Dear Radio Executive:

There's been so much discussion in newspapers, trades and at the water cooler regarding the competitive state of the radio industry that it's already beginning to be difficult to determine the realities vs. the fiction.

One of the things I enjoy most about the research business is the comfort that can be brought on by empirical evidence. It's not always easy, but there are times that the facts can blow away the fog of theory and chatter.

At Bridge Ratings we wanted to get to the truth regarding the significant alternatives facing traditional radio. This has been our inspiration for the ground-breaking studies we've published recently about audience attrition and erosion and the soon-to-be-released study of the general radio audience and its intent to migrate to satellite or Internet radio.

We recently gathered as much data as possible regarding projected subscriber growth at satellite radio, Internet radio streaming usage and the projected availability of the Wireless Internet. We graphed the results to see just where all this shakes out. You may be surprised. Digital Audio Market Projections.

The compiled data indicates that at this point in time, projected subscribers to satellite radio should reach 35 million by 2010. We still see XM as retaining its 'senior' market share throughout the growth term.

Meanwhile, Internet radio streaming is already the source of preference among Americans for supplemental audio entertainment and it will continue its growth as more users are equipped with broadband technology.

Combine this data with the market penetration potential for wireless Internet and the picture becomes much clearer. And while the wireless solution for in-car Internet radio still needs to be determined, its potential for use by the public at large is far greater than the impressive growth projections being tossed about for satellite radio. The question that begs to be answered is: "As Internet radio use accelerates both in and out of home, will satellite radio's profitability model matter?"

The key here is this: with Internet radio already the preferred medium over satellite radio, traditional radio should continue to perfect and refine its product, keep an eye on the alternatives and not get distracted.

I've been interviewed recently by the San Francisco Chronicle and the New York Times about some of our recent audience studies at Bridge Ratings. What I found most interesting about these discussions was that the writers seemed more enamoured with the new technology vs. traditional radio angle than they were about getting the facts straight and depicting an accurate picture.

The momentum of all this press is being driven by two things: 1) the race by the traditional press to get the story out regardless of its accuracy, and 2) the active but small group of early adopters of this new technology. Primarily due to the publicity energy generated by these print articles, these two components are creating a distorted perception of the true nature of the marketplace.

Don't get me wrong; there is, indeed, something going on at more than the grassroots level of "radio" listening fueled by all of this new technology. It just appears that the 'wolf' isn't banging on our door yet; he's still a few miles away. But for traditional radio, the point of fact is that it needs to remain focused on what it does and has always done. Be local and live and relate to its community and let the facts of the coming impact of technology remain clear.

According to this data, wireless Internet radio represents the biggest challenge - not satellite radio. The Internet radio solution will be aggregated in a portable device, much like an iPod or MP3 player with docking ports in your car and in every room in your home so it can be heard through car and home entertainment audio components.

Furthermore, the data supports recent Bridge Ratings interviews which indicate the future pervasiveness of audio streaming and audio downloading through mobile telephones. In fact, by 2010 we project the number of Americans streaming audio through mobile telephones will match or surpass those subscribing to Sirius Satellite Radio!

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

Sincerely,

Dave Van Dyke - President