A small device introduced two years ago in Philadelphia is altering a troubled industry.

The gizmo is called a portable people meter (PPM), and participants in ratings surveys - some as young as 6 - carry it everywhere. The meter reports what those who tote it around are hearing.

Until 2007, Arbitron Inc., the research firm that compiles radio ratings, calculated audience size by analyzing diaries kept by a random sample of listeners.

While some are happy about the new system, others see it as flawed and possibly discriminatory.

One thing is certain: When the method of measurement changed, so did estimates of audience size. The reported number of separate individuals listening to a station in the course of a week - known in the radio business as the "cume" - soared.

Arbitron says the meters are more accurate than the diaries, and Blaise Howard, for one, agrees.

"People used to vote for their favorite radio stations," says Howard, vice president and general manager of WBEB (101.1). They forgot to record in their diaries that they had tuned in to KYW (1060) when they hit a traffic jam or away from WMGK (102.9) when Led Zeppelin got too loud.

"Now we know what they're listening to," Howard says. "Back in the diary days, there were only about a dozen stations in the country that reached one million different people in a week. Now, in Philadelphia, there are five."

"More people are listening to more radio stations than we ever had thought before," says Jeff Haley, chief executive officer of the Radio Advertising Bureau.

In the sales hotbed that is radio, the people selling ad time are ecstatic about that. Ad buyers, however, point out that the "share," the percentage of people listening to a given station, has dropped. And the two sides struggle to figure out the monetary value of the new measurements.

"Radio is complicated," says Ellen Drury, president of local broadcast for GroupM Matrix, a major media buyer, "but we have to use the measurement that has become the currency for our clients."

Not everyone is happy about the new measurement system. Because of their cost, the meters enlist a smaller sample of reporters than the old diaries. Critics say that makes it much harder to get representative numbers.

The PPM ratings changes have hit stations with large minority audiences particularly hard.

In May, the Federal Communications Commission ordered an inquiry into the assertion by a group of stations that "the continuing viability of minority stations is seriously threatened by the devices."

"Arbitron is still working out the kinks," says Elroy Smith, Philadelphia operations manager for Radio One, which serves an African American and urban audience.

"In the diary world, people would say they listened to [WDAS, a competitor with Radio One's WRNB] from morning to night. So it was measuring loyalty. PPM is real-time listening. It's meters measuring sounds. It's totally different. In terms of loyalty, PPM has no sympathy.

"We're making sure we get our fair treatment. It's important to induce African Americans to wear their meters."

After introducing the PPM in Philadelphia and Houston, Arbitron has rolled it out in 13 more markets, with an additional 18 scheduled this year.

"In Philadelphia, there are 2,077 people who have PPMs," Arbitron spokeswoman Jessica Benbow says. Taking into account broken meters, people on vacation, and other factors that could affect participation, the company's goal is to have data from at least 1,530 listeners tabulated each month.

Users are selected by random telephone digit dial based on their demographic proportion - sex, age, race - in the market's population, Benbow says. Included are cell-phone-only households - a growing proportion, especially among young people, and a segment critics say is underrepresented.

Arbitron gives each radio station an encoder, says Taymoor Arshi, the company's chief technology officer, which broadcasts an "acoustic watermark" within the normal hearing range.

"Algorithms hide the code within the sound people hear," Arshi said. "That's the secret sauce of PPM. It's done acoustically."

No matter where you go or what you do, if radio is playing, the meter picks it up. That is, unless it falls out of your pocket when you're upside down on the jungle gym.

"We've had a couple turned in that were found on the playground," Benbow says.

Contact television critic Jonathan Storm at 215-854-5618 or jstorm@phillynews.com. Read his recent work at http://go.philly.com/jonathanstorm.