With all these new gadgets for listening to music -- from MP3s to state-of-the-art cell phones and laptops, not to mention satellite radio -- it's a wonder anyone is listening to good old-fashioned terrestrial radio.
One theory says that so many listeners are spending money on newfangled technology that the ones left tuning in to terrestrial radio are doing so only because they can't afford the new toys.
"Because of satellite radio, more affluent people are going to use that service, so we have a smaller piece of the pie to slice up with the people remaining, who are not so affluent," said Bob Pettit, general manager of WCBM, the Baltimore talk-radio station at 680 AM. "The younger people are going to the new technologies. Radio used to be a very effective way to reach people aged 18 to 34. Now, not so much."
As a result, Pettit said, national advertisers are not turning to the old medium the way they once did, leaving the field to cheaper, and often local, ad buyers. In turn, the stations are obliged to charge less money because their demographic is poorer, he said, leaving the stations with less revenue.
But other people in the business consider that view heresy, and point to many ways in which the traditional broadcasters are holding their own. While they admit that radio audiences are declining, and that the amount of time people spend listening has fallen, they say that 230 million people, or about 93 percent of the U.S. population, still listen to some radio during any given week -- down from 96 percent a decade ago.
In contrast, upstarts XM Satellite Radio and Sirius Satellite Radio have attracted a combined 14 million subscribers since their launches in September 2001 and July 2002, respectively. The two companies, which earlier this year announced their intention to merge, charge about $13 a month for access to hundreds of commercial-free channels, which can be accessed through special receivers and personal computers.
While those audience numbers are still comparatively small, millions more people have bought MP3 players and other music-playing gadgets, and sales remain hot in the young demographic that advertisers covet.
This month, Orbitcast.com reported the results of a Bridge Ratings study that said satellite radio leads other radio formats by 30 percent in attracting so-called "influentials," described as listeners who are enthusiasts, who influence others to act on or consume products or services. "They're the hubs of word-of-mouth marketing," the Orbitcast report said.
The Bridge study found that satellite radio listeners are 10 times more passionate about their experience than their terrestrial radio counterparts. "They are passionate enough to pay for radio while others simply turn on the radio," the report said.
Trying new things
But Fred Jacobs, a radio industry consultant who is credited with creating the "classic rock" format in 1983, was skeptical of the findings. "It's not about affluence; it's about choice," he said, adding that stations and radio networks have hardly faced the new technological landscape lying down.
"Radio is fighting back in a number of ways -- beefing up and improving Web sites, moving to podcasts to better leverage the strength of their personality shows and, of course, the fledgling HD radio," Jacobs said, referring to the high-definition broadcasts and receivers now available.
"Many advertisers are looking beyond 'old media' -- radio, TV and newspapers -- for results and return on investment," Jacobs said. "They have a greater willingness to experiment with digital platforms -- Web sites, podcasts, etc. -- and even word of mouth. The greater the choice for advertisers, the better their ability to negotiate better rates."
Some music stations -- particularly those with the so-called "Jack" programming, named after a fictitious hard-living radio cowboy -- have reacted to the new gadgets by establishing a "shuffle" format, similar to the feature on MP3 players that allows a continuous flow of music, chosen randomly, to play.
"The Jack format is the radio equivalent of an iPod shuffle," said Thom Mocarsky, a spokesman for Arbitron, the audience research company. "Radio programmers are putting together songs that they never would have put together before. Now, they're willing to be eclectic. That's part of the response."
Mocarsky said that while the number of people who tune in to terrestrial radio has been mostly "rock solid" for the past 20 years, the time that individuals spend listening has declined. Ten years ago, he said, listeners generally spent 23 or 24 hours a week listening to radio. Now, the average is about 19 hours. But he said that 70 percent of the people who subscribe to satellite radio also listen to terrestrial radio.
Magic word: 'local'
Several industry experts conceded that programmers and station owners have added to their own woes in recent years by stripping many stations of their individual voices, loading up airtime with commercials and insisting on playlists that make all stations sound the same.
Holland Cooke, a news and talk-radio specialist at McVay Media, a radio management and consulting firm based in Cleveland, said in a recent interview posted on MarketWatch.com that terrestrial radio companies had hurt their cause by "deregulating, consolidating, automating, and in the view of many, dumbing down their programming."
"It's an indictment of AM-FM radio that people will pay 13 dollars a month not to listen to it," he said.
Cooke elaborated in an e-mail message by saying that satellite radio's advantage is that it simply has more channels than AM or FM stations.
"It's cool to hear a reggae channel, but no FM owner seems to dare to commit to one," he wrote. "Notwithstanding that AM/FM provides fewer channels -- heck, because AM/FM provides fewer channels -- AM/FM radio should be doing what only it can do, that which non-local media cannot: local content, the silver bullet against iPod and satellite."
Edward C. Kiernan, general manager of Baltimore's top-rated talk-radio station WBAL, 1090 AM, and its FM counterpart, WIYY, known as 98 Rock, is one of those who advocate concentrating on local programming.
"Our feeling is that satellite radio can never be as local as WBAL radio can be," said Kiernan, who described the hand-wringing over the state of radio as overblown.
"I've been in the radio biz for over 35 years -- radio was supposed to be dead by now," he said, ascribing its supposed demise to the advent of television, to the fact that cigarette advertising was removed from the airwaves, to record players, cassette tape recorders, eight-track tapes and, more recently, compact discs. If none of these things killed radio, he suggested, then iPods and satellite radio won't either.