• by Erik Sass  @eriksass1, November 5, 2009

Bad economy or no, online radio is poised to boom. Total online revenues are expected to grow 12% in 2009 to $441 million, according to a new forecast from SNL Kagan, followed by 20% growth in 2010, when they should top $530 million.

In the following three years, SNL Kagan sees a cumulative annual growth rate of 16%, with online radio revenues reaching $827 million in 2013.

The SNL Kagan forecast is noteworthy; it provides an overall estimate of online radio revenues, which have been a matter of speculation and guesswork (and no small disagreement) among analysts.

For example, for some years the Radio Advertising Bureau lumped online advertising revenues in with "non-spot," then "off-air" revenues, before finally breaking out a separate digital figure beginning in the first quarter of this year. However, the RAB figures -- like SNL Kagan's -- don't distinguish between online radio advertising revenues and other revenue streams, including online subscriptions.

Whatever their source, online revenues are still just a small part of radio's bottom line, as SNL Kagan's figures acknowledged. After four years of double-digit percentage increases, 2013's $827 million will be just 4.7% of total radio revenues that year. What's more, by this time, growth will be starting to level off.

Separately, total radio revenues have fallen precipitously over the last two years, and there isn't much reason to hope that the medium will be able to recover this lost ground. Indeed, the turn to online revenues was largely motivated by losses in the broader business, meaning that radio broadcasters didn't embrace digital initiatives until late in the game.

SNL Kagan analyst Justin Nielson stated: "In the past, radio broadcasters seemed resistant to embrace new technologies, but with the decline of traditional ad spending, radio stations have turned to online initiatives to grow top-line revenues."

Nielson added: "With total radio revenue only expected to post modest growth over the next five years, it has become increasingly vital for stations to monetize digital innovations."