is a more detailed version of an earlier story.
a recent opinion piece here about AM revitalization, iBiquity Digital
Senior Vice President for Broadcast Programs and Services Joe
D’Angelo wrote that the company’s digital technology provides a
cost-effective path for AM to evolve.
fact sheet from iBiquity outlines the rate structure.
(Click to Enlarge)
Radio World and iBiquity received comments in response, with readers
complaining about “astronomical” HD Radio licensing fees. I then
heard back from iBiquity Director of U.S. Broadcast Sales Rick
Greenhut, who asked for a follow-up opportunity to explain the fee
tells me the fees actually went down again recently because the
company wanted to make it easier for smaller-market stations to
convert to digital. “We’re trying to open the tent wider. We want
[digital conversion] to make financial sense for as many people as
possible.” Greenhut also that emphasized that the main channel
licensing fee is a one-time, rather than a recurring, cost.
one-time fee is now $10,000. This compares to a published rate in
2009 of $25,000, though after discounts an average station at the
time paid about $15,000, a company official told me then. In 2010,
fees were reduced; iBiquity rolled out several options under which
the cost ranged from $10,500 to $12,500 depending on payment
how the $10,000 fee works: A station pays $2,500 down. “They then
have three years to sign on an HD station. At that point we bill them
for the balance,” with payments spread out over five years. That
works out to $125 a month, according to Greenhut, who said there’s
no interest involved.
reason to scale back prices now, he said, was “so a guy in a small
market could make money in the short term with HD.”
referring to return on investment that he said some digital owners
are earning with multicast channels. Those involve a separate
licensing fee based on a revenue-sharing model. Stations pay 3
percent of incremental net revenue derived from HD2, HD3, etc.
channels, with a minimum annual fee of $1,000. Payments can be made
stations carrying third-party data services such as traffic on their
digital channels, an auxiliary data fee also applies. This is the
same amount as the multichannel fee.
some readers may look at the drop in fees and wonder whether
iBiquity’s business model is sustainable, Greenhut told me the
company always saw receiver and chip sales as being where it would
get the majority of its revenue.
auto OEM and aftermarket sales running so far ahead of projections, I
was able to drop the prices to make it easier for stations to
upgrade,” he said. “We never looked at broadcasters as providing
the majority of the company’s revenues. We’re an IP company.”
also remember that, back when HD Radio was still usually just
referred to by the generic term IBOC, early adopters enjoyed lower
license fees. Greenhut acknowledged that the fees did start out
smaller before the technology was proven and there were receivers in
the end, he estimates, the
cost of an iBiquity license to a station typically is 10 percent of
its total conversion costs. And are stations still converting to
digital? Yep, at a rate of one or two per week, says Greenhut.
“There’s nothing like having a competitor nip at your heels with
an HD2 translator,” he tells me.
2,180 stations — 1,864 FMs and 316 AMs — were airing the hybrid
analog/digital signals as of mid-October, and those have led to the
creation of an additional 1,450 digital-only multicast channels. By
comparison, in early 2010 there were about 2,000 stations and 1,100
multicast channels, I reported at the time.
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