The Slow Growth of HD Radio
Written Jul. 23, 2008 by Tom Webster in HD Radio with 5 Comments
Lots of activity this week on the HD Radio front, led off by Chuck Taylor's excellent piece in R&R (which quoted some Edison data) about the progress of HD radio adoption in the US. HD has certainly been a lightning rod for flames this year--note the differing headlines on these two sites, PC Week and the Washington Post, that use the same Chuck Taylor story!
Chuck was nice enough to interview me for this piece, which led Jon Gordon, from the excellent program on American Public Media, Future Tense, to call me and chat further about the progress of HD Radio adoption and what my thoughts were on the limiting factors behind its slow uptake. I've linked the interview below--luckily he called me in the early morning while I still had my good "radio voice" working :)
In both Chuck's piece and the Future Tense interview, I tried to establish what I thought were the real issues behind HD's slow growth. The central challenge is that you have a national "product," the HD Radio Receiver, with a national rollout and national messaging. The programming, however, varies considerably from market to market, and very little of it is driven by consumer demand or even consumer insight. Some markets have great HD programming, but here where I live, not so much. So it is hard for the typical consumer to get excited about HD when there is no clear content offering to sell. Soma FM is the same great online radio wherever I listen to it. Howard is Howard, no matter where your Sirius is located. But radio is trying to package and sell a national answer to these challengers with no consistency in product. It is as if we are trying to install Coke machines in every market, but some we forget to fill, and in others we only stock Mr. Pibb and RC Cola.
HD has to start with great, new digital brands first, with distribution over HD receivers AND online, and at least some of these have to be big, high profile national shows. Radio's goal should be compelling digital brands for the future, and in that context HD radio is just one means of distribution. I think there has been a lot of negative energy spilled over HD, just as there have been a lot of stakeholders who have led themselves to believe that HD is their "answer" to online and satellite radio competition. Our answer to online competition should be great online programming--additional, free distribution over the HD airwaves then becomes a strategic advantage. It isn't an "either/or" proposition.
There are simply too many "jukebox" HD-2 channels. At a recent summit on the topic, I heard one industry executive note that HD is taking time, but so did FM. The implication was that HD will follow the same natural progression. I think that is a mistake, and the "jukebox" issue exposes it. When FM was beginning its rise, free music was an economically scarce quantity--the only source for free music was the radio, so FM had greater economic value as one of its sole providers. Today, free music, in the form of online jukeboxes, file sharing and peer-to-peer music networks, is no longer scarce, but an economic commodity. So in order to provide real value (enough value to monetize), radio can't remain in the commodity business in that environment. The industry has to create value through the creation of strong, passionate brands that may be augmented by music, but that stand for something more than "one great song after another." One example is "The Strip," in Dallas. The programming on The Strip does a wonderful job of not just providing music, which is a commodity, but evoking a sense of place and a mood that is truly unique. The answer for side channels is not to replicate online jukeboxes (how many of them are really successful, anyway?) but to build unique brands that generate true passion.
The solution is not a programming issue but an HR strategy issue. Building those brands takes the time, resources and energy of radio's fantastically talented programmers and creative staff--all of which they don't have, because many are already programming 3-5 broadcast stations. So often the HD-2 channel gets relegated to the back burner. It's simple math, really--if a programmer spends 40+ hours a week making their broadcast programming compelling, what makes the radio industry think we can toss off HD-2 channels over lunch breaks? It is an old business school adage--you get what you measure. When the industry starts measuring itself on the quality of its HD-2 programming, then it will devote the resources it needs to create truly compelling brands, and get them in as many soda machines as it can.
Reader Comments
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Bravos, Tom! Well said. We'll get what we give; the play's the thing.
Tom, not sure I necessarily agree.
I think the problem is more around HD Radio's value proposition rather than brand awareness. Does it really provide listeners a better/different experience than regular radio - so much better that it would persuade someone to buy a new radio for their home or more realistically for their car, for drive time? The last thing that really prompted people to change out their car stereos were CD players, and more recently iPod-accesories. Mainstream acknowledgement of what it exactly offers that is compelling enough to actually convince people to replace existing units just isn't there.
Could you explain to the average radio listener in 20 seconds why they should shell out $x for a new HD radio for their car? On the other hand, could you explain to the average radio listener in 20 seconds why they should shell out $x for a radio that allows them to listen anything on the internet? I bet the latter would be a lot easier.
I think the ceiling for HD is the segment of the population that is interested in Satellite radio. Couple million nationwide tops.
I'm not sure I said anything about brand awareness--I think I was talking about the value proposition. I don't think anything you mentioned contradicts what I wrote!
I do disagree with you about the ceiling for HD. IFF HD comes for free in my car, the ceiling is vastly higher. There are about 765 cars for every 1,000 Americans, so that gives a better sense of the "ceiling" for free distribution of digital radio. There are obviously a lot of miles between where we are now and that ceiling, but it is a valid ceiling, nonetheless.
Thanks for reading.
Finally was able to find, after some googling, what "The Strip" on KJKK HD-2 is about.
But why on earth do they put it on in Dallas??
My big belief is that one of HD Radio's leveraging points (on Satellite) is the local aspect it has.
So what I'd like to see is, "The Strip", on an HD-2, you know, in Vegas.
Besides an improved sound, HD provides what?
More packaged jukebox stations. And we're again stuck listening to a strangers playlist. I'd rather have it my way. Consumers can carry virtually every song known to man on their ipods. Pandora, Last.FM, Groveshark and more provide customized playlist..
Paid or free nationwide wireless, internet enabled dashboards are only a matter of time.
Radio HD or analog are still playing by the old rules.... The earth's largest animals dinosaurs died because they couldn't adapt to a world that changed.