• by Erik Sass , April 29, 2008

The burgeoning online radio industry was abuzz Monday. Emmis Communications announced it is launching a new company, Emmis Interactive, to help radio broadcasters and other publishers create and expand their Web operations. The company will be led by Ray Mena and Deborah Esayian, its co-founders.

Previously, Emmis Interactive was an internal division responsible for developing Emmis' online business, including creating and revamping Web sites for its various radio stations. In this capacity, it helped raise online revenues to roughly 5% of the company's overall revenues, more than twice the industry average. Now Emmis is putting these skills at the disposal of other companies.

The new company already has business lined up: Emmis Interactive's first job will be to create an online presence for Renda Broadcasting, which owns several dozen radio stations in mid-sized and smaller markets around Pennsylvania. Emmis will not only create the Web sites, but also train sales staff to deal with online inventory.

On the surface, it might seem strange that Emmis is peddling its online skills to potential competitors, but there are several factors that explain strategy. First, the local focus of radio broadcasters is mirrored in their online operations, so Emmis can elect to only work with broadcasters in markets where it doesn't own a station.

Second, online radio still contributes only a fraction of total revenues for broadcasters. Emmis may see value in simply helping expand the market, drawing in more dollars and building overall volume, as this will ultimately benefit the company as well.