Thoughts on Radio's Digital Future

A Top Ten HD Radio To Do List for Radio Broadcasters

Bob Struble

This time around, I am focusing some thoughts on the indispensible role radio broadcasters play in the digital AM/FM transition. The reason is simple: without concerted broadcaster action, there will be no digital AM/FM.

Visionary broadcasters recognized that they needed an over-the-air digital future, and took action to make it happen. HD Radio Technology was initially developed by radio broadcasters. iBiquity was started, funded and is directed by broadcasters. Large groups and public broadcasters were a driving force behind station upgrades. The HD Radio Alliance was formed by broadcasters to promote the technology. And forward looking broadcasters implemented advanced HD Radio features like multicasting and iTunes Tagging.

Despite that tremendous support, the HD Radio transition is not a top priority for some in the radio industry. Radio has had many pressing issues of late: historic revenue declines, overleveraged capital structures, the performance royalty battle, new strategies to distribute content and engage in the connected world, to name a few. Add to those the usual day-to-day operational challenges, and it is not surprising that radio’s digital broadcast upgrade, which is a long term effort, is sometimes lower on the list.

But just because the HD Radio transition is long term does not mean it isn’t critical to radio’s survival. AM/FM cannot be the last analog medium in a fully digital world and hope to remain competitive and relevant. Today’s consumers have increasingly sophisticated digital expectations which cannot be met by analog technology. In cars and mobile phones, radio is competing with digital media that didn’t exist five years ago.

It was in that spirit that Entercom’s CEO David Field asked me what aspects of the HD Radio rollout he should be managing closest. Our discussion led me to put together a Top Ten List of To Do’s for him. I have shared the list with several other radio leaders, and since we are heading into the NAB Show, I want to let you all have a look.

I am certainly not capable of writing for the Letterman Show, but I did work for CBS awhile back, so here goes. Unlike Dave’s list, it is numbered 1-10 in rough priority order.

The Top Ten Things Radio Leaders Can Do to Drive the HD Radio Rollout

Upgrade your station to HD Radio broadcasting: it’s the entry ticket
Drive unique, quality programming on HD2/HD3/HD4 channels: content is king
Monetize your HD Radio investments: it will drive everything forward
Support the HD Radio Alliance: it is critical to consumer adoption and growth
Promote the technology at the local level: we have to sell consumers the benefits
Provide a quality digital broadcast: dead air or sloppy broadcasts don’t cut it
Increase power to the highest level possible on all FM HD Radio stations
Set up your HD Radio stations to deliver quality ‘Artist Experience’ data
Set up your HD Radio stations to deliver quality iTunes Tagging data
Where possible, provide quality real time traffic information

A few words on each:

#1, upgrading stations to digital is the price of admission. You can’t play in the digital world if you are not broadcasting digitally.

The industry has made great progress here, but there is still ground to cover. There are more than 2,100 HD Radio stations in over 250 markets reaching 90% of the population. 96% of the top 10 stations in the top 10 markets are now broadcasting digitally and 80% of all radio listening is happening on HD Radio stations.

Which is fantastic progress, but we are not done yet. Shreveport, Louisiana, the 109th biggest city in America, has only one HD Radio station on the air. Millions of HD Radio equipped cars are being sold in all markets – they drive Fords in Shreveport – so broader station conversion is critical. Like all its competitors - TV, internet, mobile phones, satellite radio – AM/FM must be as a fully digital service. It is easier and cheaper than ever to go digital, including a new cashless barter program from Citadel Media.

#2, developing high quality HD2, HD3 and HD4 programming should be second nature to an industry that knows content is king. Our survey data shows additional content from digital FM stations is HD Radio Technology’s biggest initial consumer selling point.

So first off, get them on air: if you have an FM HD Radio station, you can and should be programming extra HD Radio channels. Then, the same long standing analog content guidelines apply to digital. The best HD2/HD3/HD4 content is unique and diverse, not cookie cutter or me-too’s. It brings something new to a market or addresses underserved niche audiences: bluegrass, comedy, alt rock, ethnic language programming. It can be developed locally or nationally.

Some of the best digital programming comes from energetic and experimental local personnel, reminding many of the early days of FM. So try stuff, you have a blank canvas. There are also national HD Radio syndicators: Talk Radio Network, ESPN Radio HD, Dance Radio Network, All Comedy Radio, and others. There are more than 1,300 new digital channels out there, and most have great programming. We just need more.

#3, monetizing HD Radio investments, may soon be the most important item on the list. When stations begin making real HD Radio money, it will change everything. And we get great examples of the money being made every day.

AEs are selling spots and sponsorships on HD2/HD3/HD4. Ethnic or niche broadcasters are leasing HD2s or HD3s to get on the air. Stations with iTunes Tagging capability get paid by Apple for generating music sales. Stations broadcasting traffic data on the HD Radio bandwidth are being paid by manufacturers or advertisers to provide this service. So in any number of ways, the HD Radio money is there.

Corporate and station management can take the lead in grabbing these dollars by driving behavior. You get what you measure and what you pay for. So add an HD Radio budget line, pay enhanced commissions on HD Radio sales, run HD Radio sales contests. When AEs talk digital to advertisers, the pitch should automatically include HD Radio offerings. The industry knows how to do this.

On #4-5, promotion, a question: why would you upgrade your station and not tell your listeners? Promotion will drive consumer adoption and sales, making monetizing the technology truly rewarding. Successful promotion is radio’s lifeblood, so all that is needed is to turn that skill to HD Radio offerings.

Supporting the HD Radio Alliance should be an easy decision. Broadcasters formed the Alliance to cost effectively promote their new digital offerings. The price of entry today is pledging a modest amount of inventory – no cash – used to run HD Radio ads.

The Alliance effort has propelled the growth of HD Radio receiver sales, which have doubled every year for the last several years. And by using airtime to promote specific products, the Alliance has driven car and consumer electronics manufacturers and retailers to launch more HD Radio products. The airtime is invaluable ‘currency’ used to push partners forward. It is an extraordinarily low cost and effective growth strategy. And if the Alliance had more broadcast members, they could do that much more.

At the local level, do what you do for other promotions. Produce promo spots showcasing new HD Radio content. Have the DJs talk it up, regularly plugging the HD2/HD3/HD4 channels available. Run top and bottom of the hour liners. Use your web presence to cross promote, with obvious links to HD Radio streams. Stunt on your analog channel with HD2/HD3/HD4 content sampling. Include HD Radio branding in all station promo material: commercials, billboards, websites. Especially effective are live appearances and joint promotions with local retailers and automakers who sell HD Radio products, which will also uncover new revenue opportunities.

Remember, though, just like in the analog world, bad promotions can hurt the effort. On one hand, all those station liners saying ‘now broadcasting in crystal clear HD’ help to build awareness. On the other hand, they lead consumers to believe they are getting the benefits of HD Radio Technology when they aren’t if they don’t have a new digital radio. A call to action – ‘go out and buy that new HD Radio receiver’ – is really required.

#6, maintain quality digital broadcasts, should also be second nature. Sporadic dead digital air is an issue, often because engineers aren’t told fixing HD Radio equipment issues is a priority. Program Service Data (PSD), digital scrolling text used to display song, artist, call letters, etc, can be spotty. Who wants to see “Sweet Home Alabama” scrolling on the screen when “Brown Sugar” is playing? (I know, I’m old.) There are over 4 million HD Radio receivers out there, so poor broadcasts color consumers’ perceptions of your digital station. Treat your digital like analog, not tolerating dead air or inferior broadcast quality.

#7, raise the power because it improves the digital signal. The FCC allows stations to increase their FM digital power and all that can, should. More power means more coverage and better reception, allowing FM HD Radio signals to replicate analog coverage. We want listeners to enjoy all the new digital benefits wherever they get analog, indoors or out, and on all the new portable devices coming.

Numbers 8, 9 and 10 address advanced HD Radio applications. Like all digital services, the HD Radio offering is being featured up over time. These new apps bring the radio listening experience up to the expectations of digital consumers and lead to new revenue opportunities for stations. Artist Experience enables stations to transmit images like album covers to radio screens; iTunes Tagging links music discovery to purchase; traffic information provides real time updates to navigation systems. HD Radio receivers enabling these features are shipping now. And there will be more apps to come.

But it doesn’t work unless these new services are broadcast. What happens when a consumer gets excited about seeing album covers on the radio in his new VW GTI, but sees nothing because his local stations haven’t lit up Artist Experience yet? Not a solid first impression of radio’s digital capabilities. Bringing up these services can be quick and inexpensive, it just needs to be on the priority list.

The digital world presents radio with threats and opportunities. AM/FM has plenty of new digital competition. But we firmly believe that with some attention and effort, those threats are overwhelmed by the potential digital broadcasting brings to better serve listeners and advertisers and the revenue and value that will create. It’s up to broadcasters to grab the opportunity.

On any and all of the Top 10 items, we are here to help, so give us a call. It’s all we do, all day, every day.

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Thanks for reading, and let me hear your thoughts: email to thoughts@ibiquity.com.

Bob Struble
Columbia, MD
March 2011