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AG News: Monday - 9/14/2009

Will Internet Radio Save HD Radio?

"Internet radio stations are what's going to save HD Radio!" If I told you this quote comes from a July 20, 2007 radio industry article at Audio Graphics, you'd probably say, "Go on, get outta here!" But, it does.

That being said, I'm glad to see CBS Interactive Music Group has announced bringing its Last.FM to four stations as HD side channels: WWFS, New York; KCBS, Los Angeles; WXRT, Chicago; KITS, San Francisco. Start date for this morphing of internet radio to broadcast programming is October 5. It should be noted that this sets no precedence as announced on July 18, 2007 a unique partnership with Cincinnati Public Radio to rebroadcast WOXY programming on WVXU's HD2. Also, Soma.FM has been leasing out one of its sub-channels, Groove Salad, as additional programming for NPR.

Now that we see the radio industry beginning to embrace the concept of using internet radio stations to provide programming for its HD Radio initiative, let's throw out a couple of questions. 1) Is it too late? 2) Do you, as I, see internet radio's future also being connected with rebroadcast over a terrestrial station's main signal?

Here is a point of contention that may prove this move by CBS Interactive Music Group to be too late to matter. Had it been done two years ago, HD Radio may have captured audience interest. But, two years is a long time in internet activity. With the proliferation of iPhone, Blackberry, and other smart phones, is expecting consumers to purchase an HD Radio to hear internet radio a little over-ambitious? What's the incentive to buy an HD Radio when a consumer can connect their car or home stereo to an internet radio station using a smart phone and a $10 jack?

We've already seen the stats on the growth of smart phones. According to this article from The Examiner (Washington), "Credit Suisse raised its estimates for smart phone sales over the next 18 months....The bank hiked its forecast for 2009 sales by 11 percent to 176 million units. Its 2010 estimate went up 19 percent to 223 million units." The article continues with "Credit Suisse expects the smart phone market to eventually reach 1.5 billion phones, while only about a fifth of that have been sold."

Simple math states that 300 million smart phones have been sold. Nobody has seen sales figures for HD Radio, but I'm going to guess that it lags this figure by, say, about 299.5 million. (I believe that as being a generous estimate.)

Another item to consider (and one that was brought up here in 2002) is an expectation that in the not-too-distant future we'll be seeing internet radio stations rebroadcast over terrestrial stations that cannot afford to pay for staff or in-house programming. WOXY and SomaFM have shown it can be done. CBSi's move confirms it.

If the radio industry expects to salvage anything from its HD Radio folly, it needs to provide programming that goes beyond retransmission of a primary signal, or the jukebox-on-steroids approach demonstrated by Clear Channel. CBS and Last.FM are trying to improve on this now.

Two years down the line, there is a growing interest in internet radio. There is also a process for connecting to internet radio stations in cars. I do it all the time and know of other people who also pull in internet stations while in their vehicles (although I've yet to be able to connect to Last.FM on my Trio).

At home it's a no-brainer. Quoting former browser-king of Netscape and now a venture capitalist, Marc Andreessen, from 2003: Youth today do not have a stereo in their bedroom, they have computers.

With smart phones, you can add "computers in their vehicles" as a sidebar to this observation.

Acquiring these preceding bits of knowledge, perhaps it's best to change the sentence that started this discussion to internet radio stations are going to save the radio industry.

Oh, and one more item to consider as we leave: If internet radio is streamed over HD Radio, how will streaming rates be determined? If copyright royalty fees - or tax, if you prefer - are based on the total number of listeners, there's no way to identify that number in an HD Radio rebroadcast. Ooops!

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Ken Dardis
Online Since January 1997

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