A small group of innovators is disrupting the airwaves with "peer-to-peer" radio, reports Vaughini Vara in The Wall Street Journal. At Mercora.com, for instance, consumers "can create playlists of their favorite music, and with a few clicks of the mouse, 'broadcast' them over the internet to fellow users." Over at Last.fm, a database of "each user's favorite music" is used "to search for 'neighbors' with similar tastes. Then it creates a customized broadcast for each listener, based on what their neighbors are listening to." And it's not just small players on this field -- America Online "offers a similar service called Shoutcast, shoutcast.com, which attracted close to 200,000 listeners on a recent afternoon." It's all very legal because the music is streamed, not downloaded. The P2P stations also "pay annual fees and royalties" just like traditional radio stations do. The appeal to listeners is pretty clear: "When you've got only 30 slots on a radio dial, you're going to be programming to a lower common denominator," says Raghav Gupta, coo of Live365.com, another P2P radio station. "This opens the world to much more variety and diversity." P2P radio fans also "like the sense of community that comes with listening to playlists compiled by other listeners. Some say it reminds them of rifling through a friend's CD collection." At Mercora, consumers even have the option of joining a chat among fellow listeners as they enjoy the "broadcast." Tom Mara of KEXP, a Seattle radio station, thinks traditional radio should pay attention here: "It's no longer a case of a person in a booth broadcasting to people anonymously ... Now we need to figure out new modes of interaction -- not only between the listener and the station, but between listeners." The P2P stations, meanwhile, need to figure out how to make money. At Live365, you can listen for free, but if you want to "broadcast" it's $9.95 per month. The site also runs some banner ads, as well as some "video and audio commercials during broadcasts. It also offers, for an extra $5.95 a month, a premium service with higher-quality sound, more 'stations' and fewer ads." Mercora is running Google's contextual ads, and gets a cut every time a user orders music via Amazon. Last.fm runs ads and solicits donations. None is profitable, although Mercora just nailed a $5 million round of financing. Not everyone thinks that's a good bet, though. "People think they want choice, but they don't want too much choice," says Richard Wolpert of RealNetworks, whose Rhapsody service puts "together individual computerized broadcasts based on survey information," as does Yahoo's Launchcast. Then again, there's Davin Jindrich, happily reports he discovered Japanese pop music through Mercora. Oh, wonderful radio, marvelous radio ... [Cool News]