PalTalk, a video-focused social network, and New York sports radio station WFAN on Monday announced that two of the station's popular programs will be video-simulcast on the Internet as the centerpiece of an online interaction among fans and program hosts.

The deal is part of a growing if belated embrace of the Internet by the radio industry which has seen many of its younger listeners abandon it for digital entertainment alternatives such as MP3 players and Internet radio. And advertisers have adjusted their budgets to accommodate that exodus.

But after decades as little more than an interested observer of the digital revolution exploding around it, the radio industry is finally repackaging its content for the Internet. The industry began by offering audio streams of radio programs via the Internet.

New York City-based PalTalk is going a bit further. It is combining video feeds of traditional media content such as radio shows with social networking tools, web style interactivity, and video-sharing among its users.

Ten-year-old PalTalk, which has taken $6 million from Softbank Capital Partners, hosts video chats for 4 million active users. The company recently began creating videos of radio shows around which it wrapped its video chat applications.

"We began with a simulcast of the Opie and Anthony radio show and it has been so popular that we have now established radio as an offshoot of our video chat business," said Joel Smernoff, president and COO of PalTalk.

PalTalk offers its basic service free of charge but generates revenue from paid premium services, which allow users to share video content with each other.

But not everyone agrees that video streams of radio shows will prove to be particularly enticing.
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"You are seeing the radio industry learn to leverage online video among other Internet technologies, but I am not sure that just putting cameras in the studio is the most compelling use of video," said Ray Mena co-president of Emmis Interactive. (see Emmis Takes Radio to Internet School)

Emmis Interactive, the online marketing division of radio conglomerate Emmis Communications, helps traditional media firms use the Internet as an extension of their businesses.

"I think online video should be approached in a more TV-esque way while still leveraging the brand and the niche that you own. You can expand into other more video-worthy areas," Mr. Mena said.

Radio is in the midst of its fifth consecutive year of flat or decreasing revenue.

The industry generated $17.9 billion in income in 2007, slightly lower than the $18.1 billion consecutively recorded in 2006, 2005, and 2004, according to BIA Financial Network.

The research firm predicts radio revenues will be down as much as 3.1 percent in 2008, due in part to the faltering U.S. economy, but expects a rebound in 2009 when some of radio's Internet related experiments begin to take hold.