Paul is taking a few well-deserved days off and I'm working on writing a major five-part series for next week, so unless a big news breaks, we're going to leave up this issue for a couple of days. Thanks for you understanding...and talk to you soon! — KH UPDATE: Regarding the new radio ownership/consolidation rules, the FCC explained in the text of their decision why they felt that Internet and satellite radio should not affect their definition of the "radio marketplace; see R&R here.) Nice article from the Canada's The Globe & Mail ("Wireless revolution will have winners, losers") (7/3/03) here. Legendary jazz label Blue Note Records has relaunched its "Blue Note Radio," using iSelector technology from RCS, here. See you Monday with a full issue of RAIN!

From Hollywood Reporter.com: "Music radio, once a radical force in shaping popular culture, has become all but irrelevant -- or hadn't you noticed? The medium that brought us bell-bottoms, Jimi Hendrix and closer to each other through the acquaintance of mutual friends (DJs) has been turned into computerized wallpaper, a programmable backdrop whose cards are punched by format consultants...

"Other media have stepped in to replace music radio as purveyor of tunes to the masses: music videos... and Internet streaming and satellite radio, which ultimately could save the music business but remain in their infancy on an adaptive scale...

"Focus-group studies reveal listener discontent in several critical areas, including complaints about a lack of musical variety, too many commercials and meaningless on-air chatter. Unless radio addresses those and other audience concerns, (consultant and former program director Guy) Zapoleon [pictured above] warns, the medium 'will continue to lose listeners and be primarily (for those age 30 and older) in a few years.'..

"Of course, children and other radio listeners have migrated in large numbers to the Internet during recent years. Ironically, though, the medium that has done the most to hurt the music industry also offers its greatest hope.

"'(America Online) is doing a great job of exposing new music,' says Zapoleon, who believes that while radio still possesses tremendous potential, 'the Internet (may) become the primary way to break music in a few years.'..

"But Jeff Smulyan [pictured right] -- president and CEO of Emmis Communications, the nation's seventh-largest radio station owner -- does not believe that the Internet will salvage the record business.

"'It will be impossible to aggregate enough listeners or viewers to make (the Internet) salable to advertisers, especially in concentrated areas,' he says. 'Therefore, it will never reach the aggregate masses necessary to sustain it as a commercial vehicle.'

"In addition, Smulyan notes, 'everyone who uses the Internet believes they shouldn't pay for it -- that's certainly a challenging business model.'"

Read this entire article, as well as an interesting "side bar" on satellite radio, at Hollywood Reporter.com here.

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... Currently, based on our webcaster audience size estimates here at RAIN, we believe that the midday weekday audience for Internet radio in the U.S. adds up to an AQH of more than 500,000 people -- a bigger audience than Emmis's WQHT/New York, KPWR/Los Angeles, and WKQX/Chicago put together. If that audience could be aggregated together, and if it continues to grow, could it eventually be an audience large enough to interest some national radio advertisers? I would think so. Finally, it's interesting to note that Jeff notes that it's a "challenging" business model when consumers expect to receive the product for free. But that's exactly how terrestrial radio works -- listeners expect it for free too! Somehow, broadcasters have found a way (i.e., running spots sold to advertisers) to meet the challenge. -- KH ...

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Hollywood Reporter writer Paula Parisi wrote (in a section from which we did not excerpt), "Internet music piracy is the primary culprit in the recent downfall of the record business." But is that so obviously true that it doesn't even need to be presented as a statement that needs sourcing? I'll tell you what gets me: The lousy relative value of CDs versus other products in the same store with the same form factor -- i.e., DVDs and video games. Somehow, movie studios have managed to find a way to sell 2 hours of video accompanied by 4 hours of audio (assuming one director's commentary track), with more attractive packaging, of a product with much higher production costs than a music CD, often for less than the price that record companies are asking for 45 minutes of audio alone. Yes, of course illegal downloads are an issue that the industry needs to address -- but labels also need to look at their marketing- and pricing-related problems, too. -- KH