Dear Radio Executive:

The Churning Tide

If You might get the feeling from the title of this month's column that a soap opera is about to roll over you - but it's not. "The Churning Tide" refers to what I consider to be a more clear view of the media landscape than we've had in perhaps years.

Over the last four weeks we've seen numerous stories covering such things as continued severe drop-offs in album (CD) sales at retail, the radio industry's sluggish economy just can't get a break, satellite radio is losing its luster among investors and no one knows why all this is happening before our eyes in some sort of cruel perfect storm.

Last month XM's second quarter performance underscored the troubles that have been brewing for months as the company saw an internal programming quagmire that is just now getting straightened out and a derailment of some technical issues that have brought sordid press reports to the streets certainly having a negative impact on the company's public perceptions and its ability to collect new subscribers.

Meanwhile, Sirius reports a blockbuster quarter earning 60% of the new subs that have joined the satellite radio revolution but still is losing money - more money than previously thought!

Terrestrial radio sits in the midst of this swirling drainpipe trying to maintain some footing. Bridge Ratings' second quarter attrition report actually shows a little light at the end of the tunnel for terrestrial, but it's a long race and perhaps we're only seeing a temporary skylight beam instead of the end of the tunnel. Terrestrial's advantage in all this is its brand awareness and the fact that its been a part of people's lives for eons. Only early adopters and innovators are catching the new media wave. Still, over fifty percent of the masses are late-bloomers or late adopters, if you will, and its taking them time to sort all of this out - and that's to radio's advantage.

Chris Anderson's new book "The Long Tail" is a great read. The basic premise is that while "hits" have always been at the forefront of popular culture: movies, songs, magazines, clothing - everything, the Internet is contributing to a new phenomenon where everyone has as many choices as they want these days and many consumers are taking advantage of that variety of niches. In fact, so many are taking advantage that the cumulative number of people consuming the vast variety in entertainment, for example, almost outnumber those who prefer the most popular of offerings. In essence, the mainstream is "shattering into a zillion different cultural shards, upsetting the traditional media and entertainment models. The audience is shifting to something else, a muddy and indistinct proliferation of...well, non-hits. They're certainly not "misses" because most weren't aimed at world domination in the first place. They're 'everything else'".

And now "the long tail" is impacting everything media perhaps explaining why even terrestrial radio's archenemies are beginning to stumble (except perhaps for MP3 players and cell phones!).

The lesson here is for terrestrial radio to understand once again 'the big picture' and how it should remain focused on the challenges of improving its content and delivery systems. The smartest of terrestrial's operators are realizing that terrestrial isn't about having a transmitter in the back 40 acres beaming to mass audiences. They understand that the new paradigm is that terrestrial is a content provider and the best way to approach today's technological landslide is to deliver that content (hopefully branded) through as many delivery systems as possible.

The "long tail" is responsible in a big way for this churning tide. Here's another opportunity that terrestrial can take advantage of.

Your feedback is vital to our company's on-going success. I look forward to hearing from you.

Sincerely,

Dave Van Dyke

President