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October 22, 2014

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2/5/01 Satellite Radio: Is The Sky Falling?
The issue of satellite Radio is polarized. There seems to be no middle ground. Either you believe it’s good for Radio, or you believe it will destroy Radio. Where do you stand? Most Radio broadcasters tell me it won’t work but that, if it does, it will be bad for Radio.
Lines formed around the booths of Sirius and XM Radio (the two satellite Radio providers) at the recent Consumer Electronics Show. Electronics retailers and manufacturers came in droves for a chance to sign up to distribute these two networks. It’s funny how they are embracing satellite Radio and we, as an industry, are not.
“No one will pay when they can listen to the Radio for free,” seems to be what I hear most frequently. “Radio is a local medium. Why would anyone want to listen to it as a national medium? It won’t happen,” goes another common mantra.
What will really happen? First, I believe the satellite guys will target Radio with the intent to create a high level of dissatisfaction in our product. As many Radio companies have become a little greedy and are running up to 22 minutes of spots in some programming, the satellite companies will make a lot of noise about it. They will play off Radio’s newfound weakness — clutter, lack of creativity, lack of excitement, too many commercials.
If I were a satellite guy, I’d probably highlight Radio as a 100-year-old medium that hasn’t really changed, and feature satellite Radio as the new New Thing.
Satellite Radio will get some traction beyond early adopters. It won’t be immediate, but it will grow as listeners hear ads that say how bad Radio is. People will seek alternatives and — what the heck — $10 built into the lease of a car is no big deal for 50 commercial-free channels and every possible format. Frankly, these commercials will also drive increased listening to Internet Radio — anything other than traditional Radio.
Sure, Radio is a local medium, but TV did not suffer by becoming a national medium. If these people do their jobs well, national Radio will appeal to consumers.
The good news is that if the satellite Radio people succeed (and I think they will), they will bring new life to Radio advertising. United Kingdom local Radio, fearing loss of ad revenues, fought national Radio to no avail. In fact, national Radio did take a lot of local Radio billing; but it also raised such awareness of Radio advertising that all stations saw increases in billing because more people were using Radio. This is likely to be the case here.
What should you do? Be ready to see Radio’s flaws highlighted. Be ready to see some of your listeners shift to satellite Radio. But don’t expect an all-or-nothing proposition. After all, it’s just a button away; and people, as always, will listen to lots of different stations, no matter how they are distributed.
This may finally prove what research has shown for years: Advertising makes you feel connected to the community. Although most research shows that people dislike ads, it also shows that people are more likely to listen to stations with ads, than to stations without ads — as long as there are not too many.
— B. Eric Rhoads

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