The costs of starting a traditional radio station are very high, putting it out of the reach of most people.

The costs of starting a traditional radio station are very high, putting it out of the reach of most people. But internet radio, which works across normal broadband connections, has made it much easier – and cheaper – for anyone to start their own broadcast. Nowadays there are a huge range of stations available online, from traditional channels playing music to those discussing social and political issues.

How does it work?

Internet radio is created and distributed differently from traditional radio. The source of the radio is a computer – you’re plugged directly into the computer, which creates a ‘stream’ of audio from your voice and any music you play. This stream is converted to data and then sent along your internet connection to a distribution server – this is a powerful computer with a very fast internet connection, normally located in a data centre, which has the capacity to send the stream to many other computers worldwide. The listener, who tunes into your radio station, connects to the distribution server and receives your programming.

What topics should I discuss?

This is completely up to you, but to build a brand you need an overarching concept to the radio station in order to appeal to your target demographic and build up a listener base. If you’re targeting a particular music niche, you should have a very developed knowledge of past and current trends, well-known and ‘hidden gem’ bands, etc. By definition your listeners will also be knowledgeable, so you need to cater to refined tastes.

If you’re discussing particular topics, you should keep them timely and relevant to your audience, and make sure you strike a balance between making the information engaging and journalistic integrity, to help build trust with your audience. Try to find topics that have a large enough following; if there are relevant experts for that topic, bringing them onto your radio show for an interview can be a great way to build awareness.

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Music licences

You need a music licence to play music via internet radio – make sure you don’t play any copyrighted songs before you gain a licence as the fines can be substantial. PRS for Music, which represents performers and publishers, offer a subsidised licence for smaller online radio stations – the Limited Online Music Licence (LOML). To qualify, you mustn’t generate over £12,500 each year in revenue. The cost starts at £118 and rises to £1,176, depending on how many streams of the content are performed per annum. The top band covers fewer than 450,000 streams, while the lowest covers fewer than 45,000 streams. Talk to PRS for Music for more information before you pay; if you will only use music for part of the year you ask for pro-rata costs.

PPL, which represents record companies, also offer a license for smaller online radio stations – the PPL Small Webcaster Licence. The service must generate less than £5000 a year and service fewer than 270,000 streams. It costs £189.41, and the operator must submit a report to the PPL each year detailing the amount the service has been listened to and the average number of record music tracks played per hour.

How do I fund it?

Advertising is a common way to fund your internet radio station, by playing commercial sound bites at intervals. Affiliate deals for products discussed are also a way to bring in money, as well as advertising on your radio station website. Having several different revenue streams, rather than putting all your eggs in one basket, is recommended due to the fickle nature of advertising revenues. Make sure that you negotiate rates with advertisers, and make sure you choose advertisers carefully – don’t work with companies that contradict your brand.

Start-up costs

Compared to traditional radio stations, the start-up costs of starting an internet radio station are minimal. But there are still overheads you’ll need to budget for. First and foremost; do not skimp on equipment. Sound clarity makes a massive difference to how professional your station sounds, so buy a decent microphone (and a screen, to avoid ‘popping’ on loud sounds), as well as a good sound card so your computer can process the audio. For music, don’t use low-quality MP3s as this will be obvious – use CD-quality music at a minimum.

You’ll also need to pay for a distribution server – luckily this doesn’t involve actually setting up and maintaining a physical server, as there are online streaming services that make it very easy to stream audio. These operate on a variety of payment models and can help you scale your radio station effectively, reducing the costs of growth.

Make sure you write a feasible business plan and stick with it; you need to control costs, including marketing costs, to ensure a lack of cash flow doesn’t stifle your radio station’s potential.

Legal and compliance

Unlike traditional radio stations, you do not need a licence to broadcast via the internet. However, if you broadcast copyrighted material then you are breaking the law if you don’t have the appropriate license. Please see the section above about licences and make sure you fully understand the process before you start broadcasting.

Since you’ll be discussing topical issues and perhaps controversial stances, you’ll need to be aware of the laws surrounding libel. Libellous statements are those that are seen to falsely give a negative image to a person, business, corporation, government or nation. Fighting a libel lawsuit can be extremely expensive, and cause damage to the brand, so make sure you understand the law before you start broadcasting.

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