Offer a person six different dishes when he or she is very hungry and chances are high that you will be praised for your generosity. Offer the same person sixty dishes and you will be criticized despite the fact that you have offered food. Excess choice is never a good thing.
This is the biggest problem that internet radio providers are facing. It is going to be virtually impossible to create a niche market where a single station will gain leadership status very quickly.
Just take a look at the total number of web sites on the internet and the total number of popular web sites online. There are millions and millions of web sites on the internet but very few can qualify to the status of globally popular web sites. Even then, the level of competition is intensely high.
The sites survive because the net is the only medium of transmission of information between computers. On the other hand, transmission of audio and radio content through the internet is not an exclusive option. People can make use of televisions, traditional radios, digital radios and other entertainment options on and off the internet for relaxation and fun.
In such a scenario, the presence of a large number of choices for users in a field already burdened by excessive options can be dangerous. Chances are high that internet radio will appeal to a limited number of persons which will render the entire concept financially weak.
The best way for this problem to end is for big organizations to enter this field in a big manner. This will generate consumer interest and will create a scenario where internet radio can hold its own against competition. However, there is no incentive for developing technology in this regard when entire world is focusing on transmission of entertainment options through wireless medium.