The Decade of Radio Cannibalism

What is the most interesting/startling/eye-opening thing I've learned this year about the radio business?

There are no leaders - only followers.

The conversion of a highly independent-thinking, proactive industry to a defensive, lack-of-self confidence one didn't happen overnight. It's been nine years in the making. Sort of like James Cameron's "Avatar", only this time it ain't pretty.

Up until 2000 when the Internet bubble burst, the radio industry was robust, creative and ballsy, i.e. it took on all 'comers' who wanted to threaten its very existence and it took each and every one on with gusto. It thrived in that environment and it made its members love their business that much more.

The bubble burst and there were no more $1000 spot rates from Internet start-ups.

9-11 halted everyone's business, but radio never recovered because around the same time Napster taught our kids that they didn't really need radio...

The Internet proliferated as high speed access surpassed the tipping point of 50% of households...

Internet radio, You Tube, Smartphones, subscription radio, technology and...

Arbitron's PPM. The last straw.

Audience measurement systems for any consumer product have always been a reflection of usage; no more-no less. Once delivered, it was up to the customer to interpret the data.

What changed with the introduction of Arbitron's PPM service?

The methodology influences the business.

PPM is arguably more accurate, yet it has its limitations just like the diary-system does.

It allows programmers and managers alike to dissect audience movement down to the minute and to over-react to changes in listening behavior. The cause of that change in listening is not measured, yet programmers can make assumptions which may not prove accurate.

The science of Arbitron's meter system has taken advantage of radio management's building inferiority complex by eliminating the 'long-tail' or product variety evident among radio's vast potential listening audience.

The most mass-appeal stations are the victors in PPM rated markets.

The stations that take the least risks to create exciting, compelling listening perform best in this metered world.

PPM has surgically removed radio's best traits: it's abilty to respond quickly to consumer trends and to offer entertainment faster than any other medium. This ability to read its audience from gut and sound research, kept interest in radio at high levels before technology brought new competition.

Perhaps the worst part of this is that the industry has been led by its nose into this quagmire without a fight. And now it has a ratings system which does not fully support its business potential.

If the motion picture industry followed this path, we would be presented with only the most bland, smallest common denominator movies. And while there's certainly a place for them, consumers would never have been exposed to such interesting films as "Momento", "Eternal Sunshine of the Spotless Mind" or "Requiem for a Dream" over the last decade.

And this secret sauce which the radio business held in high esteem is what is missing in today's newly competitive landscape.

A new study from Bridge Ratings suggests that radio is not dying on the vine it's just sharing usage with other media and tune-in is as high as ever.

This is the time for creativity, risk and reward. Results of this study show that radio consumers like the ease-of-use and the pervasiveness of over-the-air radio. In fact listeners of all ages are pulling for radio, and want it to be better, funnier, more stimulating.

Consumers are pulling for radio because they know it can do better.

The industry is ending a decade of cannibalism. We have seen the disease of "no confidence" coupled with "less courage" seasoned with a measurement system that doesn't support the creation and delivery of many potentially popular radio formats.

During times like these it is strength, courage and the ability to think independently that is needed.

Perhaps it is not too late to embrace those traits that brought the radio industry its greatest successes. There are options to Arbitron's meter methodology; options that would measure the totality of the interests of radio's consumer base.

For 2010, we look for a more positive landscape for all business to operate, and the radio business, specifically, has a chance to be reinvigorated.

What's Really Next?

What's really next for media companies?

Smaller - leaner - more outsourcing.

The chart to the right reflects a related growth curve between staffing and corporate efficiency, or productivity.

The way this applies to radio is at the core of its frustration with attracting more loyal listeners.

There just has not been any investment in the product in over a year at a time when radio is competing with media that understand the importance of creative content.

Radio has its own set of rules and at this point, generally, most radio companies can ill afford to invest in the one thing that will help their business grow: personnel and content creation.

Economies such as the one we're experiencing in late 2009 no longer lend themselves to the operations models which allowed companies to staff more robustly.

The benefit to that kind of structure is that if companies staff responsibly, employees reach their maximum potential to deliver for the company by reaching their own competency levels.

What has led to this redesign of culture is the reduction in staffing and a reduction in quality output. Once highly-competent employees have found themselves delegated more and more work often outside their area of specialty or comfort.

This tends to result in staff that are not competent at the new tasks and somewhat less competent at their old tasks. This amounts to a severe reduction in efficiencies and production which further drives down business cash flow.

This cannot be sustained.

Something's got to change. And this is what we're experiencing.

Change can be uncomfortable.

Ultimately, change is for the best.

Therefore, the best option is to reduce workload to a more comfortable level where talented employees can do their jobs at levels that will again produce positively for companies. Operating in this culture will allow companies to regain traction and begin to rebuild.

This means a shrinking of the business as a whole in every aspect.

It may be "circle-the-wagons" time for the media industry - certainly it is for terrestrial radio - and concentrate on core competencies until things return to a less volitile marketplace.

Yet, despite this reduction in services, companies must also understand they cannot grow by cutting. Business development can continue to be a part of the mix.

For radio, an industry that still experiences respectable profit margins, this will mean figuring out a way to reinvest some of that profit margin back into their businesses.

I'll reveal how to do that, in my next blog.

What's Good for the Radio Goose....

Since February's announcement that Sirius satellite radio was interested in acquiring XM, we've seen many twists and turns in Mel Karmazin's effort to convince the FCC and others that a merger is in the best interests of consumers. In Mel's usual style, he has done an expert job of laying out the rationale and presenting it in an intelligent, non-offensive manner.

However, as we near the end of 2007, we seem to be very close to a decision on this event and as I mentioned in an earlier blog, my money now is on the merger getting approved.

The National Association of Broadcasters has done a respectable job of countering satellite radio's rationale in favor of a merger, but the time has come for the NAB to face the "Rule of Consolidation".

The fact is that the NAB has lobbied for consolidation of the radio industry since the early 90's and got permission for radio companies to begin buying up each other in a 1996 act of Congress.

The argument was that not only is consolidation good for the business - it's good for the consumer.

Now, eleven years later, many in our business - even on Wall Street - believe that this wave of consolidation has had negative repercussions on the financial well-being of the radio business.

Again, in the last two years, the major radio companies have been stamping their feet for further consolidation. It seems that owning 8 radio stations in the biggest radio markets wasn't enough. There are those who want to own 10 or more stations in the same market.

Yet when it comes to satellite radio consolidating, the radio industry says "no".

The radio industry is concerned about this proposed merger for many reasons...but none of them are truly onerous.

If the radio industry manages their business properly...

• A merged satellite radio company will not significantly impact its listenership
• A merged satellite radio company will not impact radio's revenues and profits

This deal has been examined every which way and in the end, there are no grounds to prevent it.

Bridge Ratings has been studying consumers' reaction to the proposed merger since it was announced in February. Over time and 5 studies, current satellite radio subscribers have become less concerned about the impact of such a merger. Potential satellite radio subscribers are confused, but most will delay their decision to subscribe until a decision is made. This is one reason why year-to-year satellite radio subscriber rates have fallen so precipitously in the last year.

The only negative impact the merger has had on the satellite radio companies is that the news of a potential merger has derailed the sector's growth. That's only temporary.

Satellite radio is a niche business and a merger will not automatically make it a broad-based appeal business.

If consolidation was good for the radio goose why isn't it good for the satellite gander?

Will Traditional Radio be Invited to the Wi-Fi Party?

As a proud owner of an iPhone I was thrilled to hear that Steve Jobs had cut the price of the 8 gig iPhone by $200 just in time for the upcoming holiday season. Boy, that makes me feel just great!

But wait....as radio broadcasters, we should we feel good or bad that Mr. Jobs didn't 'refresh' his new Fall iPods with FM radio receivers.

The radio industry shouldn't feel slighted that FM radio seems to be at the back of the line of applications that are waiting to be included in America's favorite audio toy. We need to be realistic; it's just never going to happen.

Why is this?

Bridge Ratings has conducted studies over the past two years on iPod and MP3 use and believe me when I say that very few users of these devices want a radio in them. It just is counter-intuitive. Focus groups have been asking why it would make sense to put a radio in an iPod.

Steve Jobs has seen the research too. He's not even contemplating adding a radio to his iPods. Because Mr. Jobs doesn't ever look back. He has the luxury of doing what radio management hasn't had the chance to do in over 7 years - look to the future.

Of more concern to traditional radio is the new iPod Touch which comes with Wi-Fi capability and a Safari browser - the best mobile device browser out there. It's on the iPhone and it makes surfing the Internet effortless.

And now a music-playing device has the ability to go to iTunes and download music direct to the player. How far away are we from a time when these same devices can surf over to an Internet radio website and in a Wi-Fi hot zone listen to Internet radio. Not very far.

Generally, the radio industry has done a decent job and has dedicated some resources to its Internet radio efforts. This has occurred in mostly large and some medium markets. The remaining markets/stations haven't taken the step because they are intimidated by the streaming/copyright expense issue and they really don't know how to do an effective job of delivering an Internet radio product.

But if you can feel that Wi-Fi enabled MP3 player train bearing down on you, you are not alone, traditional radio. It's coming and coming fast and as far as Internet radio is concerned, traditional radio's greatest weakness is the vast choice (thousands) of stations available on the Internet. Practically every taste is served. And soon it will be served in a small hand-held device.

Traditional radio's greatest strength is its brand and the current distribution system of blasting its programming across metropolises (is that a word) up and down our great land. Radio's bright leaders should take these Steve Jobs press conferences to heart because each time Jobs steps on that stage, radio's exclusivity and relevance shrinks.

If you have not instituted an Internet radio effort for your company or station, don't wait too much longer. The pervasiveness of portable devices that can bring the world of radio to a hand-held music player or mobile phone is on the horizon. In fact, some already do.

You want to be invited to that party.

The Radio Fortune Teller: Teen Radio to Return

I received two interesting calls in the last 24 hours - from 'kingpins' at high levels at two of the biggest advertising agencies in the land. They wanted to apologize.

Apologies from such lofty men and women who control so much of the advertising dollar in the U.S. are hard to come by, so I promised that comments I may use in my blog or in research we do at Bridge Ratings would be anonymous.

One of biggest - and quietest - radio industry issues to come out of the last ten years has been the theory that one key reason radio is experiencing such attrition from teens and young adults is the perfect storm that was created as technology eclipsed radio's lack of compelling youth radio content. The logic goes that if radio had been a bit more aggressive with radio programming geared to 13-24 year olds over the last ten years, it is possible that radio time-spent-listening among this group would not have fallen so sharply.

But, the chicken-and-the-egg fairytale dictates that radio would have gladly pursued such a course of teen programming if ad agencies would have supported it. No big ad dollars for teen radio - not likely money-hungry broadcasters would spend the resources required.

So, what about those calls from ad agency big-shots?

The calls (I just got another while writing this blog) were about the just-released report by TRU, a subsidiary of Research International, that revealed that teen spending in 2006 had reached $179 billion. That amounts to about $180 in disposable income per average teen per month. These media buyers have apparently awoken from a deep sleep (or deep denial) and were asking poignant questions about the possibility of a rebirth of youth radio and what would I recommend.

I pointed them to a Bridge Ratings' study we published earlier this year that glancingly mentioned some new youth radio formats that had tested extremely well. Not really a mystery since the radio formats were put together and researched with the help of a pretty smart group of average 13-21 year olds.

Formats of particular interest to these media buyers had working titles of "Youth News" and "Current Blend".

"Youth News" is fairly easy to figure out - only you wouldn't believe how good it sounded in testing. That's because this new youth information format was written and delivered by no one older than 24 and it had music throughout.

"Current Blend" is a bit more difficult to decipher. However, I can tell you that it's a music-focused radio format that is not currently heard anywhere on the planet on traditional, satellite or Internet radio!

So, I'm excited because there seems to be a glimmer of anticipation on the part of some of the smarter media buyers about radio formats that focus on 13-21 year olds.

It would seem that they have just been waiting for something like this to come along.

I asked these buyers if radio stations began popping up around the country with these two ideas (and more), would they send more dollars - many more dollars - their way, and these buyers gave a profound "yes"! response...."...but only if they get ratings..." they concluded.

I asked, "Where have you been placing youth ad dollars over the last few years?".

They replied, "CHR and Rock stations, primarily. But we know we're missing a tremendous number of these kids because many of them don't listen to those formats."

I have no doubt that traditional radio can regain some of the lost youth listening it has been faced with in recent years. And these formats will do amazingly well with both of Arbitron's methodologies (diary and People Meter).

Which broadcaster(s) have the courage to step up?

I'm waiting for your call. 818-291-6420.

2010: A Radio Odyssey

Did you see the film "2010", the sequel to 2001: A Space Odyssey? A joint American- Soviet expedition is sent to Jupiter to discover what went wrong with the U.S.S. Discovery against a backdrop of growing global tensions. Among the mysteries the expedition must explain are the appearance of a huge black monolith in Jupiter's orbit and the fate of H.A.L., the Discovery's sentient computer.

It was released in 1984. Good times.

That was before the Internet, before rap replaced pop, before iPods replaced discmans, file sharing changed music purchase habits, satellite radio, digital music, Internet radio, and terrorism was something that happened overseas.

Hard to believe we're closer to 2010 now than we are to 2001.

And 2010 will be a tipping point for radio in many ways.

From developing behaviors of radio listeners, changes in the ways they use radio are occurring more rapidly than perhaps is commonly known. Much like time-lapse photography where you don't recognize change unless you piece together views of behavior over long periods of time, the change in media has truly been a rapid development over a short period of time and radio's 'light at the end of the tunnel' is more likely to be an on-coming train than an end to difficult times.

And like the movie "2010", if radio had had the ability to send a probe into the future back in 1984 to learn what went wrong, hindsight would most surely have kick-started an industry wide reaction that would have perhaps led to a different outcome.

For here we are a mere 29 months from 2010 and radio is running out of time.

Running out of time to remain competitive.

Running out of time to develop its people.

Running out of time to adapt to the digital universe.

Running out of time to learn how to microtarget.

Looking back over the last 6 years of work with clients of Bridge Ratings, it is becoming agonizingly clear that while the radio business has made solid efforts to grow its industry and to adapt it to the changing technological realities, it truly has not done enough. And this is what concerns me: current senior management at radio's best companies is not embracing the fact quickly enough that the future of our business rests solely on their shoulders - on their watch.

Today's senior radio managers will be long gone leaving their trainees the keys to the kingdom. It is the opinion of many that the next generation of radio leaders, in general, do not have the technical and operational knowledge or experience to lead this business into the future.

Left in the hands of less experienced, inappropriately trained and myopic junior management, the industry will struggle to maintain status quo.

There is little going on in the area of strategic development in our business: programming development, creative sales development, new revenue stream development, marketing development and personnel/management development.

Frankly, I'm flummoxed (great word) about why this industry doesn't respond to the implications of its future.

Certainly, there has been plenty of coverage of multiple future forecasts about impending change and how fast it is occurring and the impact of audience attrition. So, it isn't non-awareness - and it isn't stupidity.

It is inertia more than actual resources that is the problem. And inertia in many ways is a much more difficult quagmire to be free of.

Yes, 2010 is coming fast and radio seems less prepared to exist in a technologically accelerating world.

It does, however, have a resource most of its competitors covet: its people. And its people are what just might save the radio industry from being swept over by the tide of change.

Let us hope that the powers that be know this too.

Radio Moves Consumers to Buy

Once again, radio gets a bad rap.

This one comes from the University of Texas professor Stan Leibowitz who claims in a paper first published in January of this year that radio airplay can actually hurt music sales. I'm not sure what, if any sample, he used to come to this conclusion, but study after study we've done at Bridge Ratings is more than enough to convince me that radio moves music product. A variety of other industry research confirms this notion.

Both physical CD's and digital downloads are positively impacted by radio airplay; that's what our consumer samples have told us. We've been doing these types of studies since 2002.

In fact, let me reiterate a quote from the summary section of a study Bridge Ratings conducted in 2005 and confirmed again in '06: "Radio airplay - especially of new music - directly and positively affects consumers interest in listening to and subsequently buying new music. Digital downloads are the primary media of the young and early adopter young adults, and CD sales are still the media of choice for adults, especially those with younger children."

Our studies have gone on to establish that a radio format leaning heavily on new music and structured in such a way as to allow listener input on the songs being played, would be highly successful with the 13-21 year old age group with bleed-over into the upper 20's. This is because (we discovered) that no matter what the age group, consumers use traditional radio stations to satisfy their need for "surprises" in the form of either unexpected programming or new music.

And it is specifically the stations currently airing a predominance of current music that garner an audience whose number 1 reason for tuning in is music discovery. Consumers of this type of radio use those radio stations as a filter, screening out the poor and playing the best of the rest.

Yes, radio does sell music - and it sells tons of other consumer products. Music just happens to be easier to sell on the radio because the product is the commercial.

Here's a calculation the record labels might want to consider:

A Los Angeles radio station with average ratings playing 8 current songs an hour is, in essence, playing 8 commercials for those artists and the record labels. We've proven music moves product.

Over the course of a typical week, if that radio station received compensation as it would for its typical commercials, it should receive $2,150,400 for the value of the airtime that week alone!

Now, of course, these radio stations benefit greatly from accessibility to that music product given so generously by music labels. It is, after all, the station's programming content. And, truthfully, those stations garner ratings that generate revenue that generates profit. True. It's a symbiotic relationship this thing that radio and the labels have, but it works - has worked - and will continue to work.

To say that radio airplay hurts music sales is a misguided statement which either needs to be recanted or at least better explained.

Radio: A Great Place to Work?

I have just completed reading a massive study on the Best Places to Work. Guess what? Radio doesn't fare very well.

It's fascinating in that the study takes into account issues that get to the root of what makes employees happy and productive:

* The Credibility Index
* The Respect Index

The study consists of approximately 40 statements that cover company credibility, respect, fairness, pride and camaraderie as well as agree/disagree statements about the work experience and satisfaction of the work along with how the company itself contributes to employee feelings of fulfillment.

The radio industry performs so poorly on employee job satisfaction, job fulfillment and company credibility that it has a negative score. This means that more people are leaving the industry than are joining it and a high percentage (29%) of those who remain employed in the business are either worried about their future with the company they are with or are seeking other employment.

When one considers all of the issues facing the radio industry mid-2007, I don't believe companies place employee satisfaction or fulfillment near the top of the list. The most important matters of financial and legal stability remain at the top of lists.

In one intriguing comparison report, company management rank "employee morale and job fulfillment" as one of their top three most important issues.

The same questionnaire filled out by company employees ranks "employee morale and job fulfillment" out of the top 10 most important issues employees believe are considered by their employers.

The radio industry has its problems whether it be audience attrition or technology challenges but it has become so myopic in its view of the world when it comes to the welfare of its most important resource - its people - that until the industry returns to treating its people with respect, caring about their futures, and motivating employees all of the other challenges the industry faces will hardly have a chance of being overcome.

Many of managers and radio industry employees I speak with have known for some time that radio is no longer an industry that lives up to the promise it did 30 years ago, but to see the industry I love rank so low in black & white, truly brings home where things stand.

Chicken Little?

I just returned from the "New Media Seminar 10" in New York City. It's an event sponsored by industry publication "Talkers Magazine" published by long-time industry visionary Michael Harrison. The event draws about 600 programmers, managers and related people who are tied to the news/talk radio industry.

Great group of people. Excellent seminars. Thought-provoking commentaries. Stimulating cocktail party discussions.

Yet, some of the buzz being dispensed to the attendees this year is that "terrestrial radio"is in serious trouble if it doesn't get its act together. There was a sense among those there that news/talk and talk radio is the salvation of terrestrial radio primarily because music radio is dead, dead and more dead. It's this MP3 player thing that's going around.

I respect all of those in attendance who got up on the dais and the podiums and tossed out this theory, philosophy or prediction, but they're just plain wrong. And I'm getting fatigued with "bloggers"and journalists who continue to spout this incorrect theory.

It's a matter of degree really. Certainly, people are finding multiple audio alternatives for their audio listening enjoyment. They're all good and serve a distinct purpose and fulfill a specific need and mood. And the "pie" is being divided up into more pieces.

But all the research I've seen indicates that the public love this. You've heard that "Content is King"? For consumers "Choice is king".

Terrestrial radio will sustain whether it is Talk radio or music radio. Why would anyone listen to terrestrial FM music radio when they can provide themselves all the custom songs they want - whenever they want?

Because radio provides something MP3 players don't: surprises and music discovery. "Pandora's" more of a threat than MP3 players. God help us all if royalty rates slam the door shut on Pandora and others like it. The point is, music on terrestrial, when programmed properly, can easily provide a unique component that will cause people to continue to want to tune in when they are in the mood for it.

So, if you know someone trying to sell this bill of goods that music on FM is going to be extinct within 5 years (let alone 10), have them call me. My personal cell phone number is 323.829.3201. I'll be glad to explain it to them.

Meanwhile, you know what happened when "Chicken Little" cried "the sky is falling", right? Do you even know who Chicken Little is?

He was wrong.

Nostalgia: Everybody's Sgt. Peppering

Hard to believe that June 4 is the 40th anniversary of the monumental "Sgt. Pepper's Lonely Heart's Club Band" album by the Beatles. And, rightly so, in this world of 'everyone-gets-to-voice-their-opinion-blogs', everyone is writing about it.

"Sgt. Pepper's" changed so much for so many, but in particular it had the power to change the thinking of a generation of young people. It influenced worldwide culture. 1967 was a watershed year and the release of such a creative musical endeavor represented a lifestyle shift to a higher gear.

Some of the people who were in their formative years (between 16 and 20 years of age) at the time eventually would find themselves in the radio business and "Sgt. Pepper's" systematically and ethereally had an impact on the early direction of rock radio.

When the album first was released on June 4, 1967 radio was all about the single; pop hits penetrating listeners' ears on powerhouse stations like WABC-AM in New York, WLS in Chicago and KHJ in Los Angeles. Suddenly, fans of the Beatles noticed something changed with their favorite band. The group had created an entire statement with their album; all of the songs seemed to tie in with the theme of the album and suddenly we all started listening to music differently - seeking subtle tie-ins between song and concept and realizing that "With a Little Help From My Friends" really sounded like crap on AM, but sounded like technicolor on FM.

And like many like me at the time, "Sgt. Pepper" opened a door in my mind about how cool radio could be.

What is amazing about this entire "Sgt. Pepper" experience is that while the Beatles stretched themselves to be creative with the recording of this album, they didn't really appreciate at the time of the recordings what affect these songs would have on the world. The only thing they cared about each day going into the studios was that they recreate on tape what they heard in their heads, consistently pushing George Martin to produce what they heard and seeking guidance from engineer-extrordinaire Geoff Emerick to make it sound unlike anything anyone had heard before.

The album took six months to record - a huge detour in music recording in those days. Prior to "Sgt. Pepper", the Beatles - and most other artists - would more often record an album's worth of songs in a week and get it pressed and out to the public within the month. "Pepper" was different because the 'boys' had decided just prior to recording the album that they would stop touring and devote their time to quality recordings. They were focused and on a mission.

On this 40th anniversary of such a superb creative effort which influenced active and passive music lovers alike, it's with melancholy that I think of the general lack of creativity that is presented in the music and radio business these days.

Generally, the music released by record labels seems uninspired. And while there are some very interesting things happening on the Internet with Indie bands, in general the malaise that has stricken the radio industry has infected the music industry - or vice versa.

There are a small number of creative radio stations popping up around the country, but there is also a tiredness that is pervasive in the radio industry - including satellite radio - that also overcomes people in their 60's when they realize they just don't feel the same when they get out of bed in the morning.

When "Sgt. Pepper" was released, rock radio and the music industry were bound together in an adolescent growth period for both industries. The two businesses seemed to work more closely together to make "it" work. As a program director for rock radio stations in the early 70's, I can attest to a different relationship program directors had with their music company reps. At least I felt we were on the same team with the goal of getting the best music (on vinyl) out to the masses.

"Sgt. Pepper" opened the door and a flood of interesting new albums followed:

• "Bookends" by Simon & Garfunkle, "Wheels of Fire" by Cream, "Waiting for the Sun" by the Doors and "Cheap Thrills" by Big Brother & The Holding Company (Janis Joplin) - all in 1968.
• "Blood, Sweat & Tears", "Blind Faith", "Zeppelin II" and "Abbey Road" in 1969.

What will it take to revitalize the music and radio industries' in 2007? It's anyone's guess. Inspiration can come from anywhere.

But we need another "Sgt. Pepper" event.

I, for one, don't think we'll ever experience such a cultural phenom again, which is a shame because it literally changed the world.

And in this corner....Pandora Mobile Radio!

Sprint Nextel Corp and Pandora Media Inc., have teamed up to offer the personalized streaming radio service to its mobile phone users. And Pandora is likely not going to stop there. We figure Sprint is just the first of many mobile carriers. Pandora also announced this week an up-coming Wi-Fi music player. Uh-Oh! Faster than you can say "Here comes wireless Internet Radio", we've got a new contender.

In fact, Pandora founder and all-around nice guy Tim Westergren was quoted as saying "We knew that if we wanted to be radio with a capital 'R', we have to be everywhere, and not just on the Internet. We knew we had to make it mobile."

And so, with this announcement, the wireless Internet radio era has begun. I believe that in the future this watershed announcement will be known as the moment everything changed. You are witnessing history in the making.

For as Bridge Ratings has been projecting for at least three years, wireless Internet radio poses the greatest threat to terrestrial radio for just the reason Mr. Westergren stated - it had to be available everywhere.

And while our studies also show that about 25% of Americans are highly interested in some form of radio on their cell phones, the true flood will begin when portable Wi-Fi Internet Radios begin selling at Walmart and Target.

But what it comes down to for traditional radio is not to get spooked by all this technology. At the end of the day, it comes down to how good your product/content is. As radio consultant Walter Sabo has said, "every day every medium available to the consumer starts from scratch to win an audience."

HBO proves this content rule almost every week. Fox figured out a way to get 30+ million viewers to tune in for "American Idol" despite of all the competition. It's true.

The word "compelling" is thrown around a lot these days but it's becoming clear that regardless of the medium, whatever the content, it's got to grab the audience because it's a dog-fight out there. Every day - every tune-in - every moment has got to have elements of fascination to it.

And while terrestrial radio is bound to have some issues with wireless Internet radio, we're finding that given a choice between a wireless Pandora and an MP3 player, almost 50% of the digital player owners we researched think that Pandora can give them something their iPod can't: surprises and music discovery.

Welcome to the new frontier; it's only going to get more interesting!

Tivo For the Radio? It's Here!

I've been invited to participate in a grand new advancement in technology which marries radio and cell phones together in a way that's never been done before.

It makes radio interactive with its listeners and gives its listeners on-demand content!

Imagine listening to your favorite talk show personality on your way to work in the car. They just hit a great patch of compelling programming that pulls you in when your road trip is over. You've got to get out of the car. But you really would like to hear how this talk segment goes. Sorry. You turn off the radio and move on with your day.

But what if you could pick up listening to that radio show where you left off and time-shift that program to whenever you have some time later on.

Or maybe you want a news update now, not at the top of the hour when the local station's news comes on. Wouldn't it be great if you could access national or local news when and where you wanted?

How about that local traffic report you missed.

Or the weather alert.

Well, it's coming to a cell phone near you and you don't need to download any special software nor do you need a special phone. In fact, it works with any phone - any carrier - anywhere!

This miracle is forthcoming in a matter of weeks from a new media company called Cellecast. And while it's a concept that will work for any type of radio programming, it's my opinion that Cellecast was made for news/talk radio.

The cool thing about NewsTalk and other information programming is its relevance and immediacy to what is going on in the world right now. And while I will likely want to go back into the archives of some of my favorite talk radio personalities to hear portions of their shows I've missed or only heard about from friends, it's today's shows and today's commentaries, news, sports and entertainment information that I want to be aware of.

Cellecast finally breaks through the last wall that has prevented radio from offering its listeners on-demand content in an easy-to-use manner.

In fact, while radio has done an outstanding job of offering podcasts/webcasts of local station content, Bridge Ratings confirms that the growth of the webcast audience has been stymied by its lack of user-friendliness.

There are early adopters and early majority consumers who have spent the time to learn how to find and download their favorite podcasts to their computers and then on to their MP3 players, but frankly, folks, the majority of people who would love to listen to a podcast are put off by the clumsy nature of its "process of consumption". In other words, for most regular folks, it's too complicated.

But Cellecast's on-demand concept offers a solution. No more need to download a webcast/podcast to your computer or to your portable device. Just dial it up on your cell phone and listen! Genius!

Cellecast has also figured out how to offer music radio as part of its catalog of content while most companies are dealing with streaming royalty rates and record label authorization. And while the immediacy of music radio doesn't compare to that of Talk Radio, I can see the wisdom of wanting to go back to a point earlier in the day when I heard a new music release on my favorite station and I want to hear it again - now! As long as I can remember when I heard it, I can go back - time-shifting - and hear it again.

So, look for Cellecast to start making noise this summer and ask your cell phone company how you can get it.

I'm enthused about it not just because they've asked me to help advise them, but because it's such a smart idea and a good one for consumers and radio alike.

The Light at the End of the Tunnel: In-car Internet

Imagine my joy/shock when I read this week that the Internet is coming to automobiles later this year. And when it arrives it will start to change how we interact with each other and the world around us. And, oh yeah, that includes listening to the radio.

In-car Internet has been a future possibility now for several years. Bridge Ratings began projecting in-car Internet radio listening estimates back in 2004 when its arrival was still unpredictable. However, 2007 will be the year cars and tech really mesh, thanks in part to Ford's Sync, a hands-free cell phone gizmo. It will also let you control your MP3 player using voice commands. Sync will be available on about a dozen 2007 car models in the fall and, yes, it works with those 100 million iPods out there.

But this is only the beginning. Future versions of Sync will incorporate Wi-Fi so you can download your email while driving through a Net cloud and then have the system read them to you.

And there's something called Autonet Mobile that wants to turn your car into a rolling hot spot. It will allow for high-speed Internet reception and seamless data streaming; that means you can listen to Internet radio, or browse the Internet, or pick up your email without signal drop-out. It also means everyone in the car could share one connection.

You may have once heard the joke that you shouldn't always look at the light at the end of the tunnel as a good sign; after all that light might be coming at you. Well, in-car Internet radio with thousands of streaming options as well as most of your favorite terrestrial radio programming is on its way and by 2008 traditional radio will have yet another competitor.

What's terrestrial radio to do? Well, it can't do too much about this one, folks, but what it can do is step up in this battle against increases in streaming royalty rates. Traditional radio's objection to the massive increases in streaming costs has been luke-warm and timid. In fact, the loudest, most thought-provoking objections have come from National Public Radio because they understand the impact of these large increases on their business.

Once again the National Association of Broadcasters and/or whatever other lobbying group radio can put together, is failing radio. When all but the streaming initiatives of the largest radio companies will survive the many-fold cost increases proposed by the Copyright Royalty Board, radio, as an industry, will be unable to effectively compete.

Internet radio industry spokesman Kurt Hanson who knows this stuff in his sleep was recently quoted as saying, "The implications of this (rate increase) are potentially fatal for Internet radio as an industry..."

So, yes, there is something radio can and should do as the light at the end of the tunnel draws closer: it can preserve its right to distribute its content over the Internet so that it will be there when its audience arrives.

This would seem to need to be pushed to the top of radio's priority list - but will it?

Radio Gets a Military Strategy Lesson

Did you see the news item this month from ZenithOptimedia that Internet advertising will surpass radio spending next year! Another example of the old man getting beat up by a youngun. But this shouldn't be a surprise. The radio industry has seen this coming for some time. You don't witness 35%+ Internet advertising growth rates without feeling them breathing down your neck.

But poor terrestrial radio has really been getting the short end of the stick these last few years.

First it was the dot-com bust, then the 9/11 advertising pull-back, then satellite radio's big PR push between 2002 and 2005, alongside Gen-Y turning off their FM radio's so fast you can hear the massive click in unison.

The Internet started out as a tough sell to ad agencies. In the late 90's, my LA station, KCBS-FM was among the first radio stations to build a working Internet business model for a new radio revenue stream. We had to be creative because advertising agencies in the late 90's by and large didn't see the benefit. They couldn't relate to the Internet. It only took Advertising agency media queens 5 years to figure out that audiences were splintering off traditional radio and that it was prudent to follow them.

Now radio is smaller part of a pool of ad dollars that is only slightly larger than it was in 2000 and that pool is being spread around to as many media targets as possible and still be effective. Radio used to be the targeting medium, then the Internet (thanks to Google) taught ad buyers how to pin-point buys and traditional radio became a reach medium officially. Unfortunately, in today's consumer market, reach and frequency isn't as effective as it used to be.

The Pincer Movement

This reminds me of a classic military strategy that has been used to some extent in nearly every war in history. It's called The Pincer Movement or Double Envelopment and it has been played upon traditional radio perfectly.

The maneuver is mostly self-explanatory; the flanks of the opponent (traditional radio) are attacked simultaneously in a pinching motion after the opponent has advanced towards the center of an army (Satellite Radio) which is responding by moving its outside forces to the enemy's flanks in order to surround it. At the same time, a second layer of pincer attacks (on-demand audio such as iPods and the Internet in this example), so as to prevent any attempts to reinforce the target unit.

And like most armies caught in this pincer movement, radio never knew what hit them. They became distracted by the foe in front of them (satellite radio) and didn't see the second layer in the rear-view mirror.

Such battles often end in surrender or destruction of the enemy force, although the encircled force (radio) can attempt a 'breakout'. A breakout is done with the encircled forces (radio) attacking a weak point in the encirclement, with allied forces attacking the same weak point, until there is a breakthrough and the encircled forces can move again. Hmmm...does radio have any allies that can assist in this battle?

Once the Radio industry recognizes that it is encircled, it should be asking, "What are the weak points in the encirclement?" and can radio use any of its "enemies" to attack these soft points?

I can think of several - in fact, Bridge Ratings has been publishing studies for the past two years uncovering this exact strategy. As an industry, however, radio has performed an uncoordinated attack and as any general will tell you, a confused and unorganized enemy is that much weaker.

Is the radio industry a weak opponent? If so, why?

Could it be that we have had years of poor leadership from our industry 'generals' who have been mis-leading (or poorly leading) our major forces (Clear Channel, CBS) without an apparent understanding of strategy or even the battlefield?

Or could it be that our strategist, the National Association of Broadcasting, has failed the industry by not leading the charge?

In any case, while ad spending on Internet radio still lags far behind terrestrial radio (but is advancing), the squeeze is on and total Internet spending will surpass the radio industry by the end of 2008 with about $20 billion that in all honesty is mostly new money. Radio can benefit from this windfall by not assuming that it has been left standing at the starting gate. It needs to continue its aggressive approach to capture what used to be called non-traditional advertising - new media advertising which is about to become 2008's version of traditional.

Think about it!

CBS Radio: Righting a Sinking Ship

News of Dan Mason being named CEO for CBS Radio came as somewhat of a surprise this week, not so much because I don't think Dan is a good choice - in fact I think he's the best choice. The surprise comes from the wisdom shown by the company's fearless leader Les Moonves. And it's not Les specifically that's so surprising here, it's the fact that it took a TV guy - not a radio guy - to make the first major move at righting a troubled radio industry.

The radio industry has no shortage of brilliant minds. There are plenty on the beach who have suffered the slings and arrows of consolidation. There are many more who have slid into good jobs in related industries such as the Internet and other technology companies. And, yes, there are many still employed by the industry. In fact, the radio industry's 'bench' is so impressive that the consolidators out there have essentially decimated the brain trust that would've led them down the primrose path into a new era, and there are still plenty of good minds in the business.

Why, then, did it take a TV guy to make this kind of decision?

Traditional radio has lost its fighting edge. Consolidation has taken the courage out of the heart of middle and upper management. These are the people who, in the past, would've knocked on their boss's door and been invited in to discuss tough decisions and look to the horizon with senior level management and strike a path that would take their company, their radio station, their industry to a logical next step. There is little of proactive thinking left.

Instead, many middle and senior level radio executives have been emasculated. Their reason for being there has been eliminated or severely reduced in many cases. How do I know this? After more than 25 years programming and managing radio stations in mostly major markets, in recent years I have had the privilege of consulting programmers and general managers who, since 2000 have had their job descriptions changed - not necessarily on paper - but rather in real-world experience. Each week I spend several hours discussing management challenges, personnel issues, strategic and tactical solutions and discussions on 'how to manage up'. Their frustrations come from being highly paid, becoming ineffective managers who used to have autonomy over their stations and who could run their own businesses and deal with the fall-out depending on whether they failed or succeeded. These days every decision is second-guessed and because there is so many stations to manage, their management style has become one of defense. They miss the days when they could plan, plot and be proactive with their teams.

As consolidation's black shadow crept over our industry and settled deep within its joints, more and more top-down management style became the preferred centralized system of controlling so many stations. An arthritic management style became the norm. Clear Channel wrote the book on this subject. During my years with CBS, all of us general managers knew we were a fortunate lot because we actually had senior management who trusted us and gave us the resources we needed to win and run successful businesses. Many thanks to Nancy Widmann, CBS Radio President pre-consolidation, and Dan Mason, CBS Radio President immediately post-consolidation. Dan ran a different ship than Nancy, but his style still focused on fiscal responsibility and earned autonomy at the station level.

After Dan, there was Mel, then Joel and the rest is history.

It took a TV guy, Les Moonves, in one grandiose decision, put CBS radio, if not the entire radio industry back on track. It's because perhaps the TV guy is used to making bold decisions. TV is a different business than radio in many ways often because decisions about programming and people are made with the courage of making a bet on tomorrow, of seeing the positive side of trusting people and of giving good people the chance to prove themselves. Sometimes those decisions end up being wrong, but more often than not, those decisions generate exceptional results.

So, my hat's off to Les. I met him a few years ago at a CBS Radio managers' meeting. He struck me then - as he does now - as a bold decision maker who wasn't intimidated by the job; someone who had the courage to make bold decisions. He also had a supportive Mel Karmazin and then Sumner Redstone to give him room to make those decisions.

Courage. Faith. Confidence. This is why it took a TV guy to right a sinking ship. Many of us are optimistic about our industry for the first time in many years. We look forward to seeing how this plays out.

What's Wrong with This Picture?

Have you ever been apprehensive about some piece of information that you assumed was true but hadn't any statistic to confirm it? The fine folks at Inside Radio revealed such a stat during the RAB festivities in Dallas last week.

Many radio industry observers, including myself, have drawn conclusions about the consolidation of the radio business that point to the "C" word being responsible for much of the industry's problems of late. Whether you are a sales person at a radio station or a management expert, one of the arguably key issues facing the industry is the lack of focus that comes with one manager overseeing multiple stations, staffs or budgets.

As I pointed out in a recent missive here, the problem of too much on one's plate could be at the root of the listener death in Sacramento where a station's promotion staff approved what became a deadly promotion that involved the consumption of gallons of water by its listeners all in the name of winning an electronic gaming system. Had the general manager been more aware of what was going on 'down the hall', I believe this promotion would never have made it to air. The GM (and perhaps other managers) just had too much to keep track of.

Now we know just how prevalent is this issue of consolidated management and staff. Inside Radio reports through their analysis that there is one General Sales Manager in our business handling 13 radio stations. Another's doing 12 and another 11. Four GSM's handle 10 stations, 11 oversee 9. 34 have eight stations, 48 have 7 stations.

129 General Sales Managers handle 6 stations, 198 have 5, 325 have four, 509 have 3 and 1359 GSM's have two stations. Interestingly, there are still 2477 GSM's out there that still handle just one station. There are 3921 situations out there where the GM is also the GSM!

All of this to say that pulling back the covers to reveal to the light of day these statistics brings a certain soberness to this whole discussion about whether multiple stations under one manager is truly the most effective way of bringing the radio business out of its doldrums.

According to these stats, of the approximately 10,000 commercial radio stations in the U.S., only 25% are managed by one general sales manager. You do the math: that means that 75% of the country's commercial radio stations either have one GSM overseeing multiple properties or the GM, serving also as the GSM, has other issues on his/her plate.

Operational efficiency (and bottom line improvement) is at the heart of why this development occurred. Perhaps it has helped with the bottom line - at least from a personnel cost perspective - but do you think it has done much for efficiency?

Part of my job involves speaking with many members of station management on a weekly basis. Most of those I speak with tell me they are not being more efficient and there is frustration that these managers can't be more efficient that they just can't be proactive.

I doubt we'll see a change in this strategy on a mass scale any time soon. Along with efficiency problems with station management, consolidation has also brought with it higher purchase multiples and higher debt on one side and Wall Street analysts on the other both squeezing the ability of the radio business to operate effectively. This pressure will likely prevent most broadcast companies from returning to yesteryear's station management structures. They simply can't afford to.

One can only hope that more wisdom enlightens our industry's leaders and a solution to this madness can be found.

The Telephone Game

Remember when you were a kid when you had several friends together in a row one of you would whisper a word or phrase in the ear of the kid seated next to you and he whispered what he 'thought' he heard you say into the ear of the kid next to him and so on and so on? The fun part of this game was when the last kid in the row repeated what he was told. Invariably, what that last kid repeated was considerably different from the original message. Oh what fun we had!

Did you know this game is still going on?

Yes sir, and the thing to worry about is that it's being played primarily by members of the print media and the words they are butchering directly impact the image and perception of the radio business.

I must receive at least three calls a week these days from print journalists seeking answers or advice that can help them write a column. Typically, the first question out of their mouths is "So, is it true that radio is dead?" Before responding, I ask why they ask. I can't remember one of the 15 or so journalists I've spoken with this year telling me that they ask because they had found reliable statistics supporting this claim. Their sources have 100% been other print journalists. Even better, they tell me they'd read it on Internet blogs!

This telephone game emaciates the truth as one journalist after another not only repeats a story that is not true but that is often embellished.

The truth is that for the third year in a row our research at Bridge Ratings shows that the number of people listening to AM/FM radio stations on a weekly basis has slipped only slightly in recent years. Between 2001 and 2006 our information indicates this number has gone from 96% to 94% of the U.S. population using traditional radio in a typical week. Use among younger listeners has been reduced more noticeably (92% to 89%), but there are still 34 million 15-24 year olds still listening every week.

It is only fair to mention that time-spent with traditional radio is falling slightly with 15-24 year olds overall - only about thirty minutes a week over the last three years. A small percentage (known as innovators or early adopters) of this younger generation has turned off traditional radio faster than their 'mainstream' counterparts. This is an audience segment radio may never see again unless broadcasters accelerate their adoption of new technologies and get counter-intuitive and rehire some of the key programming minds that have been lost due to consolidation. But there is no significant decline in listening overall.

Traditional radio has gone from being an exclusive club with only one member to a club where multiple players have joined. The Internet, MP3 players, satellite radio - digital technology in general has joined the club in a voting block that is hard to deny. But the club member with the biggest clout remains traditional radio.

Even in-car, long the safe haven for terrestrial radio, is being invaded by these new technologies, but not at levels that would cause any right thinking individual that traditional radio is dead. In a new updated Bridge Ratings study of in-car media use, 74% of those interviewed said that radio was still the medium of choice in-car even when other technology was available including satellite, MP3 players and cell phones!

So, when you read another news story about the demise of traditional radio, remember the days of the telephone game and how much it made you laugh back then; how silly it was that communication along a line of friends could get so mangled that the original message bore no resemblance to the words repeated by the last kid in line. In general, perhaps due to competition for column inches today's journalists write what they think will get published often without regard to truth or reliability.

The truth is out there - it just may require more digging to find it.

Keeping Up with Gen-Y

I can't tell you how long the alarm has been sounding for terrestrial radio to get its act together to save its future by developing new programming and content that will be compelling enough for today's under-25 year olds, but I do know that Bridge Ratings has been publishing studies about this for at least four years. And I know several other highly-respected researchers who have been doing it longer.

Yet have we seen any creativity on this front? I can't say I have. There are some youth-oriented attempts on HD radio, but these kids don't care about HD. Even satellite radio hasn't developed any programming that will attract this hard-to-reach generation. Is everyone just giving up? Knowing how important it is to develop future audiences, one would think both traditional broadcasters and the satellite radio companies would dig in their heels and get with it.

I was invited to present some findings at three corporate retreats last year. Bridge Ratings was commissioned to find out what terrestrial radio could do to make its business relateable to Generation-Y. Everyone nodded their heads, slapped me on the back to thank me for opening their eyes, yet nothing's been done!

Frankly, perhaps the reason nothing has surfaced that is compelling is because technology and Gen-Y tastes are a moving target and they are moving too fast for radio to keep up. First there was P2P music file sharing; MP3 players, iPods, iTunes, then Myspace, Facebook, YouTube - it can be exhausting for some. This I get. Now comes something new that will blow your mind: Mobile Social Networking Software or MoSoSo which is essentially the sophisticated reach of cyber-social networks like MySpace combined with the military precision of GPS.

New cell phones equipped with this software were marketed to the college-aged life-group by Rave Wireless last year. It's mobile GPS technology that enables students to find like-minded buddies (Bored? Love Indian food? Meet me under the clock!), it also offers a cyberescort service linked to campus police. If the student doesn't turn off a timer in the phone, indicating safe arrival at a destination, police are dispatched to a GPS location. Your friends can find where you are at any given moment and can keep tabs on your whereabouts all day long if they want. Fortunately, the locator function is strictly "opt-in", meaning users can turn it on and off at will.

The point here is that the more time that goes by, the more convinced I am that terrestrial radio - even satellite radio - are being left in the dust as today's youth clamor for more customized, on-demand, "what I want - when I want it" media which includes the high-speed train known as mobile phones. Cell phones are becoming, if they haven't already become, the new 'radio'. Cell phones serve the same function today as portable radios did two generations ago; they are just more sophisticated social technologies that are empowering groups of our youngest consumers.

Technology will not slow down. Shelf-life for any of these things grows shorter and shorter. The first wave of MySpace users long ago abandoned it and have moved on. Fodder for technology companies to stay ahead of the game. In fact, most highly-focused consumer-oriented tech companies have divisions of brainiacs whose only job is to work on what's next.

Has radio invested in anything similar for its future? Or has it given up on keep up with Gen-Y only to be satisfied with an aging listener base? This is what keeps me up at night.

The "End" of Innocence

The time has unfortunately come in our industry where one event defines a tipping point that has been coming for some time. I speak, of course, of the radio contest incident at KDND-FM, Sacramento in which a listener lost her life after consuming nearly two gallons of water competing to win a computer game.

Enough has been written about what happened and debate has been swirling as to what the lawsuit and any potential FCC action may bring. With this unfortunate situation comes clarification of what's wrong with the radio industry.

Fingers have pointed at consolidation as one of the principal reasons the radio industry is in its current state. Much has been said about how combining radio assets in a given market in order to save money has eliminated many hard-working, creative and effective people from management to on-air personalities, traffic directors and support staff. From my perspective having spoken with managers on a daily basis since consolidation (1996), there has been this undercurrent of concern expressed to me about deteriorating effective performance by station managers.

Where once one manager oversaw one station's operations (General Manager), one Program Director creatively built one station's programming, one Sales Manager oversaw one sales department, the late 90's saw a proliferation of multiple stations or staffs falling under one manager. It has been expressed to me on numerous occasions as far back as 1999 that this type of structure was a defensive approach to management, i.e. too much was going on within the radio stations for management to effectively keep their finger on the pulse, to effectively plan ahead and lay the groundwork for smooth operations and excellent communication.

In order to accommodate this demand for one's time, managers delegated responsibilities. After all, there were only 18 hours in a workday and not enough time to pay attention to the minutiae that often makes these businesses work.

This is at the heart of what happened in Sacramento. General Managers used to participate in weekly promotion meetings, if only to be aware of what the station was up to and to provide guidance in the event there were any questions about legal or ethical issues related to promotions or contests. With consolidation these promotion meeting appearances by GM's began to disappear. If the GM was interested enough, he/she would have notes about the meeting submitted to him afterwards and if the station was fortunate, he would actually read them.

I know programmers, sales managers and general managers today who submit weekly or monthly reports to their bosses and believe their reports are never read. There just isn't time.

And in Sacramento, the lack of General Management involvement with the promotion department has exposed how one person can only do so much. Entercom owns six Sacramento stations. Entercom Sacramento GM David Lichtman likely was not involved enough to be aware of KDND's "Wee for a Wii" promotion. In all likelihood his non-involvement was rooted in his time management. From what I know, Mr. Lichtman is a good man and has been a good executive for Entercom. He just couldn't be everywhere he needed to be.

And while they may not be as significant on the surface as his missed opportunity to stop this promotion before it started, it is quite possible that Lichtman's involvement with 6 stations caused other important decisions, strategies or personnel issues to fall through the cracks.

This single event has brought to the forefront a significant symptom of what's wrong with the radio business whose managers used to be proactive, where general managers would see the future and plan for it - not only react to the here and now. Where sales managers would spend time with their staff and train to excel. Where program directors would have time to consider ways to improve programming and stay ahead of their listeners.

The implications of consolidation become more clear each day, but nothing crystallizes how consolidation has contributed to distraction of management more than what happened at KDND-FM, "The End", in Sacramento.

The industry can learn from this event. But will it?

Wall Street's Delusion

Banc of America securities analyst Jonathan Jacoby has just returned from CES in Las Vegas with some good news and some "bad news" for terrestrial radio. He also returned exposing his ignorance of true listener behavior.

Mr. Jacoby says that he "found many new devices/systems that are making it easier to use cell phones and MP3 players in the car." He continues, "several products on display integrate the iPod and cell phone into the car. Our negative outlook for terrestrial radio is based largely on our view that radio's in-car listening base will be eroded by compelling alternatives.

"On the plus side," he adds, "the supply of HD radio units seems to be building. There were more HD radios on display than at last year's CES," and many major audio manufactures have gotten into the game."

Let's address these comments:

1. Mr. Jacoby, as substantiated by Arbitron's People Meter technology and more granular research by Bridge Ratings, terrestrial radio has evolved into more of a reach medium. Radio stations have larger weekly audiences than previously thought. From a radio sales perspective, sales managers will have to finesse a new approach to selling air time with reach as the emphasis over "average quarter hour", but that's not a major river to cross.

The point here is that in spite of the in-car alternatives Mr. Jacoby mentions, Americans still listen to the radio and attrition overall is slight. Terrestrial radio is still a key viable in-car option and only the very young early adopters and innovators in the 16-22 year old age group are significantly more likely to turn off the radio for longer periods of time. But they still listen.

Terrestrial radio competes quite well in-car with other alternatives. The amount of time spent in-car with terrestrial radio depends on quality of content.

2. HD Radio units available seem to be building. Not pertinent. Bridge Ratings estimates that by this time next year, there will be 1.9 million HD radio units in the hands of consumers in the U.S. an increase of some significance over the approximate 1.1 million we estimate were sold by the end of 2006. But it's not enough. The growth is disappointing. We project less than 9 million HD radio consumers by 2010. Hardly something to be excited about when satellite radio will have 30 million and Internet radio will have 147 million.

Let's look at consumer interest in HD radio. In a soon-to-be-released update to its 2006 study, Bridge Ratings reveals that mainstream America, a life group we call "mainstreamies", has little understanding of what HD is or what its benefits are. A disappointing 26% of this group are even familiar with the term and less than 1% know that you have to purchase additional hardware in order to use it. 63% of the entire mainstreamie life group think they already have it!!

No, Mr. Jacoby, your visit to Vegas doesn't seem to have clarified anything for you. It would appear that if Mr. Jacoby represents common attitudes on Wall Street, terrestrial radio has a different problem: those who lead investors by the nose don't have a clear, informed understanding of consumer interest or behavior. That may be the biggest hurdle terrestrial radio has to face going forward.