The sultans of stream

Liquid Compass.net channels radio stations' content onto the Internet

Jeff Smith, Rocky Mountain News

Published January 8, 2007 at midnight

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At Liquid Compass.net, employees get all the latte they want, a free season ski pass and lunch every Wednesday.

The loft in lower downtown Denver features a cabana and a plush couch where employees can sit and play Xbox games on the office television. Employees also can listen to music on their desktop computer.

All of the above are perks except listening to music. That's part of the job.

Liquid Compass "powers" more than 500 Internet radio stations in the U.S., buying the bandwidth and operating and monitoring the streaming audio. It charges around $250 a month per station for providing that service.

The lean, 13-employee company also develops Web sites and customized Internet audio/media players, and provides software that enables traditional, or terrestrial, radio stations to insert Internet-only ads during station breaks for their online audience.

Those various services enable the radio stations to promote themselves on the Internet, conduct listener polls and create additional revenue through banner ads or short video ads that can be linked to advertiser Web sites.

"People in radio are good at selling, spinning tracks," said Zackary Lewis, Liquid Compass' chief executive. But, he said, they aren't necessarily adept at Internet technology.

For years now, consumers have been able to listen to many of their favorite radio stations on the Internet, often for free. WXYC in Chapel Hill, N.C., is credited by many as being the first to go on the Internet in 1994.

But it was only last year that Internet radio showed signs of taking off, according to a joint survey of 1,925 people by Arbitron Inc. and Edison Media Research last year.

Arbitron/Edison estimated 52 million Americans had listened to Internet radio in the previous month and that the number of weekly listeners ages 12 and older had increased from 8 percent to 12 percent. About half of the listeners come from households earning $50,000 or more.

Jason Hollins, a vice president at Edison Media Research, noted that the increase followed a relatively flat performance during the previous three years.

"Now I wouldn't be surprised if it increased by another 50 percent (this year)," he said. "The future is bright."

Lewis, a former Marine who helped provide security for King Hussein of Jordan, Andrew Ronchetti, a Web site designer, and Kristy Wingfield co-founded Liquid Compass in the summer of 2001 (Wingfield is no longer involved in the business). They started in the living room of Lewis' townhouse.

Within the first year, Liquid Compass got an offer to sell out to a competitor. Lewis' response: "By next year, we might have your clients."

Today, Liquid Compass' customers include large corporations such as CBS Radio, Clear Channel, Entercom and Lincoln Financial, and small, independent radio stations. Lewis said it provides streaming audio for 17 Denver radio stations, including The Mountain-FM (99.5) and KYGO-FM (98.5).

"Our bread and butter is not necessarily the corporate radio stations," Lewis said, "but also the person owning one to five radio stations that's competing with the big corporations."

Most of the 10,800 radio stations in the U.S. are independently owned, Lewis said.

With traditional AM/FM radio stations experiencing essentially flat revenue, Internet advertising can create an additional revenue stream and justify the cost of paying Liquid Compass for its services.

Liquid Compass also can help traditional radio stations measure how many Internet listeners they have, how long listeners stay on a site and how many "click through" to look at advertiser Web sites. Those are key to increasing advertising rates.

For some traditional radio stations, the Internet has been a savior.

Take Indie-FM (103.1)in Los Angeles, an alternative rock station that converted three years ago from the dance music station KDLD.

Liquid Compass has served as Indie's streaming provider since its inception. The Denver company also created customized Internet media players for Indie, such as one that looks like a guitar amplifier, and has helped develop promotional campaigns, said Dawn Girocco, the station's general manager.

"Zack and Drew are very, very smart, and they get where things are going, and how important it is for radio stations to keep their listeners actively involved in the station," Girocco said.

She said that since most L.A. radio stations have signal limitations, Internet radio is important in expanding the audience. "It's a money maker," Girocco said, although she couldn't divulge specific figures.

Meanwhile, Lewis said Liquid Compass is profitable, generating more than $1 million of revenue a year, and is signing up 30 new stations each month. The company also has a 3 percent churn rate - customers that don't renew their contracts.

"Our goal by the end of 2007 is to have close to, if not above, 1,000 stations that are hosted on our network," Lewis said.

What is Internet radio?

• It's a broadcast service transmitted via the Internet or audio programming offered exclusively on the Internet.

• Anyone with a high-speed Internet connection can access an Internet radio station anywhere in the world, often for free. Registration or a fee may be required in some cases.

• Traditional radio stations that offer online radio generally have some sort of "listen live" button on their Web site, which launches an audio player.

Who's tuning in

41 percent of Internet radio listeners are ages 18-34.

50 percent: The increase of Internet radio's weekly audience over the past year

52 million: Number of Americans who tuned in during the past month

58 percent of listeners are male.

Sources: Arbitron/ Edison Media Research, 2006

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