How to set up your own internet radio station

How much does it cost to start a radio station - and, what do you need to bear in mind?

If you’re thinking of setting up your own internet radio station the good news is that it’s easier than ever to do. With advances in software and hardware you no longer need to host your radio station from a dedicated machine at home or your place of work. It can all be done in the cloud!

That doesn’t mean that there won’t be costs involved in setting up and maintaining your online music radio stream. Those costs aren’t simply financial, you’ll also need to dedicate a fair amount of time, energy and passion if you really want your online radio project to succeed.

Back in late 2012 I conducted an experimental online radio station called mrc.fm which remained ‘on air’ playing non-stop music with short tight links for 6 months (even though some of my music licenses extended to 12 months).

What Made mrc.fm Different?

I started mrc.fm for a couple of reasons. The first was the fact that I’d spent most of my teens and twenties working IN radio and wanted to see what it would be like to run my own radio station. The second reason was to create something unique that could help compliment and promote my audio production company Music Radio Creative.

The idea of mrc.fm was that it would be an online radio station playing ‘remixes only’. Those remixes would be of popular songs so you might hear the Bimbo Jones remix of a P!nk track, the Moto Blanco remix of Adele or the Freemasons’ take on Beyoncé. The idea being that the listener would recognise every track played. At the start or finish of tracks you’d hear an announcer, sweeper of a sung jingle designed to fit with the flow of the music.

Music Royalty Costs

This was one of the most expensive and time consuming parts of running an online music stream. Hands down. In the UK to broadcast music online you need to have licensing agreements in place with PRS and PPL.

PRS is relatively straightforward and allows you to purchase a ‘Limited Online Music License’ right there and then on the website. The only hard part is deciding which one to go for (it’s based on the number of listeners you’ll have which is hard to tell when you’re starting). I went for the lowest listener license which, at the time, cost £141.60 and I never exceeded the terms.

PPL is a little more in depth. They want to ‘get to know you’ a little more and find out about what you’ll be doing. Their radio licensing department is an extremely friendly and helpful one and I had many of my questions answered by them along the way. While the exact licensing fees are negotiated on a confidential one-to-one basis depending on what type of radio station you’ll have (the main factor is - will you run advertising or not?) You can expect to pay anywhere between £600 to £1000+ per year for a basic online radio stream like mine was from the outset.

You will also need to pay a per-performance fee which works out at fractions of a penny per track but, of course, this adds up over the course of a month and a year - more on that later.

The other thing you’ll need to consider when licensing an online stream is where in the world will people listen from. While PRS and PPL have some reciprocal agreements with other countries not all countries are covered (the United States being one that is not) and if you intend to have listeners in the USA you’ll need to talk to (and pay) their licensing bodies too.

Radio Station Reporting

Every quarter I was required to submit a return to PPL stating every single track I played on my online radio station. That report was to include artist name, track name and IRSC number (if possible). In order to make sure all the correct information was getting reported I needed two things. First, radio station software that would report all this data (preferably into a tidy .csv document) and secondly music tracks that contained all the required metadata.

I searched high and low online for something that would do such a thing and finally settled on a paid account at listen2myradio. It was the easy integration with Centova Cast that made music logging painless. As long as the tracks had all the right data when I uploaded them Centova Cast would produce a .csv file at the end of every month that I could download and pretty much email straight to PPL. I did also look into cloud hosted Airtime Pro at the time but it wasn’t quite there. At the time of writing this article it looks like Airtime Pro is now also becoming a good option for music reporting too.

I was also required to let PPL know the Total Listener Hours and Average Number of Sound Recordings Broadcast per Hour in my reports every quarter. Again, this was a straightforward process using the Centova Cast control panel to access the relevant data.

All of these reports required a time investment and dedication from my end.

A Legal Music Library

As I mentioned a moment ago you will need a legal music library for your radio station that contains the correct metadata for your reports. That’s why I purchased all of our music library from Amazon MP3. Each track costs around 69p to 99p and can be downloaded with every single piece of information contained within the mp3 file’s ID3 tags. It also helped with the radio player I embeded on the radio station website which called up the correct artwork and an affiliate link to Amazon for those interested in purchasing the music track. If you’re interested in what I used I purchased and used a modified version of this radio player.

Here is another cost for your online station. If you’re adding 20 tracks to your playlist a month that’s around £20 or £240 a year to keep your music library up to date.

Is It OK To Play Mashups Or Bootlegs?

No. It’s not OK. A good rule of thumb is - if it’s not available to purchase and download from Amazon or iTunes you can’t play it on your online radio station. As I was playing remixes I had a number of enquiries from bootleggers and mashup artists. I confirmed with PPL that my agreement didn’t cover me to play these tracks under the terms of my web license.

Imaging and Talent Costs

I was lucky to immediately have access to top quality voice talent who were more than happy to record some links and voice overs for the radio station as they knew it would help to promote them. Finding good talent to make your radio station sound good is an art and then getting producers involved to make that talent sound amazing is the next step.

I was running many power intros designed to fit perfectly with the start of each track. In order to do this we used sung vocals in addition to voice overs and had these produced on a regular basis.

If you want your internet radio station to sound professional you can check out our radio station jingle package prices here.

Then there’s the on air talent that will host radio shows on your station. Are you going to pay for these people or will you place an unpaid job advertisement on Media UK or other internet radio forums? There are plenty of people willing to do a show for free in order to gain experience and exposure to a new audience but always be aware of the quality of product you’re producing.

Radio Hosting Costs

Online streaming still works counterintuitively compared to traditional radio. The more listeners you have to an AM or FM radio station the more advertising you can sell and at a higher price. You want more listeners to traditional radio. Internet radio is not so simple.

The more simultaneous listeners you have to an internet radio station the more you need to pay to the company hosting your stream (in my case listen2myradio). I went for a basic 128kbps SHOUTcast stream with maximum 25 listeners at one time and the cost was around £10 a month. This was all well and good until (as a result of my marketing efforts) mrc.fm got featured on the front page of the Windows Media Player radio directory for dance music. My listeners maxed out and I had to quickly pay to upgrade my account to a plan that cost around £25 per month to take advantage of all that new traffic coming my way. An account that allowed for a maximum of 50 simultaneous listeners covered my needs. It was often the case that my lowest amount of simultaneous listeners (anywhere between 3-10) would occur at 3am-4am GMT and the spike would usually come in between 8pm-10pm GMT (hovering at near to 50 listeners at the same time). The last thing I wanted after getting featured is a message telling my potential listener that the stream is busy, try again later. My total listening hours reached a peak in Q1 of 2013 when I amassed a total of 16,824.05 hours for the months of January, February and March.

Web Hosting Costs

If you’re going to have an online music stream you really should have a good website to represent your brand. That’s where web hosting costs come in (anything from £60 up a year - don’t go with a free host). Also consider getting a professional company to design your website or, if you have the skills yourself, I recommend a combination of Wordpress running a Genesis Framework child theme with some plugins to support your internet radio station.

How To Make Money From An Internet Radio Station

So, suddenly I had all of these listeners but no obvious way to monetize my efforts. That listening traffic wasn’t translating into clicks to the website (so no opportunity for an AdSense or other PPC model). I wasn’t hearing much feedback from my listeners so no chance to directly sell to them. I had the on air talent mentioning short URLs on air to track click throughs (such as mrc.fm/jingles) but the click rate was poor. It seemed that the majority of listeners were tuning in for the music and sound of the radio station. My next option would have been to sell advertising spots on the radio station in order to make some money and pay to keep the radio station on air.

Another method I attempted to leverage to finance the radio station was Kickstarter. You can watch my promotional video here. The only issue here was that I was asking for money to maintain the radio station. Kickstarter is all about getting projects started and meeting a definite goal, for this reason, as I’d already launched mrc.fm I didn’t meet their guidelines to get listed.

Cost To Run An Internet Radio Station For A Year

This is a rough list of costs involved to run an internet radio station (legally and professionally) for one year excluding and merchandise and marketing costs:

Music Licensing - £1328 Music Royalties - £500 New Music Tracks To Add (rate of 20 per month) - £480 Web Hosting - £60 Radio Streaming - £300 Power Intro Production Costs - £1200 Website Design - £1000 Website Templates - £60 Jingle Package (cost of acapellas and production) - £400 Project Management - FREE (I will do this in my own time as my passion)

Total cost to run mrc.fm for 12 months = £5328

Is Running An Online Radio Station The Future?

I’m on the fence on this one. I didn’t see enough traction in six months to encourage me to keep going with the idea. I initially designed it to promote my main business and could see very little ROI. Perhaps if I’d hammered away at marketing the station and started taking on advertisers I’d be telling a different story right now. The fact is, in my opinion, every single huge company with any common sense is hopping in to music streaming - iTunes Radio, Google Music, Spotify, Vevo, Rdio, Deezer to name a few - and they HAVE got agreements sorted with the record labels, they HAVE got the bandwidth and hosting worked out and they HAVE got a huge marketing budget.

I’m not saying it’s impossible to create something amazing, unique and profitable in the world of online streaming music radio but make sure you go in with your eyes wide open.