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Broadcast Radio Sector Challenged by Net

Red Herring reports that terrestrial radio�s belated embrace of digital technology is not yet paying dividends. The industry�s revenue from advertising remained flat in 2005, according to BIA Financial Network, and the industry�s prospects for 2006 remain relatively uninspiring.

The industry has begun testing new electronic ratings technologies, but the four-decade-old diary ratings system is keeping the industry, which depends almost entirely on advertising, at a significant disadvantage in competing with instant-feedback media such as the Internet.

The industry, which initially steered clear of the Internet and viewed it as a dangerous competitor, has embraced digital technologies such as podcasting, High Definition Radio, the Internet, and improved listener-counting methods�significant steps for the conservative industry.

But the new technologies have failed to arrest the exodus of younger listeners who choose MP3 downloads, satellite radio, Internet radio, and other alternative entertainment options over terrestrial radio. The radio industry generated $18.2 billion in advertising revenue in 2005, a sum almost identical to its 2004 revenue.

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