skinny 28.8 Kbps garden hose. The bandwidth you offer to your listeners and how your audio stream is encoded will largely determine the quality of your listener's experience with your station. Simply put, the larger the audio stream's bandwidth, the more audio information you'll provide your listeners and the more CD-like will be the listening experience. Think of it as resolution. Encode at too high a rate, however, and the majority of your cost of quality will be wasted on the average user.

CD's are encoded using a 44.1 kHz frequency response with a 16 bit sound resolution. Sound is sampled over 44,000 times each second and each of those samples is recorded using 16 bits. Stereo requires twice the information, as there are two such channels. For one minute of CD music this results in roughly 10 megabytes of information. However, the Internet sends data in packets, some of which get lost, so you have to allow about 20% for overhead. Still, to experience stereo CD quality requires a 1.7 Mbps connection from you to the listener. Not many listeners have connections to the Internet that big.

So you'l have to compromise. There are three ways to reduce bandwidth requirements: 1. Reduce your frequency response, 2. Compress the signal, or 3. Stream in mono. Peter Newman, PD of KING-FM in Seattle currently streams his popular classical format in mono because in his opinion the sound quality is superior to stereo. When that changes he says they'll add the extra line and an additional $7-800 per month expense.

Figuring out bandwidth requirements is pretty straightforward math. For example, many music stations use a 20 Kbps audio data stream (the maximum recommended for a 28.8 modem user). If you want 100 people at any given time to be able to listen, you need 2200 Kbps of bandwidth on your servers (2000 Kbps for the streams, plus an extra 10 percent for network overhead). Take the time to estimate how many people you believe will be listening and use that to factor the amount of bandwidth you'll need. If you're using an Internet Service Provider, be sure to discuss this with your ISP.

Hosting: While you can host your own audio, generally it's easier and more cost-effective for radio stations to have their Internet Service Providers (ISP) provide the servers for the radio signal's online distribution.

Real Vs. Windows debate: Whose technology is superior, RealNetworks or Microsoft? The main issue may be cost. For scalable, industrial-strength applications, Real's encoding and serving software will cost you in license fees. Microsoft's is free. You must, however, be using Windows NT4 operating system on the server. Win 95 or 98 is ok for the encoding system. Also, the Windows Media Player is built into all Windows machines while the RealAudio player is a download. The two media players perform on par in low bandwidth applications (such as streaming to 28.8 and 56 Kbps modem users) while some ears say that Microsoft's codec sounds better in highband listening scenarios. This is highly subjective, to be sure. Your best bet? Seek out various radio sites in your format so the music is familiar to you. Once you've found your exemplary Real and MS sites, compare and contrast them in both lowband and high bandwidth listening tests. Then let your ears be the judge.

Rights and Royalties-

Time to talk about ASCAP, BMI, SESAC and the RIAA. If you stream, you deal with these four organizations. If your site offers music downloads you may also need to include the National Music Publishers Association, also known as the Harry Fox Agency. But let's leave Harry alone for the time being and focus on pure simulcasting on the Web.

Every Internet transmission of a copyrighted musical work constitutes a public performance of that work. You pay for this right in each medium you deploy; you pay performance rights for your terrestrial broadcast and you pay performance rights for your Internet bitcast, even if the two programs are identical. If you're streaming your station's signal over the Internet without a web license, you're doing so illegally and can be sued for copyright infringement in Federal Court.

Remember, there are two copyrighted works embodied in a musical recording. The underlying composition, the notes and lyrics, is covered by the performance license and administered by BMI, ASCAP, and/or SESAC. The second copyright is the physical sound recording which includes the artist's interpretation of the musical composition and the creative efforts of the producer, engineers, background musicians, etc. This is the domain of the record labels and their trade group, the Recording Industry Association of America.

The RIAA is positioning for a New Deal with the Radio industry. Not satisfied with the old quid pro quo-product and free broadcast rights in exchange for lucrative promotional exposure-this time the labels want their piece of the digital pie. It will inform and annoy you to read the Digital Millennium Copyright Act, or DMCA from top to bottom. In their attempts to prevent electronic piracy, the labels have knee jerked an unwieldy monster into law. "Snookered" is the word Yahoo's Mark Cuban used about broadcasters at the Fall 99 Radio Ink Internet Convention. I would have chosen a one-syllable synonym. Go to www.riaa.com/weblic/wl_dmca.htm and read how restrictive the fine print is. Fortunately, there's enough slop in the language that for practical purposes, a radio "retransmitter" shouldn't have to alter rotations or formatics. Still it's a shame that the RIAA has spread this kind of FUD (fear, uncertainty and doubt) in the broadcast community at a time when interactivity offers more opportunity to identify and move record product than ever before. Smells like reverse payola to me. One day a settlement will be reached and based on that number, you'll owe back fees to the RIAA. If you're interested in watching this legal drama unfold, and you should be, bookmark www.digmedia.org. This is headquarters for the Digital Media Association or DiMA, the trade org representing broadcast and Webcasting interests.

BMI: all BMI Internet licensees are charged an annual minimum fee of $500. BMI is providing radio stations with a license that has a similar fee structure to their current interim broadcast license when they use the same audio programming in real time on the web as they are using over the air. Your agreement will cost more if you offer music outside the scope of your broadcast signal than if you simply simulcast.

Only revenues directly attributable to your Radio Station Web Site are considered when calculating fees. Fees are based on your gross Internet revenues from sources such as banner ads on your web site, sponsorships, subscriptions, commissions from transactions and other revenues generated by the site as outlined in your agreement.

BMI: "the best way to estimate your Music Area Revenues is to analyze the traffic patterns on your site. First calculate the number of music impressions by multiplying the number of impressions to music pages by the number of music file titles on each page. Then divide the number of music impressions by the number of total page impressions. The resulting number represents the portion of your gross revenue that would be considered your music area revenue." Got that? In a phrase, "your mileage may vary." Ask your BMI rep for a copy of both types of agreement then do the calculations. For quick math, figure that what you pay them for over-the-air, you'll pay for Internet rights.

Notice to large broadcast groups: each URL has to have a separate agreement and profile, even if you "portalize" or give your market cluster a common front door.

ASCAP: The minimum fee payable under the ASCAP license agreement is $250 per year. There are three different rate schedules depending on how sophisticated your music tracking technology is, but the base is the same: the greater of your web site revenue or annual operating expenditures for your site. You can visit ASCAP's site and go through the exercise with their online rate calculator: www.ascap.com/weblicense/license.html

SESAC: The minimum license fee per web site is $50.00 per six-month period and is calculated on the average number of monthly "page requests" times .005 times 1.3. Assuming you have a commercial site, the maximum license fee is $1,625.00 per six-month period. Per the recommendation above, see the SESAC web or your rep for their particular metric definitions.

People-

I'll just say this flat out: your station's Internet needs will not be met by part-time, low-level or inexperienced employees. This is "go big or stay home" territory. Your Webmaster, Web Director, Web PD or whatever title you choose needs to cross-talk and integrate all the departments in your operation-programming, music, production, sales, marketing, promotion, engineering, and now Web technology. Even if you're outsourcing certain elements of design and content, you must fully dedicate a qualified resource to oversee this project. This isn't just a good idea, it ought to be the law. Budget at least what you would expect to pay for a top music director/assistant PD in your market.

Factor the value of time that the interactive nature of the Web will suck out of your organization. Everyone from the PD, MD and airstaff to the receptionist should respond to listener email on a daily basis. Create an automated bounce-back message so a listener/user gets immediate feedback, even if it's to say, "Heard from you, acknowledge, back to you shortly." Peter Newman from KING-FM wisely states, "If you don't respond to listeners quickly you create a perception that either nobody's home or nobody cares. Not the message you want to send with an interactive medium." Agreed. Good customer service demands a maximum 24-hour response time.

Production. Soon, everyone will split their stopsets into Web and air. When that happens you';ll want to create custom spots for the Web and that will impact your creative/production area. The content should be different after all-you're using a direct response audiovisual medium. Spot length is an issue as well. Sixty-seconds might be the radio standard. On the Web, one minute is an eternity.

Updating: Your site needs daily attention. Among a dozen similar checkbox items, the playlist needs revision every time an announcer drops or adds a music position. This takes time, which costs money. Include a line in your plan called "Overhead" even if it's a total guesstimate.

Techwatch: a 24/7 monitoring function is recommended for best care and feeding. You do this for your transmitter; your Web should be no different. This person(s) doesn't have to be physically on duty but someone must always be on call.

The Tally:

As you've observed, there are too many variables in the equation to reduce streaming to one easy number. But good back-of-the-envelope numbers for a Top 15-market streaming project should total about $200K per year. That includes people, organizational overhead, computers, software, miscellaneous gear, bandwidth and licenses. The bulk goes for bandwidth-as little as $18K per year up to $70K per year depending on number of listeners and the quality of the streams. Go with a service provider and that could cost $100K per year for all the extra handholding. Staff costs vary by market but figure a Music Director's salary (minimum) for your onsite Web Director plus overhead for an extra six of your current staffers. For quick figuring, copy over your performance license costs and add the same amount for the (eventual) RIAA figure.

Ways to save cash:

  1. Go with Windows Media over Real Audio and eliminate license fees for the server software. Good solution only if you use Windows NT servers.
  2. Get your chain to cut volume deals with vendors and/or take the project in house and amortize technical talent across the group.
  3. Do a straight barter deal for unsold inventory. (But try to sell it first!)
  4. Go with Yahoo Broadcast and they'll pick up the cost of performance rights if you stream from their listen page.
  5. Stream in mono. Over 28.8 and 56 Kbps modems mono sounds fine and saves 50% of your bandwidth costs.
  6. Encode audio at less than 20 Kbps. Not recommended for music stations but if you broadcast sports, talk or AM-anything you can easily get away with 16 Kbps.
  7. Eliminate Web Director's salary and get the GM's nephew a copy of FrontPage2000. Then cross your fingers.
  8. Hope that somehow this will all just go away.

Credit where credit is due: this article is the distilled input from many expert sources. I quoted, paraphrased and generally cribbed freely from Peter Newman at KING-FM in Seattle, Charlie Harger (charger1@uswest.net), ex-Microsoftie and co-author of "Taking Your Station Online with Streaming Media," the knowledgeable Mike Powers, Radio Guide at about.com, Howard Greenstein, Microsoft's Program Manager for Windows Media, Gregg Makuch, Segment Marketing Manager for Radio and Music for RealNetworks, Andy Collins, Senior Manager of Radio for Yahoo Broadcast (formerly Broadcast.com) and others. The ASCAP, BMI, SESAC, RIAA, NMPA and DiMA websites were also valuable resources; I encourage you to check them frequently to track changes in legal and licensing issues. Any errata in this article stems from ignorance not stupidity; it's a wise person who knows the difference.

The Wrap. If you're a small station and you have access to smart technical talent, you don't need a service provider to help you. If you're a major market station in a competitive situation and you don't have an in-house Internet expert purely on the technical side (not the Web Director), then I recommend going with a vendor solution. It'll cost you more but you'll gain time, service and expert advice, all of which have their own value. In a future article we'll name names and rank the providers, but in the interim I';m certain that Gregg Makuch at RealNetworks or Howard Greenstein at Microsoft (both Seattle) or Andy Collins with Yahoo in Dallas would be happy to take your questions. Best of luck, see you on the Web.