Dear Radio Executive:

Terrestrial radio is doing many things right.

At this year's Portable Media Expo held at the Ontario Convention Center in California, I had the pleasure once again to unveil Bridge Ratings' latest podcast listening estimates and projections. The room was full of interested podcasters and a few broadcasters. Why terrestrial radio wasn't well represented is a question we'll get to in a moment.

On the surface, my remarks were not positive: podcast audience estimates for 2006 through 2010 had been lowered based on interviews we conduct monthly across the U.S. with a sample of 4400 persons 12-64 years of age. Instead of our original estimate of just over 7 million podcast listeners this year, we now are projecting there are just under 6 million. Instead of 12 million by the end of '07, we're projecting just over 8 million. Why the adjustment?

Seems that the little world of podcasting is beginning to show signs of growing pains. You can read the details of our findings by clicking here. However, the essentials are that when we first started tracking podcast listeners in the early part of 2005, 100% of those people were innovators and earl adopters, primarily hobbyists who all seemed to discover the wonders of podcasting at once and pushed this new technology to the forefront and the press picked up on it. Hobbyists love the "wild wild west" nature of these things and, like the CB radio craze years ago, the early podcasting phenomenon was fueled by passionate people who loved the technology and had figured out how to create and post podcasts, felt they had something to say, and loved doing it from their living rooms, basements or bedroom 'studios'. They got off on hearing how many listeners they had and where they were listening from.

However, traditional radio at the end of 2005 was faced with the challenges of new technologies dealing a strong attrition blow to its time-spent-listening. So, quite rightly, many early adopter broadcast companies, led by National Public Radio in the States, jumped into podcasting with both feet and found traction. Listeners to terrestrial radio now had their own device for time-shifting radio shows they may have missed or missed part of. NPR, Clear Channel, CBS and others figured out they had marketing muscle and a legion of listeners who they could 'sell' the concept to. And the Early and Late Majority - or mainstream America, began to adopt it as well. Bridge Ratings has determined that use of media such as podcasting enhances the station's loyalty and reach and thus can take a bite out of the audience attrition that has been occurring.

The composition of the aggregate podcasting listening audience has thus changed. Rather than a pure 100% group of hobbyists, as of August 2006 less than 70% of the audience are now comprised of these Innovators and Early Adopters - the balance are generally average Americans - prime advertising targets - who are enjoying podcasting simply because terrestrial radio has done such a good job of introducing them. In fact, traditional radio is doing a better job of marketing the podcasting concept than they are the HD radio concept. Our samples understand the benefits of podcasting far better than they do those of HD radio. In this respect this is bad news since terrestrial radio is counting on HD to pull it out of the fire. Unfortunately, it's not going to happen quite that way.

Terrestrial broadcasters get hammered in the business press about their battle with new technologies when the industry should be receiving accolades for its aggressive approach to adopting the new technologies to enhance the listening experience. After all, there are still over 250 million people a week in this country that tune in to a terrestrial radio station. That's 250 million people who will be exposed to these new technologies. This exposure will hasten the growth and development of their use which is only a good thing.

So, as we strive to reach the finish line of 2006, and looking back 12 months, terrestrial radio has done some great things this year. We'll look more closely at those triumphs in next month's letter.

What do you think? Let me hear from you. Your feedback is vital to our company's on-going success. Respond to this letter.

Sincerely,

Dave Van Dyke

President