Interference from satellite radio
The biggest countervailing force to the power of oligopoly is not government regulation (easily defanged) or consumer revolts, it's the disruption that occurs when a new technology or new social circumstance slips past the oligopoly dragon guarding the gates.
That seems to be starting to happen in the US radio industry, according to my read of a Wall Street Journal article ("Terrestrial-Radio Firms Get Serious", 1 /11/05). The title of the article says a lot: the fact that traditional radio requires an adjective "terrestrial" means that like "snail mail" and "land -line telephone service", it is only an alternative that might get confused. In this case the word "terrestrial" also sound like a diminution - just earth-based.
The article tells how radio giants like Infinity (Viacom) and Clear Channel, who rule the radio roost, scoffed at the threat of digital satellite. As the article puts it:
Radio executives long have dismissed satellite radio, playing down its threat on the theory that few people would want to pay for something they're used to getting free. But that line is getting harder and harder to swallow.
It turns out the two major satellite services, XM Satellite Radio and Sirius Satellite Radio are growing faster than any one expected, and are grabbing some popular radio personalities, most notably the notorious and enormously popular Howard Stern. Even though the cost of putting in a satellite player in your car or home is considerable and the fees for access to the wide variety of stations are not trivial, millions of listeners are heading that direction, most presumably abandoning terrestrial radio.
The traditional radio stations have faced declining ratings for years. While the total number of listeners has stayed steady at around 95 million, the article reports,
The indication of the newfound fear of the big guys is that they have banded together to put on a $28 million advertising blitz of their own, using pop stars to push the joys of traditional radio. Radio is also trying to follow in the wake of satellite radio by dividing its spectrum digitally to offer more stations. But the number of offering is not the issue, as the big two and a few other companies often have four to six stations in each market, all programmed with a similar repetitive approach that pushes few identified hits over and over.
While the number of terrestrial-radio listeners holds steady at about 94 million each week, according to rating service Arbitron, audiences say they spend less time listening to it. Last spring, Americans spent an average 19 hours and 45 minutes tuned in each week, compared with more than 21 hours five years ago.
In the long run the big radio networks have the deep pockets and the industry influence, and they are, after all, "free" (if you don't mind the ads). But the rise of this unexpected rival (now million listeners) and the stagnant nature if their audiences and the music biz in general, may crack this oligopoly. Of course, one solution may be just to buy out the innovators. According to the article, "Covering all of its bases, terrestrial-radio titan Clear Channel holds a small stake in XM." That share could be increased if XM threatens more, and the financial situation of the satellite companies is still rocky, as with any that are spending heavily to promote a new idea.
