Thoughts on Radio’s Digital Future
Addressing The Long Tail: HD2s and HD3s for Fun and Profit
Analog AM/FM cannot address The Long Tail. HD Radio™ technology can help.
Few business concepts have gained such quick and widespread acceptance as The Long Tail, put forth by Chris Anderson of Wired. It states that in the digital world, there will be increasing opportunities to serve small niches of consumers with targeted products and services. It’s about profitably addressing the 20% of consumers in the classic 80/20 structure. Huge new businesses have been built (Amazon, eBay, Netflix), and older businesses have been revitalized – think of the hyper-customization of Apple iTunes and Dell computers.
Analog radio cannot effectively serve The Long Tail. Broadcasters have had huge success addressing the 80% with widely popular mass market content pushed through our loud speakers. But our economic structure won’t let us take advantage of the few consumers who like reggae or death metal or comedy or mommy talk. You simply cannot program niche formats on analog stations and make the numbers work – listenership and revenue potential are too low to cover capital and operating costs.
Which is an issue, since consumers have shown they demand choice, especially in media. Cable and satellite television, satellite and internet radio, iPod and MP3 players, YouTube, and countless others have gathered huge numbers of users (admittedly, not all profitably yet), by providing lots of choice. At a minimum, AM/FM is missing this Long Tail opportunity, or worse we are losing listeners, who are part of, and advertisers, who want to target, The Long Tail.
Enter HD Radio multicasting.
The ability to stream multiple different audio streams on a single FM frequency gives radio broadcasters an economically viable means to address The Long Tail. Digital FM broadcasters essentially get new ‘stations’ at no cost. So putting on niche formats is immediately practical.
And more than 800 stations across the country are seizing this opportunity, with some exciting initial results. Many have heard of the award winning HD2s who have led the way with compelling, niche formats reflecting the tastes of their local communities: RIFF2 with its edgy Detroit flavor; KBCO’s Studio C in Denver tapping its live archives; WHUR’s World in DC, with an eclectic mix targeted to the African American community.
And there are hundreds more you may not have heard of. Like WPOW’s Pirate Radio in Miami, doing reggae and island for the South Beach crowd, WAMU’s Bluegrass Country serving the greater DC’s bluegrass devotees and my personal favorite, WIYY Indie 97.9 HD3 in Baltimore, which is as good as any of those great Boston indie rock stations I listened to back in the day. I could go on and on.
Highly targeted, nationally syndicated programming is gaining traction. Clear Channel’s Pride Radio targets the LGBT community and is on HD2s in seven markets. Bonneville’s iChannel showcases unsigned bands on six HD2s. And most recently, ESPN Radio HD has been launched with over 90 hours of fresh sports content daily and already has clearance in Houston, Dallas and Seattle.
We all recognize we are still in the early days, and the full potential of multicasting will not be realized until consumers purchase a lot of digital receivers. But we are getting there. Listeners are calling stations when an HD2 goes off air. Our friends at Arbitron say that HD2s are beginning to show up in PPM data. And just like in the early days of FM, great programming on HD2s and HD3s can help drive that receiver uptake.
But the dollars are beginning to flow and goodness knows the industry needs new revenue sources. RIFF2, Wilmington’s 93.7 HD2 Graffiti Radio and KSHE2 in St. Louis and are selling spots to local advertisers - KSHE2, by the way, was the first HD2 to air a live concert, Charlie Daniels. And Clear Channel and Bonneville are selling HD2 airtime and web digital bundles to companies like Verizon Wireless and Scion.
We were particularly excited about the recent deal announced by WorldBand Media with Emmis, Bonneville and Next Media. WorldBand is leasing HD2 spectrum from these broadcasters and will program South Asian language content for its targeted audience. So new broadcaster has an economic way to address a Long Tail demographic, and existing broadcaster gets paid for its digital spectrum. Real dollars. Today.
This ‘multicast monetization’ is crucial. There is no mystery that when the revenue begins to flow, stations pay a lot more attention, HD2 and HD3 programming and promotion will get better, and the entire digital rollout will be advanced.
Our good friends at the HD Radio Alliance have recently taken important actions to further the development of HD2s and HD3s. By freeing up Alliance member stations to choose their own formats and sell HD2s, they’ve given local personnel (who ultimately drive most successes in our business) the tools they need to innovate and realize return. It’s a crucial development, and we are happy to see stations grabbing the opportunity – like CBS’s Psychic Channel.
We at iBiquity will do everything we can to help these developments along. A good example is our assisting stations moving heritage formats like smooth jazz onto HD2s. When stations make that change, we work with them to contact frequent listeners and inform them that their favorite station hasn’t gone away, it’s just gone to an HD2. And we put programs in place to get those listeners discounts on HD Radio receivers. It’s resulted in nice receiver sales, and retained listeners.
But the success of multicasting is now really in broadcaster’s hands. We’ve seen a good start, but obviously have a long way to go. I’d humbly offer these (fairly obvious) suggestions to the industry to kick it into high gear:
Put HD2s and HD3s on air, keep them on: There’s more than 800 out there, but hundreds and eventually thousands more are needed. Radio is competing with many digital content suppliers. And once the HD2 is on, make sure the engineers keep it on. Dead air sounds as bad in digital as it does in analog.
Develop compelling programming: As the man said, content is king. Listeners are being turned on by great HD2 programming, but they can just as easily be turned off by schlock. It’s a blank canvas, go wild. But make it good.
Promote: No one will know how great your HD2s are unless you tell them. The national Alliance ads have been hugely important to the initial rollout, but they can’t compare to local stations passionately promoting their HD2s and HD3s to their local listeners in ways they know best. I applaud the stunting that is going on – stations putting their HD2 programming on their main channel during certain day parts, to promote and let listeners sample. And nothing is more effective than the simple act of a trusted jock encouraging his listeners to check out the station’s HD2.
Monetize: My belief is that nothing will push the HD Radio rollout forward more effectively than broadcasters making money on the technology. So sell it! Others are. I know there are no ratings and only hundreds of thousands of radios, but that was the case with the early days of FM too, and creative account reps sold that. Bundle with other digital or analog assets, lease spectrum, create sponsorships, ask us for ideas. Set a budget number for multicast sales. The industry needs the top line help, and here’s something new to sell.
As I have said, there is no one silver bullet that will pull the industry out of its doldrums, but multicasting is most definitely a piece of the solution, maybe a big one. The technology is out there. The first industry pioneers are showing the way on great programming, effective promotion and generating revenue.
So go ahead, grab that Long Tail. It will help your station, and help the industry. And we’re here to help in any way we can, just give us a call.
Thanks for reading, and let me know what you think: email to firstname.lastname@example.org. I do read, consider and try to respond to all of them.
All good things.