Pity the poor folks running local radio stations. On the music side of things, downloadable MP3s, satellite radio and podcasting have eroded their power to create hits and keep people listening to commercials. As millions of people discover the joy of programming their own playlists on iPods that play right onto their car radios, the pain of listening to preprogrammed, repetitive playlists becomes apparent.
And on the journalism side, cutbacks have eaten into local news operations while Weblogs and online media have offered more interactivity and choices. Of course, radio was one of the first interactive mediums, with people making requests for songs, participating in contests and calling in to talk radio shows.
And the National Association of Broadcasters estimates there are 247 million listeners of over-the-air “terrestrial” radio vs. only about 3 million subscribers to XM and Sirius satellite radio and 4.1 million listeners of the top three online radio networks. Still, broadcast radio is one of the last holdouts of analog technology, and the media landscape is shifting inexorably to digital.
But wait, there’s a white horse on the horizon for radio broadcasters in the United States: HD Radio. This allows stations to offer their current analog signal, as well as a digital channel that delivers higher quality sound — and data — to special receivers. As with satellite radio, HD Radio would vastly improve the signal quality and reduce interference, but there would be no subscription cost. (For a clear explanation of how HD Radio works, see this page.)
Backers of the new technology say that AM radio in HD sounds like FM radio, and FM radio is CD quality. But perhaps the most exciting part of HD Radio is that one station on one frequency could serve multiple digital streams — meaning a public station could have news on one channel, classical music on another and public affairs programming on another. Plus, there’s the possibility of rich data services such as local weather and news beamed to portable devices in the future, as well as audio on demand and time-shifting similar to TiVo on televisions.
“We’re right on the cusp of a revolution in radio,” said Dennis Wharton, senior vice president of corporate communications for the NAB. “Analog radio has been around since the ’20s, but there’s not been an upgrade in the technology until now.”
While the backing of major broadcasting chains such as Clear Channel and Infinity have pushed the number of stations committed to upgrading to HD to 2,500, less than 200 stations nationwide are broadcasting digitally now, with almost 500 licensed to broadcast digitally. In the UK, a different but similar technology is further ahead, with BBC’s digital radio having the potential to reach 85 percent of Great Britain.
This is still an infant technology, and no one knows whether it will be the Next Big Thing or another Betamax format. Plus, if current music formats and radio journalism are largely formulaic and cliched, how can more channels in the same hands improve quality for the listeners?
Bringing diversity to the digital airwaves
The people in public radio have faith in HD Radio, with National Public Radio embarking in an extensive initiative called “Tomorrow Radio,” along with leading radio station equipment manufacturer Harris Broadcast and consumer electronics company Kenwood.
Why is public radio wowed? It’s HD’s improved audio fidelity — something important to its discerning listeners of classical and jazz music — as well as the opportunity to serve up a more diverse programming selection for listeners.
Dennis Haarsager is associate vice president and general manager of Educational Telecommunications & Technology (ETT) at Washington State University, which operates Northwest Public Radio, some regional public television stations and interactive video instruction. Haarsager confirms that public radio — despite its non-profit status — is moving to HD Radio enthusiastically. Plus, the FCC is poised to allow digital stations to split their signal into more channels.
 Dennis Haarsager
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“Thanks to some federal assistance for capital costs, the stations seem pretty engaged in making the conversion,” Haarsager told me via e-mail. “I have grants for 4 of our 13 stations. I think, though, that we’re all betting that the secondary audio channel will be approved [by the FCC] and that appropriate receivers will follow quickly.”
The company that invented HD Radio is called iBiquity, and has been funded by a Who’s Who in the radio and media business, including ABC, Clear Channel, Cox, and Viacom — along with the Ford Motor Company for that important in-car endorsement. iBiquity simply makes money by licensing its technology to digital radio manufacturers and to the makers of the digital broadcast equipment for radio stations.
Jeff Jury is chief operating officer for iBiquity. He told me that there has been a chicken-and-egg problem introducing HD Radio technology to the market. “The broadcasters say, ‘Where are the receivers before we start broadcasting?’ and the listeners say, ‘Where are the broadcasters?'” Jury said. “So we decided to get the broadcasters to go digital first.”
The first HD Radio receivers for consumers only came out in early 2004; they cost anywhere from $999 down to $349 and only had technology for scrolling simple data such as song titles and artist names. But Jury expects that digital radios will range in price from $499 to $299 in 2005, even hitting $199 by mid-year. Plus, some of these radios will have the capability of playing supplemental audio or a second digital channel from one station.
So now the guessing game begins on what exactly stations will do with these extra channels to program and more powerful data streams to send out to listeners in their cars or at home or work.
“Data delivery could be tied into [a car’s] navigation systems and offer real-time traffic reports,” Jury said. “There could also be a weather or news or traffic button, where you can hear stored information that’s updated on a frequent basis. Possibly down the line, there could be ways to rewind and store data to play later. All this is enabled with digital broadcasting, and to a varying degree listeners have shown an interest in it.”
While all that is nice for audiophiles and those with a TiVo jones for skipping commercials and playing what you want when you want it, there’s also a world of possibilities for radio journalism. What if radio stations gave the extra channels over to community groups to run hyperlocal programs or niche music for ethnic communities?
The one advantage radio broadcasters have over satellite radio is their local focus: local weather, local traffic, local news and local advertisers. If they could really dig down to the hyperlocal level, commercial and public stations could strengthen their ties to local communities. “Localism” is becoming a watchword in the radio industry.
Richard Redmond, director of broadcast systems for Harris Broadcast Communications, says he hasn’t heard any broadcaster say that they’d like to turn over one of their digital channels to the community, but he still thinks there’s potential.
“Some of the community organizations may choose to rent any or all of the time on those channels to have a voice for their micro-cast, if you will,” Redmond said. “Whether it’s a Chinese community or a Russian community — certainly in a larger city you have an aggregation of different ethnicities, and they’d like to have that kind of connection. This was limited to AM time-brokerages or FM subcategories in the past, and this could really offer people in their communities the ability to have a much larger voice than ever before.”
Sussing out the competition
The big question is what will inspire radio listeners to make the investment in a new digital radio. Variety, sound quality, no commercials — and Howard Stern’s switch to Sirius — have been the drivers for satellite radio, while podcasting offers a novel, but still complex, method for storing and listening to audio content on the go.
Redmond sees a few features of HD Radio that could help listeners make the leap. “I’m intrigued by what these extra channels will offer,” he said. “If you’re in a big market with 40 stations, if you could even offer just two channels, then it would give you 80 stations. You’re now approaching with free radio the variety of satellite. The local aspect is something the national satellite services simply can’t offer. You could add relevant local content — weather, traffic.”
But there are skeptics. Richard Warner, president of What’s Up Interactive in Atlanta, says that consumers would need a clear-cut reason to adopt digital radio.
“This isn’t like CDs taking over from cassettes,” Warner said via e-mail. “It’s not DVDs taking over from VHS. There is no groundswell of support from consumers for digital radio. They’re more interested in all the hits and whether traffic is bad, and they get that just fine now. I think one key factor for acceptance of digital radio will be auto makers. If they install digital-compatible radios in cars, the platform will reach critical mass much faster.”
Perhaps the biggest bugaboo for radio broadcasters is the iPod and its ilk of portable MP3 players that jack into a car’s cassette deck or can use transmitters to play on a car’s radio. Will HD Radio allow linkages to iPod-type devices, or is the potential for copyright infringement too strong? Redmond, for one, believes that digital radio stations will eventually offer ways for people to buy and download the songs they like and perhaps even use Apple’s iTunes music store to fulfill orders.
Fred Wilson is managing partner of venture capital firm Flatiron Partners, and is one of the founding investors in iBiquity. He sees the iPod and Net-delivered audio as the biggest threat to broadcast and satellite radio. But Wilson thinks there’s a chance for them all to work together.
“Satellite and terrestrial radio can co-opt this trend and make it their friend, or they can decide it’s the enemy and ultimately lose listeners to it,” Wilson told me via e-mail. “I think some broadcasters will embrace it while others avoid it. The beauty of radio is that there are thousands of stations, each with its own general manager, who has a lot of autonomy to do what they want on their stations. So radio is an entrepreneurial industry and I think it will adapt to the changing landscape better than say, recorded music has.”
Next year, the second generation of HD Radios will arrive, and with it, more digital channels perhaps with more diverse programming. But the chance for personalized data and more interactivity — and even citizen journalism — likely won’t arrive until the third generation of digital radios and services in a couple years, according to ETT’s Haarsager. He says the technology often moves faster than the regulatory bodies in broadcasting.
“When the third generation comes around,” Haarsager said, “and you have some on-demand datacasting capabilities (we hope), then that will enable listeners to break free of the tyranny of hit-driven limited-time broadcast schedules and retrieve anything they want from ‘The Long Tail.’“
About Robert Niles
