Radio's Death is Greatly Exaggerated

OM Malik calls the cover article about radio in last week's Barron's "fascinating". What I find fascinating is how a business paper could do a major think piece on the radio business and miss completely the next big thing in radio, called HD Radio.

HD Radio is the answer to the very problems that Barron's calls out in its story. Digital broadcasting will make the radio industry a supplier of music and music programming to the iPod. I suspect that every digital music player in five years or less will have a HD Radio chip in it.

Musical choice is a problem in the radio industry, but HD radio will allow each FM station to broadcast as many as six or seven audio streams on a single channel if the market will support that much programming. That's potentially more channels in any given market than satellite offers on its entire system today.

Almost every major publicly traded radio group has announced big station conversions this summer. Most groups are announcing plans to convert up to 80% of their stations to HD within the next 3-5 years.

And yet Barrons missed this story completely. I hope all the radio investors out there don't miss it too.

Comments

[jackson]

I hope for your sake you are right, and certainly there's no time to waste for the radio folks, they are losing listeners. It's not the hemmorage that Barron's and Om say it is. But it is happening, and it is kids that are not tuning in. 'Talk' is still going to be a big radio format, and if somebody can get the FCC in line, it may be possible to keep Stern in radio.

[Tony Alva]

While as disgusted with the state of American radio format as I am, I tend to agree with you on a few things on this topic. More bandwidth and better technology will put broadcast radio on level playing field with other media mediums in many respects, at least while it's new and a novelty, but where I diverge with your position is when it comes to radio's age old problem of content and what forces drive it from a music programming perspective. It will still need to undergo a major revolution in order to regain market share. I haven't seen any indication that record companies and their promotion machines are making any move to change their ways as far as diversity in what they promote. It is as ugly a business as it has ever been and perhaps more so, since the stakes are higher (i.e. looking for the mother load with the next Britney vs. long term artist development). These two industries are joined at the hip in so many bad ways and until real reform happens, radio will continue to lose advert dollars and listenership post new tech buzz. Consolidation has ruined it all and the industry must now suffer for it. No matter what technology is going to emerge, radio needs to go back to it's strengths which is localization. Not just because it can generate more local advertising revenue, but also because smaller broadcast areas will offer more station ownership. This will breed more diversity in content.
Bottom line is that in order to get people in front of advertising, you have to have strong enough content for them to keep their device tuned in. You can hand out free digital devices to everyone in the world, but unless you give them something interesting to listen to, and it be on par with what the diversity they get as a norm from other mediums, it's a bust. I just don't ever see Z100 ever offering any REAL content diversity no matter how many digital sub streams they offer. Unless something changes as noted above, it will be the same old drivel. It'll just sound better.

[abhijit]

Increasing quality of broadcast radio is just one of the challenges which HD radio will address. But there are current offerings in Digital Audio Broadcasting which solve that problem today instead of 3 to 5 years in the future.

Either way, neither of these two choices (three, if you include Satellite Radio) address the other problem which is currently being faced in terms of content, and that is essentially a personalisation of audio content. Giving more choices is not necessarily the answer - witness the hundreds of TV channels currently existing and yet the upsurge of TiVO. Content personalisation cannot be done by broadcasting stations.

The only solution would be to have personalised content broadcast! And that creates a different ball game altogether.

Imagine this scenario - I create a playlist of not only my favourite music, but also talk radio, advertisements, everything audio. I listen to this playlist from wherever I am on whichever device I have at that moment. And the playlist is not sitting on my PC at home, instead it lies with the broadcaster! So every time I sign on, my playlist plays according to both bandwidth and format of the device that I have signed on from! Additionally, the broacast station adds to my playlist intelligently by watching both my current tastes as well as the kind of new music I listen to everyday. And this kind of intelligent software already exists, load 'Brain' plugin onto your Winamp Media Player.

'Brain' is part of the Synapse Media Player.

You can read my comment on Om's blog or check my blog for my views on the future of music

- abhijit.

[jackson]

I'm confused, why would you add commercials to your playlist? This is all too much for me, if anybody's looking for me, I'll be under a rock with my vinyl collection.