With CBS's announcement that it has purchased Last.fm, I figured it was high time to take a look at some of the Personalized Internet Radio providers. When most radio people think of the concept of a "station" or online streaming - they draw the analogy to terrestrial radio. One station programmed by someone in an attempt to draw in as many listeners as possible. But the internet and advances in computing and bandwidth have allowed the idea of a "station" to be replaced.

There are a few services currently available that allow for an infinite amount of stations - each one customized to the individual tastes of the listener - something that is simply impossible for terrestrial or satellite radio to do. Instead of struggling to cope with the shortcomings of internet broadcasting, they use them to their advantage.

The big problem with internet audio streaming has always been that its cost structure didn't work like radio's. With terrestrial radio - whether a station has 5 listeners or 5 million, the cost to broadcast the signal is fixed. New listeners don't cost terrestrial stations any more money - so just try to get as many listeners as possible.

With internet streaming, the streamer has to pay for the bandwidth required to send the audio to each user. With a very small audience, the costs are lower than with traditional broadcasting - so it works. However, as the audience grows, so does the cost to provide that listener with audio. Each listener gets their own unique connection to the audio source. For terrestrial radio - more listeners leads to more profits. For internet streaming, more listeners only leads to more profits if the cost per listener is less than the revenue generated per listener - otherwise, they're just digging a deeper and deeper hole by adding additional listeners. Because of this, it's possible for bigger streamers to be worse off than small ones in a profit margin sense.

However, this stumbling block - having to pay to send a unique stream to each listener - is seen as a strong positive by some internet streaming companies. Places like Last.fm send each and every user a different stream or "station" - and why not? They're already paying for the terrestrial equivalent of a frequency license (the bandwidth) - then why not let each listener listen to whatever they want instead of making them all listen to the same thing?