Not every Web "radio station" has a corresponding traditional radio station. Many web radio stations are completely independent from traditional ("terrestrial") radio stations and broadcast only on the Internet. Broadcasting on the Internet is usually referred to as webcasting.
One of the most common ways to distribute Web radio is via streaming MP3 technology, which uses the well-known MP3 music format. The bits are "streamed" over a TCP/IP connection, then reassembled and played within about 2 seconds. Therefore, streaming MP3 radio has about a 2 second lag time.
There are three major components to an MP3 stream:
Two of the most popular Web radio networks are Live365 and Shoutcast. Open source alternatives include Icecast and Xiph.org, which include Ogg Vorbis streamings (that can be played by Winamp and Zinf). Collectively, these Web radio servers list thousands of Internet radio stations covering an ever-expanding variety of genres.
The purpose of the server is to repeat the stream source to the audio playback software.
Some sort of audio playback software, that is capable of reading HTTP data streams, is needed to listen to streaming MP3 audio. Some popular MP3 players are Winamp for Windows, iTunes for Macintosh and XMMS on UNIX/Linux.
There are also a small number of web radio programs that allow users to rate the songs they are listening to. This allows a user's music listening choices to be correlated against those of others, as with the programs iRATE radio and Last.fm.
The first Internet "radio station", Internet Talk Radio, was developed by Carl Malumud in 1993. Malumud's station used a technology called MBONE(IP Multicast Backbone on the Internet). In February, 1995, the first full-time, Internet-only radio station, Radio HK, began broadcasting the music of independent bands. Radio HK was created by Norman Hajjar and the Hajjar/Kaufman New Media Lab, an advertising agency in Marina del Rey, California. Hajjar's method was to use a CU-SeeMe web conferencing reflector connected to a custom created audio CD in endless loop. Later, Radio HK converted to one of the original RealAudio servers. Today, Internet radio stations such as VoyagerRadio utilize the technologies of web services like Live365 to webcast 24 hours a day.