Terrestrial radio and the major labels haven't exactly gotten it in recent years. Consumers want deeper play lists and a wider variety of artists than rotation-heavy stations and trend-chasing record companies can offer.

Their latest case of collective out-of-touch-ness comes from a story in Ars Technica's Law & Disorder column, detailing the lobbying efforts to require makers of wireless handsets, portable media players, and other portable gadgetry to include FM chips in their devices.

It may be "free" radio, but it apparently will cost consumers more if it's baked into selling prices.

It's clear why the National Association of Broadcasters and the Recording Industry Association of America want local radio broadcasting chips in devices. Labels can still influence station operators, who typically rely on playing the latest major label releases -- over and over again. Radio stations naturally want to be heard, and this move will help it stand out against Internet-based streams and Sirius XM Radio (Nasdaq: SIRI).

No static at all
It doesn't matter that consumers have voted with their pocketbooks. Apple (Nasdaq: AAPL) has resisted the call to add terrestrial receivers as standard on their iPods -- until finally caving in with an FM tuner on its Nano models.

It appears to be a trial balloon for Apple, as it lets users tag radio songs they like to purchase through iTunes later. If owners buy in worthwhile numbers, Apple will stick to it -- but only because it would be a good business decision.

Earbud-donning music fans certainly don't seem to be clamoring for access to commercial radio. When Microsoft (Nasdaq: MSFT) introduced its Zune four years ago, it figured that a built-in FM tuner would help it stand out against Apple, where radio reception was an add-on accessory.

Four years later, Zune is little more than a bit player in this space.

There are a few smartphones on the market with FM chips, but I've never run across someone who picked their next handset based on the ability to scan through local radio broadcasts. I also can't imagine that I'll ever run into any handset maker that would want to be required to add a battery-sipping feature that consumers aren't calling out for.

In fact, I'll take this one step further and suggest that NAB and RIAA probably wouldn't want FM chips in smartphones if they are smart enough to think this through.

Tag, you're not it
The ability to tag tunes to preview and purchase later is a swell feature, but will it really help commercial radio? How likely are you to not recognize a song playing for the umpteenth time on some Top 40 station?

Tagging's true appeal rests on music discovery sites that dive deep into playlists to ferret out similar songs based on the preferences of individual users. Pandora, Slacker, and CBS' (NYSE: CBS) last.fm are the real beneficiaries of tagging.

Terrestrial radio can't help it. Between commercial blocks and DJ chatter -- and music directors that often resort to playing only a handful of major label songs in heavy rotation to build familiarity -- it's not fertile breeding grounds for tagging.

However, let's say that the consumer electronics industry plays along by adding FM chips. It smokes out smartphone owners that never even bothered to use headphone jacks. Won't terrestrial radio simply be a gateway drug to the broader realm of online radio and personalized music discovery sites?

This isn't a captive audience. Terrestrial radio had a captive audience in car drivers, but a decade later satellite radio has plucked away nearly 20 million of its premium listeners. What do you think will happen with gadgets that can actually scour cyberspace for content?

And the cacophony continues
Labels keep on losing money. Warner Music Group (NYSE: WMG) isn't expected to turn a profit until at least 2012. The industry points the finger at piracy -- and I won't refute that -- but the bigger culprit appears to be the playing field leveler that the Internet has become.

Facebook, Google's (Nasdaq: GOOG) YouTube, and News Corp.'s (NYSE: NWS) MySpace are brimming with aspiring musicians that no longer need a major label -- or a local radio station -- to be heard around the world.

Major-label CD sales have plunged over the past decade, but I imagine the industry is holding up better than advertised if we tack on the unsigned bands selling CDs, merchandise, and show tickets as a result of the same medium that is a thorn in the established sector's side.

Requiring FM tuners on gadgetry will only escalate consumer prices on the devices and buyer disdain for the industries that backed it. After all, if local radio becomes a gizmo requirement, why not the more functional mandate for online connectivity?

Where would traditional radio and record labels be in a world canvassed with connectivity? You know the answer -- and it's a few rungs less relevant than where they are bellyaching from now.

Will the Internet kill satellite or terrestrial radio? Share your thoughts in the comment box below.

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Longtime Fool contributor Rick Munarriz is a subscriber to both Sirius and XM. He does not own shares in any of the stocks in this article. He is also a member of the Rule Breakers analytical team, seeking out the next great growth stock early in its defiance. The Fool has a disclosure policy.