Online radio is either pre-recorded MP3 files or live, via-a-microphone broadcasts that are streamed over the Internet.
With online radio, you are not limited to one geographic area or dependent upon syndication partners picking up your show in order for it to be heard. It can be heard all over the world.
There are three elements to workable online radio.
The source, which is you. You add sound such as clips, inputs from CDs, live voice and so on.
The server, such as Shoutcast through Shoutcheap.com. They mix it all together, put it into a format that can be streamed and send it out through the Internet sound waves at the click of a link.
The listener, because without listeners there really isn’t any point in broadcasting. The listener connects to your server and can hear anything you’re streaming.