Net [based] businesses come primarily in two categories:
lThe FLOW based-model: Where the Net is merely another medium for pushing an Old Economy business i.e. attempting to make the Net suit an existing business.
Eg. Amazon, Fabmart
lThe SOURCE-based model: Where the business itself is re-invented to suit the net! [Eg. Dell, ICICI direct etc]
Current media/entertainment sites on the Net [of the non-chat variety] are mainly of the Flow-based model hue. Consider the case of Sa-re-ga-ma.com, which essentially seeks to ‘push’ Old Economy, Net-incompatible low-value items like cassettes and CDs through the Net. Or the case of SonyMusic.com that sells album tracks at $1 per track.

Will they ever see a great success in sales? NO! Why?
lTarget segment: Computer-savvy high SEC individuals who would soon have no incentive to buy music on the net when the same is available in peer-to-peer networks in new formats [mp3 etc]
lCore product: Music/audio/video is digitisable and the cassette/CD represents an inefficient high-overhead way to deliver this core product. Even where the music is offered as a direct download, it is not free.
lValue Proposition: Combine the above two and suddenly the value proposition being offered to the customer doesn’t look as attractive anymore [as in why should THAT customer (their particular target segment) be willing to pay for the services on offer?]
lTV and radio are free because advertisers bear the costs. B2C history is replete with examples of companies biting the dust because for some, their projections of ad revenues went haywire and for others the ‘C’ part of the story—the consumer—they bitterly realised, was increasingly getting averse to paying for anything on the Net.
lThe reason why foreign companies have not yet taken to this could be the heavy investments they have already made in their offline operations. For example, Sony Music sells

actually create the market, become the trendsetter, the rule maker et al.
The core concept: Consider the idea of a ‘one-stop media station’ on the Net which engages in Net broadcasts of music, news, ex-TV serials, soaps, movies and what-have-you using direct streaming audio and video feeds.

The assumptions underlying the source-based
one-stop media station business are:
   Substantial rise in PC penetration and Internet appliances [amongst the target segment]
   Significant drop in broadband access costs
   Home PCs playing direct streaming media using low-cost broadband access.

The core characteristics are all source-based model
paradigms.
Prime among them is the detachment of the business completely from the physical medium. [Look at  the savings in costs and investments. The logic goes further to say that any investments in physical infrastructure of the non-hardware variety will become a liability to source-model companies.]
The core product is transmittable [or digitizable, rather]. Hence, the marginal costs of storage, replication and distribution are tiny compared to comparable physical systems.
The mass-customization phenomenon: Leveraging the inherent strengths of the Net to offer what the consumer wants, the way he wants it.
For example, offering the customer the facility of both customizing his playlist in his individual account [akin to the Winamp playlist] or other playlists as company broadcasts.
lThe Times FM revenue model* [with minor modifications] seems best suited for this purpose. Times FM, one of the most successful FM radio channels in India, charged around 80np per song it played from music companies and its ad rates per second were also competitive and attractive. It managed to attract this revenue because it could boast a loyal high-end user base.
Result: It did well and almost killed the mismanaged A.I.R FM business. A similar model for our media station would mean similar fundamentals in business philosophy and in the customer base.
Reasons why this model will work hinge on one principal factor. The trick is to kickstart a self-reinforcing cycle whereby our media station becomes THE stop-shop for Indian media—streaming and live.
Once set in motion, the self-reinforcing cycle does exactly that—it reinforces its own position in the marketplace and in customer mindspace and its market power grows exponentially—a phenomenon known in management jargon as Positive Network Externalities. That will push everybody to the station—customers [raising the user base], fresh talent and content supply [artistes/bands in music; content providers etc] and even other media companies [attempting to popularise their own products on this station]. Revenue thus accrues from this more stable B2B source.
There is space in here only for one or maybe two large players who will dominate the market.