A webcaster is a web only radio station. It is relatively inexpensive to set up and maintain. The music is programmed in a compressed format and then sent to a web server. The server will then allow you to listen to the program when you access the website. However, the bandwidth from the server to the Internet backbone is costly and may limit simultaneous listeners.

A simulcast transmission is when radio broadcasters extend their live radio program through the Internet. This is done by taking the audio track from the broadcasting radio station and simultaneously encoding it into a digital "stream". Streaming audio is a technology that enables music to be played without having the entire audio file downloaded first onto the user's PC. As the music is encoded, listeners from all over the world with a PC and an Internet access can listen to it.

The best thing about Internet Radio is that it eliminates restrictions on the coverage area of FM radio stations. With Internet technology, audio tracks can span beyond the boundaries set by the radio wavelength. You can listen to it from wherever you are in the world, and whenever you want.

With Internet Radio, listeners have the ultimate control of what they want to hear. Just like with physical audio players such as cassette recorders, software audio players have control panels, so users can play, pause, fast-forward and rewind at will. Certain online radio programmes are indexed so listeners can jump right to the part they want to hear - skipping the weather report to take in the local sports scores - for example.

Another major advantage of Internet Radio is the sheer amount of variety of its contents. Listeners get to choose music from over hundreds of channels, which are arranged in categories of artistes, their genders, genres, language, eras and such. Additionally, certain online radio stations offer live programming that covers virtually every sport and geographic area to cater to displaced sports fans. There are not only more content available in online radio stations than there are in traditional/terrestrial stations, but also more flexibility. It is available on-demand, at users' convenience.

Can these online radio stations make money? Definitely. The radio station can a sell banner advertisements as well as "air time". It can also get a portion of the proceeds of any sales from the site, such as CD purchases of songs being played or other music/artistes-related merchandise.

The cost of creating an Internet radio station is very inexpensive, and once the infrastructure is ready, more stations can easily be added at a very marginal cost. That is why sometimes, over 100 stations can be offered within a single site for listeners to choose from. The low overhead means that profit can be made even with limited revenue.

Another good thing about Internet Radio is that its streaming music caters to the listeners needs to variety and choice without threatening the music industry's revenue stream, as is the case with illegal music downloading. Users also come back for more because the content is constantly changing and the music programme is always evolving, and this is good - not just for the station, but for the advertisers as well.

Many may argue that Internet Radio has its shortcomings, compared to the traditional broadcast radio - its mobility, for instance. When most people think of Internet radio they think of listening to it at home on their computer. This won't be true for long. There are currently mobile phones in Japan that can receive songs in MP3 format transmitted from servers located at the local mobile telecommunications companies. Soon everyone will have the ability to listen to Internet radio via his or her mobile phone. General Motors in America also has plans to build a car with a wireless Internet connection, which most certainly will boost the popularity of Internet-based content such as Internet Radio.