I'm, as you said, George Capalbo, and we're from Backbone Networks, and we're based out in Boston, and we make Internet radio automation software. And actually, before we get started, I want to do a little informal poll. How many people here, just give me a quick show of hands, are actually broadcasting on the net right now? That sounds great. How many people came here because they want to go and start doing that? How many people missed their flight and they're on standby at San Francisco National? No, I'm just kidding.

So, I'm going to do something a little different. I know this is the Worldwide Developer Conference, but I think whenever new technology rolls around, weird things happen, and Internet radio has been no different than that. And I thought we should take a look at things in sort of more of a total view.

Let's look at radio itself and how that evolved over time. And then also, rather than just talk about the tech, and we will talk about some tech, I want to go into the business side of it. Because some of you may or may not have heard there are royalties associated now if you're streaming music.

And it was a very, you know, in the press, inflammatory issue a few years ago, and things have kind of settled out. And I think a lot of people, you know, one story or another, and I want to kind of try to straighten that out a little bit so that you'll feel more comfortable about getting back into broadcasting. Because things are settled out to do that.

So, we're going to, we will look at all the things you need to do to go ahead and put up an Internet radio station. And that includes, like I mentioned, the royalties and the regulatory environment. So, we'll go back and look at some history. We're going to go back about 100 years and talk about radio in a very short time. We'll go a trip through time in about maybe three or four minutes, not too long.

We'll talk about Internet radio and how that fits in with other types of radio. We'll, you know, we'll look at the regulations I've said. You know, basically, you know, how are you going to pay for doing this if you have to pay royalties? How do you go about getting some money in to cover your costs or maybe even make a small profit? And then we'll talk, this is the plug part. We'll talk about what we do, which is automation systems for Internet radio.

So, let's see. How's my clicker doing? Here. I don't want to, hopefully I don't blend in with this laser. They showed me how to use this once, but, you know, it's okay. So, it's interesting. The Internet radio is very similar. You can look at it very similar to the way you do regular radio.

If you're driving in your car and you switch it on, you come in and you're in the middle of a broadcast and you maybe hear some music, you hear some commercials, a DJ talks, and there's a transmitter somewhere up on a hill that, you know, that broadcasts that signal and you receive it in your car or your home or, you know, your FM device connected to you.

to your iPod, right? And basically, Internet radio is very similar. We have a computer sending the streams out to computers, and there are now going to be in the future other devices that are not just computers that you'll be able to listen to it in a portable way. And we think that that's when Internet radio is really going to explode. And then it's going to become less Internet and more just another way of broadcasting, just the way radio is.

So, well, I would hope one of the reasons you're here is you want to find out about doing radio with OS X and QuickTime. And as you know, I'm sure if you've attended other sessions, that OS X and QuickTime are all standards-based, and it's the same for Internet radio.

And we prefer using MPEG-4, which is the same codec that gets used actually for the iTunes Music Store, because it sounds great, it plays on a number of devices, and it'll play on more in the future. And finally, as we go on, we're going to talk about the Internet radio. we go along in the technology framework, we're going to look at the radio automation.

And that is a way to simplify the operation of your station. Now if you're -- if you're a -- you look at -- think of a traditional radio station where you're spinning desks, you have to have somebody sitting there doing that. So, you know, a lot of radio has moved to automation, and we've decided to build a product that allows you to do that for the Internet and very simply with just a few computers or even one computer. So let's move on. So -- so let's talk a little bit about radio.

So now we'll start going back in time. And, you know, you can look at -- there's a definition of this that says it's a way to -- to broadcast information by electronic means. Well, Internet radio would fit into that definition. And it's really an old technology. It's been around for 100 years.

And, you know, it's all based on through-the-air -- radio frequency spectrum. And basically, originally, there were -- there was actual data sent, Morse code, you know, dots and dashes. Have you watched Titanic, right? They were sending their -- their messages with Morse code on radio, and that was really just about maybe 10 years after radio existed that they had that ability to do that on ships. And then from the 1920s, it really blossomed because they had the ability to do voice.

And, you know, things got pretty interesting. So if you all look at this -- ooh, this slide changed from when I gave it to people. That's exciting. You see about 1901, Italian gentleman named Marconi went off and did a first transatlantic signal. And then you see in the '20s, he started commercial broadcasting. And then radio at home, you know, Amos and Andy and all those old shows, the Green Hornet, you know, people would -- during the Depression, didn't go out much and radios were inexpensive.

So that really became -- it was what pretty much television is now, but obviously television hadn't existed yet. If you go back -- you go further ahead in time, about the 1960s, there were other forms of media competing with it, television. So, you know, radio changed as well, and you get the better quality of FM. And then in the 1970s, we had the first satellite networks.

And I'm not talking about like XM or Sirius where you listen -- you listen from a satellite. I'm talking about using satellites to distribute programs around the world, to affiliate stations. So imagine if you're listening to a nationally broadcast baseball game, that's most likely coming over a satellite into a radio station. That all originated back in the '70s.

And then in the 1980s, there was actually low-speed data that was sent along with radio signals. And there were these proprietary devices. You get stock quotes and weather. And, you know, that kind of pre-sages things you can do with internet radio and things you can do with paging networks, et cetera. That's where all that started. And then the 1990s, talk a little bit about the business side.

They changed the laws about how many stations a single owner could have. So you suddenly had these huge groups coming out, like Clear Channel, Infinity Broadcasting, where there are hundreds and thousands of stations that are owned by one company. And that changed the flavor of radio. Radio maybe before those days was very individual to a city. And now there's a little bit more of a homogenization. So it's kind of -- it's, you know, some people like it. Some people, you know, don't understand that it's -- it isn't different in every city. But some people don't like it.

And then, of course, talk about the later '90s, we start, you know, we start talking about convergence. And when I -- I remember when I would go to the National Association of Broadcasters show, in the mid '90s, they were all saying, "You know, radio is going to get run over by convergence. Convergence is really about -- about video." And funny how radio seems to have done pretty well at surviving this and found its way into other mediums. And it translated very nicely to it. So you want to broadcast.

So it's very expensive to do traditional broadcasts. Why? Because it's based on nature provides radio spectrum. And there's a limited amount of that. And there's regulations for, you know, how stations can be organized in a certain city so that otherwise they interfere with each other. And that's all done by the U.S.

government, the Federal Communications Commission. And they actually came up with the rules for all this back in, really, the '20s. And they did treaties with other countries. So if you ever go to Canada, you see a lot of radio stations along the border. They have to send their signal way up into Canada so they don't interfere with U.S. stations and vice versa.

So there's a lot of things that go on that you don't know about, you know, with radio. And you have to have a regulatory body. And you have to apply for a license to be able to broadcast. There's not a cost to it, but you have to prove that you're doing things in the public good. And there's a lot of competition for them. And once a station gets a license, it's very hard for them to lose it unless they've broken a law or whatever.

And that's, you know, that's limited by spectrum. So if you want to go buy or build a station in, let's say, a market like San Francisco, you're talking maybe $50, 100 million, which is, you know, not a small change. But if you're talking about a smaller market, let's say, name a town out in, you know, the middle of California, you're talking maybe millions for a small AM or FM station.

So now recently, in the last five years, we have satellite radio. We talked about the different kind of satellite distribution. This is actually, I'm talking about Sirius and XM and how you can listen to that in your car. Well, unfortunately, if you want to start one of those, you need a satellite. Now there may be some channels available, but there's a limited number of channels on those, a few hundred at most. And basically, that's pretty much taken at the moment, so that's hard to do.

So there's pirate radio, and I don't know, you know, if you've heard about people putting ships out at sea off the coast of California and New York, and they broadcast, you know, out on international waters, and you can hear the station, and, well, you know, it's sort of dangerous, and, well, it's all sort of illegal as well. We actually, a few years ago at the broadcaster show in Las Vegas, there was a group of pirate broadcasters, and they met in a church, so they were granted asylum, so they couldn't be arrested by the FCC.

So, that's, you know, not too much fun. That might be an exciting life for some people, but, you know, if you're a pirate, you're going to have to do a lot of work. If you want to start something and have a business and something you can enjoy doing, you don't want to be on the run from the police, right, or the FCC for that matter.

So, to address that, the FCC decided to put out a regulation that said, well, you can do low-power FM stations in cities, because that won't interfere with other big stations. Well, of course, the large broadcasters have blocked all that, because they say, no, it's going to interfere with us, and plus, it's also competition.

So, that's what you would expect them to do. So, that's, you know, there's only a few hundred of them that have been on the air, and there's about, let's see, what is it? Say, there are 30,000 inquiries about doing this. So, obviously, there's a demand for radio. So, finally, we come to internet radio. So, instead of using electromagnetic waves, we're using the internet. So, that's another electronic means, as we talked about earlier, to transmit. And, well, it's a lower startup cost to do this.

So, really, you could just get some computers and some bandwidth. If you're at a college, you might already have bandwidth. You can rent machines, you know, through ISPs. There are services that will give you a... a stream where you can have some number of people listening. And, you know, it's very easy to go out and reach a worldwide audience.

You can pretty much, you know, hear things all over the world without having to, you know, with radio, you'd have to wait for the ionosphere to bounce the signal to you, right? Or, you know, or get something on a satellite. Well, with this, you can pretty much just do this from any computer, and it doesn't cost you, the person running the station, anymore to reach that person on the other side of the world, in Australia, we'll say, then it would be to just be local. So, it's a pretty wide reach.

So, the other thing now, well, radio frequency, we talked about, is a limited spectrum. Well, there really isn't a limit to the spectrum. It's really just if there's enough IP addresses. How many IP addresses are there? There could be that many stations. So, it's really a lot more things that could be done.

And, we talked about it's the same cost to reach people. And, one of the cool things about internet radio is you can enhance it. You can have text annotation along with that. You can have images. You can have it as part of a webpage. And, you can do things that people can have feedback.

So, it's... It's... You know, it's a pretty powerful medium. And, a lot of people that we work with, they're trying to reach a very narrowly focused audience of just one type of, you know, of music. And, you get a lot more in-depth and interesting things that way than you do with just, you know, kind of the commercial radio station that has to appeal to everybody in the town. So, they do...they choose a very broad spectrum.

So, and you can also... One of the things you can get from internet radio that you can't get from... How many of you have ever gotten a ratings book where they ask you to fill this out and say what stations you listen to? Right? Okay. So, that's... What they do is they do statistical sampling. So, they get, you know, 100 people in an area.

And then, they base that...the population on that. And, they say, "Well, this is how many people are listening to station X." With internet radio, you can track very precisely exactly how many people are listening to your station. And, you know, if you want to know where they're coming from.

So, right now there are about 12,000 stations, traditional radio stations in the US. and it took them about 80 years to get to that point. Excuse me. And Internet radio, well, less than 10 years. The first stations came on the air about 1994. We're about 10 years out from that. And there's about 30,000 worldwide and the number is growing.

It's a little hard to find the total number, but that seems to be a pretty good approximation if you add together all the different services and people broadcasting. So that's pretty phenomenal growth. So, you know, for now, let's go back a little bit and think about traditional radio. It took it a very long time for that technology to get, you know, embedded and mature.

And Internet radio, the curve has just been a huge spike. So this is kind of explosive growth. Well, not only are the number of stations are growing, but the number of listeners are growing by about 25% per year. So how many of you have ever tried to listen to the FM inside an office cubicle and all you get is you get the noise from the, you know, the fluorescent lights or you can't even get a signal? So a lot of people listen at work. That's one of the biggest audiences for Internet radio.

And you get other things, you know, people promoting their product or services, looking for a particular service. A lot of stations are things that are promoting something, right? And, you know, last night I was--how many--anybody from Boston here? I was listening to the Red Sox game last night, sorry, over the Internet radio, which was terrific to do, but the outcome wasn't too good.

But we'll get them later, I'm sure. So that's pretty cool. So now let's go into some of the business side of this. Let's talk about some costs. Well, so you have setup costs. You've got to get yourself some computers, and I actually have a typical kind of setup here.

Oh, this is really only kind of prop. This really isn't all connected up, so we actually could broadcast, but we probably won't, but it looks nice. So I have a nice studio mic here. I have a friend that makes these down in Pasadena. They're actual ribbon mics, so you talk through this, you sound like Edward R. Murrow, if you know who that is. It sounds great.

And I've got a little mixing board, and I can connect that into a Mac. I actually have a nice Pro Audio card here. There are a number of manufacturers for this, but this will do actual, if you know what balanced audio is, and if anybody's an audio person here, you can do really good sounding stuff, you know, to hum. And all that.

It'll actually take digital inputs, so there's a lot of power that, you know, OS X actually enables this. It's very easy to go and add devices in. So that would be pretty much all you would need to be broadcasting from anywhere, and, you know, we can look at, we'll look a little bit at that later on. We'll go do a demo at the end of the presentation here. So, running costs.

Well, if you're a traditional radio station, you need power to power your transmitter, and you could have some, you know, large power bill, electricity bill. You could have some, you know, large power bill, electricity bill every month. You could have some, you know, large power bill every month.

Well, with internet radio, the cost is, or there are some costs of bandwidth, and that's basically for each person that's listening to your stream, you have to send those bits, however, you know, however many you need to have that person be able to hear the audio to each person. There are a couple of ways to do this that we'll talk about a little bit later, but mainly, you know, you have to pay for that bandwidth, and that's one of your running costs, and the more people listen, it scales up.

There are, depending on what kind of deals you can get for bandwidth, there are some economies of scale to some extent. Like, you may... You may be able to get, you know, a bucket to start out with that gives you pretty much your normal listenership, and then if you go over that, you pay more, so you can predict what the costs are.

Well, so the other part is royalties, and this is kind of the contentious part that's evolved over the last few years, and there are two types of royalties. So, they're actually the new royalties that apply to internet radio, which do not apply to broadcast, are performance royalties, and that's all done through the RIA, and there's a group called SoundExchange. We're going to be talking a lot about this, just so you know.

And there's also composition royalties, which traditional radio pays, and that's pretty much, you know, a percentage of your revenue, and it's a fairly low number, and that goes to the composer and to the lyricist for the song, and that's been done, you know, for years. And so, they're also... There are reporting requirements for both traditional radio and for internet radio, and the internet radio ones are a little more detailed, and... But computers help you solve some of that.

So let's talk about our setup costs. So your computer. Now we talked about the client server model, the transmitter on the high hill. So kind of the equivalent of Mount Sutro out here in San Francisco is an ISP that's connected to the Internet backbone. So you can locate your server there and then do your remote broadcast from wherever you need to be. That would be your studio.

So that server takes connections from your listeners, we talked about, and sends some bandwidth to them. And you can also track that when they come in. You'll know who they are. And you have some kind of encoding client or control client. We'll talk a little bit later on about the different models that are typically used for doing Internet broadcast. And that can send a stream to a server, that control client, or it can just control what's going on in the server.

So bandwidth-- so basically, the way bandwidth works out is the more bandwidth you use, the better quality your sound is. And that's probably pretty obvious. But with new codecs, you can actually keep lowering that amount down, so you can actually get more listeners from the same amount of internet bandwidth.

And the AAC codec-- we're going to listen to some samples of that later on-- is pretty terrific. And there's better stuff coming along. It's really kind of a moving thing. The technology is getting better and the sound is getting better. And the ability of people to listen at their homes-- a lot of people have broadband now-- that's gotten better as well.

I talked a little bit earlier about saying there are a couple different kinds. A unicast connection to a server is you're sending the same bits to each person directly. Multicast is a pretty cool concept, but unfortunately, it doesn't really get used in practice. And that is you let the Internet routers decide who needs the stream.

So only one copy goes into your network. So if there's 1,000 people inside your network listening to this network segment, listening to your station, there's only one copy of that going in. So that minimizes cost. The problem is most of the Internet is not really set up for that. What happens is multicast gets thrown out by routers. So multicast is very close to what it's like to do traditional radio where you're just sending one signal out and everybody listens to the same thing.

OK, so now we'll get into the interesting part, the royalties. So I talked about composition royalties. And those are, there's a group, BMI, ASCAP, and CSAC. There's also something called the Harry Fox Agency. And basically you're paying, as I said, you're paying for the composition and you're paying for the lyricist. And that gets split up by this organization.

And it's based on a percentage of revenue. And I think I have an URL down here. If not, it's on the end of the presentation that you can go there and there's a calculator and you can punch in the numbers. Based on how much revenue you have and they give you a number. And it's a fairly reasonable thing. And all Internet broadcasters have paid that back to when they started, pretty much.

So the interesting royalties are the performance royalties. So when the DMCA came out back in the late 90s, there's a provision in the law that said you cannot stop someone from broadcasting on the Internet. There's a compulsory license. You can guarantee you're not breaking the law by broadcasting on the Internet. However, you have to pay a royalty.

And this ended up turning into a performance royalty, which they've modified now to say you can be charged either for how many people are listening to a particular song. This is for streaming music. And how many people are listening at a particular time to when that song played. Or you can just count the amount of listening hours. And they have a number. They say, well, you played 12 or 14 songs in that hour.

And we'll give you a value based on that. And that's collected by a group. But a new organization called Sound Exchange, and I have an URL for that. You can check that out. And there's all the real details of that as well. So once again, traditional broadcasters are paying the composition royalties. And that's based on a few percent. And there's a minimum of about $264. And there's the URL. Okay. There we go. That's the URL at askcap.com. You can find all that. Okay.

So, as I've mentioned, the performance royalties are very contentious. I mean, it was really, you may have seen stories about this is going to kill Internet radio, it's going to shut down. A lot of people pulled their streams off the air and there was a lot of, you know, fear and panic and it really made a lot of news. And that was because this was a new thing.

And especially for the traditional broadcasters who were putting a stream on the Internet, they're not used to paying performance royalties. They say, you know, we provide a promotional value. So it was deemed that radio, you know, had a perceived promotional value back in the 20s. And so that's helping the record industry to promote their music. So because I think of, because of the reasoning for it was because of the fragmented nature of a lot of Internet stations, it's just a small audience. It's not, you know, the more general thing that commercial radio does.

So they were able to, they kind of negotiated it out so they had to pay performance royalties. Well, so the political turmoil lasted for about two years and Congress got involved and there was a settlement act for a lot of people that were broadcasting. At that time, we're able to get in and get something that allowed them to stay in business.

So, and as I said, this all goes back to the DMCA. And that was, it was intended to address the rights holder concerns in digital media. And, you know, you can imagine if you were in a business and you owned something and suddenly people were able to get it, you know, for free, you'd be nervous about it.

And if you're someone that was already doing this, you know, well, then you'd want to keep doing it, right? Why should I pay for something I haven't paid for before? Why do I want more costs? So the players in all this are the RAA, which I'm sure you've heard of. It's a group that's made up of, they represent all the major recording labels. The U.S. Copyright Office, they're the arbitrators. And there's a Digital Media Association, which is the best known of the webcaster side. But there's various other things. And some technology companies are involved as well.

So, the law said that, you know, these groups could sit down and negotiate something and come up with their own settlement and decide this is what we're going to pay. Well, of course, they couldn't do that. As I said, you know, the webcasters said, we don't want to pay anything because we're not paying it now. And the recording industry said, well, we'd like you to pay a lot. So they couldn't agree. So at that point, the Copyright Office, by law, gets involved and arbitrates it.

So they have something called the Copyright Arbitration Royalty Panel. And these meet, they set the rates for about two years. So we're actually coming near the end of a two-year period. The rates will be possibly different next year. So the first set of rates were very high and they were retroactive in 1998 and that's what caused all the uproar.

So, and there are of course different rate levels for college, non-commercial or commercial. We're going to look at those a bit. So first we'll talk about college Internet radio. And this is the current rates now. So this is actually a fairly reasonable thing. It's actually, only if you go above a certain amount of performances or tuning hours do you actually own more. There's actually just a flat rate of a few hundred dollars. And you pay $50 to the data fund, which I'm not really 100% sure what that is, but I believe that has to do with how you collect the information about the data.

So, and that's a little bit different in 2004. If you have, if your college is based on college size, if you have more than 10,000 students, your rate's a little bit higher. But this is pretty reasonable and, you know, college could easily make sure their Internet station could go, could stay on the air. Now they do limit the number of stations you have.

If you go, if you try to do a bunch of stations, once again we said the spectrum's unlimited. Well, they kind of put a limit on you. Then you have to start paying the, you know, the per rates for hours. Stephen Tonna, George Capalbo So if I'm non-commercial, you actually pay a flat rate of $400, and if you do news, it's less.

And when you say, wait a minute, I'm doing news and talk, why should I pay a royalty for that? Well, you might be using some bumper music, you know, and things like that at the start of your show. So they kind of just blanket in that you're doing that.

And there's a flat rate for all this as well. And once again, if you go over a certain amount of streaming, well, you know, then you kind of get yourself into a quandary, and you have to pay a little bit more. but you've got to get fairly large to do that.

So now we'll talk about the commercial entities. And this is the compulsory license again. And basically, one performance is one listener listening to a song. So if there are 1,000 people listening to a song playing on your music station, that's 1,000 performances. And so the rate is, we're set at about .07 cents, which adds up over time. And they say that, well, 4% of your performances bear no royalty. That's to kind of deal with people that only stay on for a short amount of time and missed connections and things like that. So they give you a little leeway for that.

The earlier rates actually had something called an ephemeral fee, where they charge you for storing music on your computer, some percentage of your royalty. And that's not in this. They simplified it for this next round. So you can see it's kind of moving toward something a little more... reasonable. So there's a minimum fee for this. So if you really don't stream much, you still owe them $500. And if you have multiple stations, the minimum, and they only have a few listeners, the maximum you can do is $2,500.

So, okay, so I have some examples here of the rates, and this is for the aggregate tuning hours. And you can see that if you're an Internet-only station, you pay the most. If you're doing news talk, you pay the least. And if you're just simulcasting your radio station, you pay a little less. So that's for traditional broadcasters, get a little price break and all that.

And so I have some examples here of what things would be. And I came up with, let me get a little closer to this, I guess my eyes are going bad. I can't read my own slide here. What, this should show us what that'll be. Okay. Right. To pay for this, you'd want to run commercials. Okay, so if you imagine someone that's running so many, you know, listeners per hour, and, you know, they had a bill of, you know, of $800 a month, they'd have to do about $3.50 an hour in commercials.

So, you know, you could easily get some kind of revenue in just to, you know, that's not a lot of money to have to go out and raise or get an underwriter to cover those rates. And they do go up as your audience goes up, but that's more valuable to your, you know, to your advertisers as well.

So, we can talk a little bit about the Small Webcaster Settlement Act. Now this was designed for people that were already webcasting to help them avoid a very onerous spill. So they really put a flat rate for the years that, you know, they didn't know this was all, what things were going to happen, 1998, 1999. And basically you're eligible for this if you fit in a range of things.

And if you're in that, and this actually, I think this expires this year, turn of the year, and this basically allowed a lot of people who were already broadcasting to stay on the air. And it was, you know, a compromise. And, you know, compromise is not a perfect thing, but it allowed people to stay on the air. So it was probably, you know, it was a good thing that it all happened. So, part of the compulsory license is you must report.

So there's reporting, which requires, which you're required to decide, you know, what you have to pay, and that's based on what you play and how many people are listening or how many tuning hours you have. And there's also something called the broadcast complement, and that's the mix of music you can play.

This is, they provide rules that say, you know, how many songs you can play by an artist in a two-hour period, et cetera, and repeat them, you know, within a day. And you're supposed to follow these rules. They give you a little leeway, but you're supposed to roughly follow these rules.

It's, you know, a little bit of a restriction, but it's something that, you know, traditional broadcasters have always done. And then there's finally annotation. So you have to display the name and artist of the title artist of the people that have made the music, its music, as part of the... So let's look at the reporting requirements. So every three months you have to do two weeks of log, and basically you have the name of your service and what type of transmission categories, whether you're a news station or a music or a non-commercial, etc.

Then you talk about each song and say how many performances of that song. So you have to give them a two-week period, and you can just select that from whatever you want, and that's how they kind of, they do a statistical thing, and they say, okay, yeah, okay, he's pretty much playing what he says he's going to do, and they base your rates on that.

So, here's the detail on the sound performance, sound recording performance complement. And this is a thing, a follower I said from a traditional radio. And it's designed to keep listeners from recording music. So the idea is it kind of randomizes everything. You don't know what's coming up. So you can't say what's going to play next. And you can say what's played, but you can't say what's going to play next. And you can't play the same things at the same time every hour so people will know if I tune in now I can get that U2 song that's popular.

So this is basically, like I said, there's some leeway to this. You can do about 10% out of it. So if there's some special thing and you play a lot of songs by one artist in the music realm for a special someone, let's say if an artist passes away, you can do that and not violate it.

So, here's an example of an annotation. This is actually from a station that we stream. This is a Beggar's Banquet record recording company Internet radio station called AV Deck. This is a track that they had a few years back. And you can see it's got copyright and it's got artist and title.

And, you know, as a bonus for Internet radio, which is pretty nice, you can embed a link in that. So, if it's commercial, you can have it point to the website of the company that's buying the commercial time from you. If you're promoting music, you can have it go and point to, you know, the recording label or maybe a music store, you know, or a number of things.

So the royalty summary. You only owe royalties if you play music that you don't own a license to. The compulsory license that we talked about is not just absolutely for everybody. If you can work out a deal with someone or some particular record company or let's say you're a band and you own your own music, you don't owe any royalties. You can go and broadcast what you want.

So there are a lot of things, but this allows people to kind of play music that they like of different genres and do it in a legal way. So you may have to prove that you do this. They may come after you. They may come after you and ask you, you know, wait a minute, you're broadcasting, show us you can do that. So you may have to show a contractor a log that shows what you've played, etc. But you can do that.

So, well, here's where computers start to come in. Now, we talked about all this reporting and the royalty rates, and there's a lot of math there. And if you had to sit down and do that by hand, looking at your logs, you'd just be doing that day after day after day. It would take up all your time, or you might have to hire someone to do that, and that would be a terrible job to have, really. You know, so computers make that a lot easier.

And that's one of the things that we do, is we track Backbone Radio, my product. We track who's listened in your log, and then we put it all in a relational database, and we allow you to go in and just say, you know, hey, what did I play? And we give you actually some example queries of what that looks like, and you can actually just calculate that stuff with a few clicks of a mouse. So that saves you having to have a person in to do that. So, and of course, you can write special software now that you've got this data.

And there might be some interesting things you could do. You could show the people that are buying commercial time from you, well, look, here's who was listening at this time. So you really, you know, you really got a good, you know, a good response based on this, because a thousand people were listening, you know, at that point. Or if you're promoting music, you can look at those demographics and say, well, what was more popular? What did people like to listen to? When did they turn off their stream, you know, in the middle of a song? Maybe that tells me something.

So, and you can look at what times things are more popular, so you can decide, you know, what's the most popular. What's the best, what's the prime time to charge, you can maybe charge more for commercials. So you can pretty much do your own ratings. Okay, so that was all the legal parts and the parts that you're required to do to be able to do the station legally. So let's talk a little bit about the technology of what's behind all this.

So we talked about encoding briefly, and really you get a trade-off. If you send more data to your listeners, you get better quality, but it costs you more. We talked about the client-server model, and we're talking about QuickTime here, right, because you're at WWDC. So we use something called the Realtime Protocol, which is an Internet standard for streaming, and each QuickTime file contains in it something called a hint track, which tells a server how to go about building the Realtime Protocol packets that need to be sent to a listener. And we standardize an MPEG-4 AAC just because, you know, it's pretty cool, and it sounds great. And also, we're going to look at some broadcasting models.

We're doing this, so we'll say, what is encoding? Well, your source material could be anything. It could be a CD, it could be an MP3 that's high quality, and you basically perform math on this with some software that says, if I take out, how much data can I take out and it still sounds good? So you can do that and minimize the amount of data you have to send to somebody, yet keep the quality. And as I said, it's a very subjective thing, and it's really a trade-off of how much you want to use, of bandwidth you want to use and how much you want to pay as to how good the quality is.

And, you know, it's a very personal thing. So obviously, higher data rates, higher quality and higher cost, lower data rate, you know, basically, it can sound okay, but it's reduced quality. For example, like the baseball game I was listening to last night was sent at about 10 kilobits a second, and it's just voice, so it really sounded like kind of a bad telephone connection, but I can understand all of it.

But if you're doing Tchaikovsky, well, you might want something that's stereo and a much better quality. So you might want to be able to have different encodings for different types. So there's some other trade-offs you can do. Stereo is great, but you can get as good a quality at less data rate by just choosing mono.

So we'll talk a little bit about MPEG-4 AAC. And this is done by Dolby Labs, and this is included in QuickTime. And it's currently kind of the state of the art for streaming. And this is really, it's based on standards. So if you and I wanted to go out and build our own codec, we could go get a copy of the standard and sit down and write some code and come up with something that put out the same format as MPEG-4, and it sounds better. And we could have an MPEG-4 codec, and that's exactly what's happening.

So there are codecs that are on the way that I'm sure that QuickTime will adopt as time goes by that sound even better at lower data rates. But once you're in the standard, it's guaranteed to be backward compatible and forward, which is one of the great things about standards. And also, standards mean that as new devices come up that support the standard, they're going to be able to play your audio natively. You don't have to do anything special to make all that happen.

And there are actually no royalties as well. So I have some music samples. Let's see if we can hear this. "That's 128 kilobit a second stereo MPEG-4 and that's kind of what comes out of the iTunes Music Store. And it sounds pretty good. Okay, so we'll go to music sample number two.

I didn't start. Well, the demo gods are not completely with me so far. But I do have a 48-kilometer here. Let's try to see if number three goes here. http://www.gmail.com/news/radio-radio-rad io-radio-radio- So let's talk a little bit more in depth about the client server model. So as I said, listeners on the Internet are your clients. It's very similar to traditional radio where you've got the transmitter in the high hill and people listening in their car in their home to a radio station. Well, if you're listening on your computer, it's a very similar thing.

So the difference with Internet radio, of course, is we mentioned that there can be two-way communication. So I can get some information back from you. You can send me an email. We can do a chat, etc. And there's a lot of things that are, you know, that's a very interesting thing that traditional radio can't do. So in most cases, as we said, we talked about multicasts and unicasts. There's a stream sent to every listener. So that's different from traditional radio, but it's there. So let's talk a little bit about that.

Stephen Tonna, George Capalbo The real-time protocol is the way that the data that's in the stream is broken up into small pieces and sent to the player. And it's designed so if you're ever driving in your car and you're listening to FM and you go under a bridge and FM drops out for a second, a real-time protocol is designed to make that possible with computers. If there's some disruption in the stream for some reason, it won't just fall over. It knows that it can throw some data away and so it can be lossy. So it's designed to kind of exist in harsh environments. and you can still get a pretty good stream.

And of course all the packets have numbers and so they're all sent from the server. They may arrive in any order at the player and the player decides how to put them back together based on their sequence number and when to play them based on there's a time stamp in each packet.

So, there's also something called the Real Time Control Protocol which basically it tells the player, this is more important if you're doing video, but it tells the player basically, you know, this video frame is at the same time as this audio so that you can sync lip sync and all that. But there are actually also reports sent back from the player to your server which talk about the quality of the service. So your server can automatically adjust itself.

So this guy's having a loss, I'll send him some repeat packets and there's kind of a you know, there's only a certain point of loss that you can go to before, you know, things fall over. But if there's just a little bit under say 10 or 20 percent, you can actually compensate a bit and, you know, and get a still keep a good quality stream by sending a little extra data.

This is the control protocol. So when you're in your QuickTime player and you hit play and pause buttons or open a stream, you're sending RTSP commands to a server which say just that. I'd like to listen to the stream, set it up. You know, I want to play or pause.

If it's a file you listen to the stream, you can actually move around randomly. You can't do that in a live stream because obviously, you know, it's live, right? So you're hearing what's in the now. It'll also tear down the connections so the server knows if you've disconnected from the server that it shouldn't be sending you those packets.

It can use that bandwidth for somebody else, and that's all done under the covers. So you can take a player, and you can encapsulate that, you know, inside. You can have a stub movie that actually just has information about what the stream is, and you can put that inside a web page or you can mail that to somebody, you know, or you can have your web page launch an external player so they can be scrolling through different pages as they're listening to their radio stream so there's a lot of detail to that. I won't go into a lot of that just because that's some things that are going on in, you know, other sessions.

I'm sure they've covered that in a lot of detail. So let me talk a little bit about broadcasting models. So how is Internet radio done? So let's kind of look at, this is more of a traditional broadcaster, and, you know, they've got a studio. So they've maybe got a radio automation system that just puts out audio, right? So they've got a hard drive somewhere, or they've got some CDs, or there's some places they still do tapes, right? And they put that through a mixer, and there's a microphone, et cetera.

And at some point, that comes out, and it'll go maybe to a, you know, obviously it goes to a transmitter up on the high hill, the real, you know, RF-based broadcast, but it goes into a compressor, and that compressor sends either over public Internet or sometimes they just use an ISDN line so they have guaranteed bandwidth, and they send that off to an encoder or they send the encoded data, you know, from the station. It's really a choice of the people putting it together, and then that goes to a server. So.

The good part about this is it's pretty simple. Well, the bad part of it is you don't actually, other than, you might be able to, you can track the number of hours people listen to, but you don't really know, you have to go correlate your logs to that if you want to do performances. You really don't have that correlation of who listened to what was played.

Okay, so another typical thing is an MP3 hosting service. So you upload some files manually and you build a fixed playlist, and that fixed playlist runs, and it can be very long, you know, and it can do some things randomly, but it pretty much just repeats, and you have to go and manually go change that to get that to be different. And once again, you could get some information on that, on who's listening and all that, but that has to be built into that software. Typically those are very simple. They're just really just sending out a stream. They're not doing all the logging.

So we can talk about Internet radio automation, which is what I do. And in this case, there's a control client that actually controls the server remotely from anywhere you are in the world. So really, your server just does what it's told, and the server has a lot of intelligence.

So it can do, we talked about the broadcast complement, there's a set of rules you have to do, or maybe you want certain broadcasts to go on at certain times. The automation system can make your station sound very fresh. And at the same time, if you want to broadcast live, you can now cut in.

And just send that live stream to that ISP, so avoiding having to have a stream that's, if there's some disruption in that, if you're not broadcasting live, your station's going to stay on the air. And of course, that server is up on the high hill at the ISP, and you've got your listeners listening to that. And that server can now keep track of all the logs, it can keep track of who's connecting and who's listening, and allows you to go off and build your reports. So. Bye.

Basically, with an automation system, you can encode the clips ahead of time and put them actually physically on the server so they don't have to be streaming from the client all the time. They can just sit on the server and run when they need to, and you can let that run autonomously.

So you could have people on the air that are just looking at what's playing now, and they know what they can talk about, or you can have them pre-recorded. There's a number of concepts in radio that are built in automation systems. At the same time, your program director could be choosing what's played.

You can have people doing commercials that track that, and that's called traffic in traditional radio. They could be doing that offline and programming the station ahead of time, and it all works very seamlessly. At the same time, that could be done from anywhere, so those people don't really even have to be in the same physical building. They could be at a live remote somewhere, they could be in their home, in their office. You can pretty much do a station and have a lot of different people involved in it, and not need a lot of bricks and mortar to go and do that.

So I talked a lot about doing dynamic playlists. Basically, if you use rotation rules, you can come up with something that sounds very fresh, and you're not doing anything to do that because you know it's going to be randomized. You'll be following the law of what you have to play to broadcast, and you can have that set up with a month's worth of music, and it'll play without you having to go to see the station. So a lot of stations do something called voice tracking, where they actually record the live inserts.

If you say, hey, it's a great sunny day and it's raining, well, that doesn't quite work out the next day. But you can do that in the future, and a lot of radio stations do that. It allows them to create something that sounds pretty live, but without having people sitting there.

The air talent can come in and do their show in 20 minutes, half an hour, instead of being there all along. But you can also do live assist. You can actually have somebody doing a show, and they can... be talking over their music, or if they're doing a live broadcast, you can have, you know, material running and recorded... You know, that's appropriate, and then they can cut in and do the live show if they're doing a sporting event or whatever, or use the playlist to have commercials while you're doing your sporting event.

And, of course, an automation system does all the logging as well. So where is everything heading at this point? Well, the royalty situation has really stabilized. You know, one of the problems in the period of the early, you know, 2000s was that people didn't know what the rules were going to be. So that's a tough thing if you're trying to run something where you're going to have to pay and you don't know how much that is.

Well, now it's very well known, and now it's going to evolve every two years. So all of you can get involved in this process and, you know, lobby, you know, Congress and do things to try to get things to, you know, come down even further perhaps or make it easier to report. So it's not going to be a fixed thing. It's going to be revisited every two years.

And, of course, well, there are lots of mobile devices on the way. In a few years, you'll be able to, your radio station will be able to stream to phones, you know, 3G and other things that are coming along. There's other standards for high-speed data. But the thing is radio doesn't need that much speed.

You don't need the one and a half megabits a second. If you have a phone that can do that and you're just doing a 56K stream, it's going to sound great. And, of course, this year the theme of NAB 2004 was IP broadcasting. So this convergence thing has really happened now, and everything is moving into being IP.

And I think over time you may see, you know, traditional terrestrial broadcasters become a little less important, especially with these portable devices because you can imagine the next thing might be in your car. And that's where a lot of traditional radio is going to be. And that's where a lot of traditional radio is listened to now. And given the unlimited spectrum of the Internet, you know, that gives you as a station operator a large audience to go choose from. So it should be a pretty cool future.

Well, so I have a final thought before we go off and do a little demo here. Well, there have been millions of downloads. I think they just said 250 million downloads of iTunes since it came out. Right? That's about the number. I mean... I'm sorry, of QuickTime, excuse me, of QuickTime, thank you.

And well, and also when you download iTunes, you do get QuickTime for free. It comes along. So everybody that's downloaded iTunes for Windows has got a copy of QuickTime. So that means you've got people that can listen to a stream done from an OS X server and, you know, there's a lot of market out there that's really been untapped and you can do it much easier and much better quality, you know, in our world. Okay, well, so I'm going to do a little demo here. We can switch to the demo.

Actually, Whoa, look at that. There we go. Okay, so I have an automation system here that's running. So we're actually looking at a server that's running in Florida. And I've got a time of what's playing on the air now, and I've got a countdown time. I've got the time and date. There are various things I can do to change the microphone gain, what my source is, etc.

I can look at a database. Well, so I actually want to do a little live insert, and I need a volunteer from the audience. Let's see if I can do some stage diving here. And I'll pick someone to do that. How about you, sir? Would you like to be a DJ? Okay.

Okay, so I'm going to start. This is a little playlist. This has got a little jingle. And actually, we bring up the audio just a little bit on this. So we're actually going to go to... So in 23 seconds this playlist will start. There's going to be about a seven second intro.

Then you're going to see a script come up and you just read what you see. Just read what you see. And you can translate into Dutch on the fly if you'd like. That won't work. I can try. Okay. And so this would be kind of a live assist. You're standing on the rock, Z Rock, WZHB. Okay, so.

Hi San Francisco, you're here. This is WWDC 2004. And you've just heard Internet Radio in Depth from George Capalbo. Is that your name right? Close enough. Up next before we go to back and ten great hits in a row, it's your turn. Step up and ask some questions. Hey, thank you.

So now there were a lot of things that were going on in that. Let's talk a little briefly about this in this automation system. So the streaming is based on delay. And there's about a five second or so delay when things happen. Our automation system actually synchronizes his live voice to what's playing on the air. So to him, he just has to look at a live cue and he doesn't have to think about any of that. And that, you know, we were streaming to a server that's out in Florida. And that's now off playing the next thing.