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Confusion Reigns About HD Radio

For some time, Ibiquity Digital has been telling stations they need to "promote, promote, promote" HD Radio. Now, members of the new HD Radio alliance share the mantra.

Programmers and Managers Get Ramped Up on Digital at Arbitron Event

COLUMBIA, Md. For some time, Ibiquity Digital has been telling stations they need to “promote, promote, promote” HD Radio. Now, members of the new HD Radio alliance share the mantra.

Those members – all major broadcast group owners – believe a huge station promotional effort is necessary to clear up confusion about what terrestrial digital radio is, and what it is not, before stations even urge their listeners to buy the new radios.

Only then, they believe, will consumers walk into retail locations or click online and create demand for the radios.

Explain the basics

Like satellite radio when it began telling its story, broadcasters must start small, by taking baby steps. Why? Presenters at an IBOC event sponsored by Arbitron cite confusion among listeners and even some retailers about HD Radio.

The event was held shortly after the announcement of the new alliance.

Bernie Sapienza, vice president Retail Business for Ibiquity, said, “Even retailers don’t understand HD Radio, and they’re the folks who are supposed to be doing this for a living.”

Greater Media Detroit Senior Vice President/Market Manager Tom Bender agreed. In a survey of approximately 300 multicast listeners, 57 percent believed they could get HD Radio on satellite radio.

“We’ve got people asking us where ‘RIFF2’ appears on the XM band. We’ve got some explaining to do.”

RIFF2 is not a satellite channel, but a local multicast channel.

Three Greater Media FMs converted to IBOC in Detroit are multicasting.

The IBOC stations are WRIF, WCSX and WMGC; their companion multicast stations are designated as RIFF2, WCSX Deep Trax and More Magic respectively.

The supplemental channels are heard online and on multicast HD Radios.

RIFF2 is a “made in Detroit” mix of alternative and indie rock, hip-hop and punk. Greater Media calls RIFF2 a new execution of the WRIF format targeting 18-24-year-olds. WCSX Deep Trax HD2 airs classic rock songs outside the regular format. More Magic is a soft AC format.

Higher denominator

Bender positioned multicasting as the chance for radio to save itself from obsolescence. “Our most successful format now is stripping everything out and putting it onto an iPod. We get this wrong, and we’re out of business,” he said.

“Please resist the temptation to criticize an analog competitor. This is a great opportunity to raise the denominator and to do it without taking big risks,” said Bender.

Programmers need to think way out of the box when programming multicast formats, and the next 12 to 24 months are a chance to experiment while the supplemental channels remain commercial-free, providing a chance to re-distribute the spot load across more outlets some day, he said.

“Encourage programmers to break their own dogma” and go beyond traditional sources for music for these channels, he recommended, although he admits that’s harder than it sounds, given the programming restraints imposed for business reasons over the past two decades.

In the survey of multicast listeners mentioned by Greater Media Detroit, respondents were asked if they were aware the station was transmitting in HD Radio; 60 percent of RIFF listeners said yes; 59 percent of More Magic listeners did.

In 2004, the term “HD Radio” meant nothing to listeners, Bender said. “We’re working in mentions as they’re logical in formats. I did not expect 59 percent to be aware already.”

But when asked if they would buy an HD Radio, only 30 percent said they intended to, he said.

He urged program consultants to recommend that client stations monitor the retail supply chain for HD Radios.

“Don’t pitch (listeners) to buy HD Radio tomorrow. Everything we have done up to this point has been to raise awareness of HD Radio.”

Bender told Radio World his multicast stations tweaked their on-air slogans and IDs based on the listener misperceptions of HD Radio. Some listeners saw RDS text and concluded they owned a digital radio.

Yet even in Detroit, a key Ibiquity seed market with 29 stations transmitting in digital, including several multicasters, awareness of HD Radio is “vague,” said Fred Jacobs, president of Jacobs Media.

In focus groups this fall in Los Angeles, Baltimore and Detroit, he found, “Some people associate it with HDTV.” He too noted confusion with RDS.

Broadcasters = chickens

Sapienza sought to dispel the chicken-vs.-egg discussions about whether stations or retailers should promote HD Radio first. Sapienza told the program consultants gathered at Arbitron, “Content drives the hardware. There is no chicken/egg debate. The broadcasters are the chickens.”

Broadcasters must promote the technology, he said, because retailers and manufacturers have plenty of other products to make and sell “without HD Radio.”

Broadcaster promotion will drive demand, which leads to retailers demanding products from manufacturers, which, in turn, will lower the prices of parts, which will eventually lead to less expensive radios, he said.

Ibiquity President/CEO Robert Struble projected HD Radio prices will drop to $199 this year.

Meanwhile, as HD Radio proponents battle confusion, listeners in the younger demos have made some surprising assumptions about radio in general, Jacobs said.

The term “radio” incorporates traditional radio, streaming and satellite, according to consumers in six focus groups conducted by Jacobs Media on new technology. The study was conducted for Arbitron as it starts to think about how to add more types of radio listening to its diary.

Jacobs said there were more negatives than positives when participants were asked about traditional radio, but one portion of the answers surprised him: Younger listeners, ages 18-34, don’t think of radio as portable.

“When’s the last time you saw an 18-34-year-old carrying a Walkman?” he asked. “They think radio is tethered to the car and the nightstand.”

There are signs of iPod fatigue setting in, according to this study. Some participants said initially they spent a lot of time with their iPods, but now they don’t. Overall, though, the product category still is getting a lot of buzz, Jacobs said.

$750 million

Radio faces a marketing battle to get its message out and convince youth that traditional radio is not passé.

“Satellite radio has opened the checkbook for talent, promotion and management,” said Struble. He and other Ibiquity executives used the rise of satellite radio, iPods and other technologies to illustrate why terrestrial radio has to go digital and they too pushed programming consultants to tell their station clients to promote HD Radio.

Combined, XM and Sirius have spent $750 million on promotion, he said, and analysts project satellite radio will capture 50 million listeners by the end of the decade; in the traffic arena, the satellite channels will have the look of local service in two to three years.

Struble cautioned that HD Radio “is not a silver bullet” cure-all, but if promoted effectively, he said radio can position itself for growth.

“We’re playing catchup,” he said, because young people aren’t listening to radio using a traditional device but rather listening to music through their PCs and using those speakers rather than traditional radios.

Traditional radio is locked in a battle in the dash, Struble said, not only with satellite radio, but also iPods, MP3s and other entertainment delivery systems.

“iPod docking stations will be an anachronism in two to three years; you’ll have MP3s built into the car next,” he said.

“They’re after your listeners and you need to respond to that. It’s a little embarrassing for (radio) to be the last analog industry in the world.”

Desired feature

Meanwhile, Pierre Bouvard, Arbitron’s president of PPM, subsequently named president of sales and marketing, said the HD Radio alliance “is going to be good.” He noted a J.D. Power and Associates survey reported by the Wall Street Journal in December that found HD Radio was among the top three features consumers want in a car, after a price point was revealed.

“While HD Radio continues to play second fiddle to satellite radio, consumer interest in HD radio-compatible receivers exceeds consumer interest in satellite radio when the one-time fee for HD is considered,” according to a J.D. Power representative.

Stability control was the first desirable feature, at about $300, according to the 2005 U.S. Automotive Emerging Technologies Study, released earlier last year. Premium surround sound audio systems ranked second at around $400 and HD Radio ranked third, when a price point of about $150 was given to survey participants.

Ibiquity Director of Broadcast Marketing Don Kelly said the company has commitments from European and Asian automakers to install HD Radio in eight brands and 30 models over the next two years. No domestic auto manufacturers have signed on so far, he said.