Radio thinks that satellite Radio is the enemy. Current thinking is that we [Radio] should not run their ads and should do everything within our power to keep them from succeeding. News Alert: Even Radio’s enormous power cannot stop or slow the adoption of satellite Radio. Why fight it?

I hear Radio people talking from both sides of their mouths. “Don’t help them succeed; don’t run their spots,” they say from one side while the other side says, “They won’t succeed anyway; why would people pay for Radio when they can get it for free?” News Alert: People will pay to NOT hear commercials if we exceed their commercial tolerance levels. Naysayers also point out the small number of satellite subscribers as an indication that this is a service only for the elite and is doomed.

The first commercial Radio station, KDKA, went on the air in 1920. With its launch was an ad in the Pittsburg paper for Kaufman’s department store, selling the first kits for consumers to build their own Radio receivers. The kit was $20, which would be equivalent to today’s thousands charged for a plasma TV. Radio began as a service for the elite. In the first five years, almost no sets were sold, but by 1930, everyone in America had a Radio. Mark my words: Every car in America will have satellite Radio within 10 years. Within three years, satellite Radio will be a standard feature on new cars (along with HD Radio for AM and FM). Subscription will be optional but built into lease payments, making it invisible.

Radio people are deluding themselves by thinking that local Radio is better than national and that Sirius or XM cannot and will not succeed. Can your local TV station produce a local Jay Leno or David Letterman with the same quality? National wins on television, and it is likely to win on Radio as well. Talk Radio is proof of national Radio success, with Stern, Limbaugh, Dr. Laura, Hannity, Savage and others. Radio will lose listeners to satellite Radio on the music side because it has no commercials and, in some cases, has better programming.

I have satellite Radio in my car, and I use it a lot. I also frequent local stations for traffic news and weather, but I find myself listening to the satellite Radio more and more because of its variety and lack of commercials. It is notable that XM plans to use local repeaters to offer local services.

Satellite Radio is probably not a threat for advertising. Though XM currently has more subscribers, Sirius is the buzz on college campuses. Kids are opting to pay more for Sirius because it does not have commercials on any music channel. XM caught on and just made a similar announcement. The big win for the satellite guys is the non-commercial world. Consider USA Today vs. local papers — each has different advertisers. Did you know that, as of this writing, Sirius is the highest volume stock traded on Wall Street?

It is exciting that a Radio company trades more shares than any other company on Wall Street. Why are we as an industry ignoring them? We should embrace them as one of our own. They are creating new interest in Radio. Their very presence will get non-Radio advertisers excited about Radio; and all Radio will benefit, lifting the tide of all Radio advertising. This was proven in the United Kingdom when local Radio tried to stop national Radio. In the end, Radio billing went up because national Radio brought new interest to all Radio, including local.

Satellite Radio IS a threat to Radio listening, especially music formats. Radio is driving people to satellite Radio. We need to be better — digital, better programmed with localism that no one can reproduce — not just because of satellite Radio but because listening is eroding. What can you do?

1. No Radio station in America should end 2004 without converting to digital HD Radio. The world is digital, and Radio is not. This is insane.
2. Music Radio stations must cut their spot loads and charge more. If you don’t do it now, you’ll be forced into it later. Satellite radio places a magnifying glass on radio’s overt commercial policy.
3. Focus again on localism and creativity. Now is the time to build or reinforce listener loyalty. Now is the time to invest in programming.
4. Ask yourself what you can offer that no one else locally or on satellite can offer. Do that thing, and market it heavily.
5. Start marketing again. Most stations do not promote outside our medium. You tell advertisers to do it, yet you do not. Practice what you preach.
6. Invest in youth. Advertisers do not give us incentives to create youth-oriented stations. The young, therefore, do not listen as much, because there is little targeted to them. Those young non-listeners won’t suddenly become Radio fans when they become part of the 25-34 demos. If you don’t win them today, you won’t have them tomorrow.

Satellite Radio may be the best motivator for making Radio great again. They are not the enemy. They will share some listening, as do other stations in the market share, but local Radio will still be very viable — that is, if we strive for greatness in our product.

02/23/04  Radio Ink Magazine. By B. Eric Rhoads