The life and death of "radio"

Date: Tue Dec 24 2013 Investing

I suppose it's inevitable, since all things in this world are impermanent. Radio as we know it is likely to die relatively soon. Zillions of people are hooked up to their iPod's (and other MP3 players), digital radio is looming on the horizon, satellite radio is here now, etc. On the other hand I don't really care about any of it, since I don't listen to any of the mass market stuff anyway. National Public Radio is more to my liking, and I hardly ever listen to that service now.

Witness this commentary: Tracking the Rebirth of Radio (By Alyce Lomax (TMF Lomax); March 9, 2005)

Apparently Alyce opined somewhere that radio was dead, and many of her readers took offense and demonstrated to her many ways radio is going to live on. All the examples she discusses involves "radio" morphing into some other transmission medium than being broadcast over radio waves in either the AM or FM bands. Hence it begs the question how you can continue calling it radio when it's not a radio transmission?

I guess that people have changed the meaning of the word "radio" so that it now means "audio based entertainment or news structured unidirectionally from a single point of broadcast to zillions of listeners". Defined this way radio can be sent over any transmission medium. But I think we need to come up with a different word for internet radio.

Satellite radio is one of the rebirth means that Alyce discusses. Now, I am invested in both of the satellite radio companies, XM Radio and Sirius Networks. I have made a bundle of money so far with these two companies, and I expect them to do well in the future, meaning that I expect to make an even larger bundle eventually with these companies. Of the choices she discusses, satellite radio is the closest to being namable as radio since it does involve transmissions of electromagnetic radiation through the air.

As for whether satellite radio represents a rebirth of radio, or the death of radio, I fall in the camp of seeing it as a death of radio. Specifically, the two companies (XM and Sirius) have a dual-monopoly (in the U.S.) mandated by the FCC. The FCC has declared they will grant only two licenses, in the U.S., for satellite radio services. This means that between the two companies there will be only 200 (or so) channels of satellite radio broadcasts, in total. Compare that to the tens of thousands of radio stations across the U.S. and you see that if satellite radio were to completely replace current terrestrial radio, you'd see a vast shrinking of the number of radio channels available.

On the other hand, the vast radio conglomerates like Clear Channel have already squelched a lot of the unique voices available through the tens of thousands of stations. How? Why, by owning so many stations, and enforcing consistency across all of them. It's a kind of McDonaldsization of radio where all the stations sound the same because they're all controlled from the Supreme Headquarters.

So why do I invest in the satellite radio companies? Simple, I clearly see the huge potential and want to ride that tiger and gain a lot of riches. If it's going to happen, and I can see it, and I know it will happen, I might as well make some money from it, even if I don't like the likely result.

But, back to radio. The other option she mentions is Internet Radio. This is the one I have real problems with calling it "radio". It's not being transmitted using electromagnetic radiation through the air, so how can it be called radio? The word radio is, after all, a bastardization of radiation.

In any case the epitome example of internet "radio" is You can listen to Live365 through their own player software, through iTunes, or through Real Player (and perhaps some other methods). It is done using "streaming audio" sent over the Internet. Hence, to listen to the service you must have a computer connected to the Internet and attached to their service. Further your internet connection must have enough bandwidth to stream the data, meaning this will work better if you have broadband rather than a dialup connection.

One thing that may not be obvious is that sooner or later services will be available for cellphones to listen to streaming audio via your cellphone. This will provide interesting competition to both satellite and terrestrial radio. I think that Live365 would be the most likely to capitalize on such a service early on.

Cell phones are already, generally, capable of using Internet services. This is the "3G" phenomena which has had much hype over the last few years. It relies on two things, a faster datarate in the transmission between the cell phone and the cell system, and protocol support to access the TCP/IP Internet. All that's necessary is for the cell phone to have a "radio" application built in, and second for the data rate between the phone and the cell system to be high enough to make it workable.

As Sun executives have been saying for years, these ain't your grandfathers cellphones any longer. You need to stop thinking of these as cell phones, but instead think of them as portable computers containing an embedded telephony application among other applications. Why quote Sun for this? Because Sun invented Java, and Java is the preferred programming language for the cell phones.

But are cellphones ever likely to be a suitable means for distributing audio entertainment?

I kind of think they might not, but technology has a way of obsoleting perceived impossibilities. Current cellphones simply would not work because audio quality sucks as does the user interface. But in the future we can expect more bandwidth, hence audio quality will improve. However I don't forsee any improvement in user interface since cellphones have to be kept small so they can be carried. The limitation is mostly in the size of the display, and if there were a way to both display huge quantities of information and have the display device be as portable as a cell phone, then the possibility exists to vastly improve the user interface. This would require a few decades of miniaturization though.