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Let's help save HD Radio at the RAIN Las Vegas Summit!
·Apr 1, 10:57 AM
Posted by: Kurt Hanson

It is difficult to get a man to understand something when his salary depends on his not understanding it.” — Upton Sinclair.

Earlier this week, the HD Radio Alliance announced a “shift” in emphasis in its marketing efforts “to consumer conversion.” The organization debuted a new ad campaign for its stations using the marketing tagline, “It’s Time to Upgrade!”

This comes after radio broadcasters have already aired a half-billion-dollars’ worth of spots that, I believe we were told at the time, were also supposed to be driving consumer purchases.

Personally, I would argue, “It’s Time to Re-evaluate!”

Join us for the RAIN Summit

That will be one of the topics we will discuss on Monday, April 14th, at the RAIN Las Vegas Summit: Whether the current HD Radio plan has any viability whatsoever — and, if not, if we can come up with an adjustment to the plan that might indeed have a reasonable chance of success.

If you’re a radio executive charged with making HD a success (whether you’re a group head, cluster manager, programmer, or New Media executive), we hope you’ll join us for this timely discussion — Monday afternoon, April 14th, at the Renaissance Las Vegas Hotel. (To be eligible for one of 30 free admissions we’re giving away today, compliments of Ando Media, just write us at summit@kurthanson.com.)

Key decisions were made long ago

The problem is that the key decisions that were made about the implementation plan for HD Radio (a/k/a IBOC) were made over a dozen years ago — before the launch of satellite radio, before the debut of the iPod, and long before concepts like WiFi and WiMAX were even gleams in anyone’s eyes.

Of course those decisions weren’t perfect, but how could they have been? Could you, right now, pick the ideal technological and marketing approach for radio in the year 2022? Of course not. No one can see into the future that precisely; you can’t possibly know all the other factors that will be going on that far in the future (e.g., the Swedish Flu Pandemic, the Robot Uprising of 2021, the astounding popularity of the Dell 700tB Ultra-Tricorder).

What else could $647.5 million have bought?

Radio stations have spent around $125 million ($50K to $100K per station times 1,500 stations) on equipment to upgrade their stations, plus $15 million in one-time payments to Ibiquity (at $10K per station times 1,500 stations), plus $507.5 million (through the end of the recently-ended quarter) in airtime…

To what better use could the radio industry have put $647.5 million? Well, they could have…

  • Hired a full-time brain-trust of 20 smart programming and marketing consultants, at $300K/year each, for three years ($18 million), and
  • Developed a technology and PR initiative to encourage radio listeners to time-shift their favorite AM and FM stations onto their iPods ($5 million), and
  • Purchased Pandora (or developed something like it) to launch as “long-tail” brand to compete with XM and Sirius (only $50 million a couple of years ago (albeit perhaps $500 million today)), and
  • Funded a massive experimental research study to prove conclusively to Congress that radio airplay promotes record sales and that the current quid-pro-quo between radio and records is a fair, balanced, and mutually-beneficial one ($3 million, which might head off a $2-billion-dollar-a-year royalty obligation if Congressman Berman has his way), and
  • Funded on-air marketing campaigns for a dozen new website brands in a variety of product categories ($300 million, assuming a $25 million launch campaign per brand to get each one off the ground), and
  • Funded the development and launch of hundreds of new Internet-only sidechannels and B-channels for radio station websites ($9 million, assuming 500 new channels at $750K per month for 2 years (i.e., until they found sponsors))…

Be that as it may, the radio industry has sunk $647.5 million in cash and airtime into HD Radio. So…

Don’t ask “how,” ask “whether”

Here we are, a dozen years after the key decisions were made, and no one in radio seems willing to do any zero-based thinking. The HD Radio Alliance seems focused on how to make the current plan work rather than whether the current plan is a viable one.

Hopefully, the smart minds at the RAIN Las Vegas Summit may be able to figure out a better way for broadcasters to recover something out of that investment. We hope you can join us to be part of that!



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Comment

  1. Inside Radio reports 330,000 HD radios sold last year. That’s almost $2,000 per sale. How’s that investment coming back? It’s not. Here’s a question that I don’t think anyone’s asked: do people want this? If a billion dollars (A BILLION DOLLARS!!) can’t put a concept into orbit it wasn’t meant to fly. Meanwhile it’s almost piling-on time, writers and bloggers of the world! A year from now when the average HD radio receiver is found on the garage shelf next to the Betamax and the 8-track player, you’ll be able to say you told us so.

    Irene Izzard · Apr 1, 12:43 PM · #

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