The radio. It’s that thing with knobs and buttons on your car’s dashboard.

All indicators say that radio is losing ground to internet radio, podcasting, MP3s, and satellite radio. In the U.K, more people listen to internet radio than broadcast radio!

Why? Because people finally have the ability to chose and control what they listen to.

Today, CBS Radio announced a 7 year deal with Arbitron, Inc., the premier radio ratings provider. Through this deal, Arbitron will be tracking consumer radio listening habits – electronically. Yes, that’s right – consumers reporting their listening habits will turn in their pens and pads and receive a pager-like device that will listen to inaudible signals broadcasted by radio stations. Let’s not get distracted by how fantastic it is that it took this long to stop using paper, but focus on the fact that more accurate and meaningful data is going to be collected about radio listening habits.

CBS Radio is hoping to have a better gauge on how many people are listening and for how long – they do this in order to have better data so they can charge more for advertising. The results of this will not be surprising: fewer people listen for less time than expected. This revelation is going to actually hurt their main source of revenue: advertising.

This is not the first time that radio has been at the brink of extinction. The radio almost had a sudden death when it first came out because the revenue model was linked to the sales of devices. Right before the radio went belly-up, some smart people started to give receivers away for free, shifting the industry to an advertising-based revenue model.

It’s time for someone smart to step up again and find a different way for the radio to make cash. I would hate to giggle about radio as we do about floppies, Betas and cassettes.