Terrestrial Radios Free Ride
In thinking more deeply about what the NAB is saying, it highlights a fact that many often overlook. Terrestrial radio has gotten a free ride. Terrestrial pays no subsidies to install radios into vehicles. Not one thin dime is paid to Ford, GM, Toyota, Honda, etc. from terrestrial radio. Cars simply come with radios because that is what is expected. If radio makes billions in ad revenue, none is shared with Ford, GM, etc. In fact, the auto manufacturers get charged to put their ads on radio. Isn’t that grand! Ford pays their own money to install a radio into a car, and then pays again to advertise on that radio. Ford provides the platform for radio to be heard, and they get charged for doing so!
The NAB in, an effort to at least get something out of the deal, appears to be on the bandwagon of at least including an HD chipset into all SDARS receivers.
Ever wonder why OEM’s are not so quick to adopt HD? I have covered this issue in the past. OEM’s get money from satellite radio. HD through this point has refused to give OEM’s a revenue share. One can imagine how the negotiations conversation goes:
HD REP Hello Mr. OEM. We would like to see HD Radio installed in all of your cars. We offer wonderful sound quality, and great programming all in a state of the art digital format. Consumers want digital, and you can give consumers what they want by installing HD. The best news is HD Radio has no subscription fees, so consumers get it free.
OEM REP Sounds good. It will take some time to add HD chipsets to the assembly line though. Lets talk about the installation subsidy.
HD REP Ummmm…. what installation subsidy?
OEM REP Well, we offer satellite radio in our cars, but we don’t do it for free. This is a business MR. HD Rep. We have trouble enough making a profit in any given quarter. You can’t expect us to absorb the cost of your business desires.
HD REP Well, Ummmmm, yes, but consumers will want this great digital service that is free. HD is in it’s infancy. We can’t subsidize each installation. It would bury us before we get started!
OEM REP We understand that. We think you have a fine product. Tell you what. We’ll waive the front end subsidy for a nice revenue share arrangement on the advertising on the back end. That will let you build your business, and in the end we will all profit.
HD REP But advertising is how we make money. We can’t give up that kind of revenue. Did I tell you that HD Radio is digital, and that consumers will love it?
For decades terrestrial radio has had a free ride in cars. The radios are simply there, generating dollars for the radio companies, and nothing but expenses for the OEM’s. Things have indeed changed. OEM’s seem unwilling to give HD radio a free ride, and perhaps they are right in playing hard ball.
Media has evolved in a major way over the past decade. Terrestrial radio has been slow to see the impacts. Terrestrial radio wants to stick to the status quo. What they are forgetting is that consumers have changed. The old business plan is no longer viable. Terrestrial radio needs to change with the times. The free ride on music royalties is the common subject we are all familiar with. We need to also see the free ride that terrestrial gets in the dashboard.
Terrestrial has a competitive advantage in royalties, OEM installations, and price. One would think that with all of those advantages, that they would be a bit less worried.
AM and FM disappearing from dashboards? Not any time soon. However, don’t look for cash strapped OEM’s to keep financing everything that comes along either. If HD is that great, then perhaps it is the mechanism where terrestrial radio can maintain a presence in the decades to come. However, by the time they figure all of this out, the Internet will be in the dashboard as well.
Position – Long Sirius, XM.
HD Radio is a farce.
They don’t want pro-consumer; the merger IS pro-consumer. That’s the whole song and dance. This has never been about the customer. It’s like politicians saying we should do something “for the children”.
It’s not about the children, nor the consumer. This is about terrestrial pulling all its tricks to keep the free ride. I don’t blame them for trying. I blame the politicians for listening to this garbage and not calling it what it is.
HD Radio might have worked on its own band, as does satellite radio on its band separate from AM & FM.
But BigRadio consolidators didn’t like that. It gave competitors a level playing field. So BigRadio and its pal iNiquity ‘worked’ FCC to shove HD digital noise onto AM & FM. The result? Interference, a shrill hissing you hear all over your radio. HD jamming is why many listeners longer hear their favorite stations.
A guest editorialist in Radio Week recently noted, people don’t love radio, contrary to the latest inane HD promotion, they love their favorite radio stations – which HD jams.
Jamming listeners’ favorite stations alienates them from radio altogether.
The radio industry will be fortunate if it survives this ‘carny shill’ called HD.
Paul Vincent Zecchino
Manasota Key, Florida
08 July, 2008
The NAB people are paid by the HD people to push their junk just like someone pushing Yugos. Some one told them that HD would save terrestrial radio, WHAT?? Yup, you read correctly, a blocking, jamming, range cutting, lo-fi technology that no one wants nor buys is going to save terrestrial radio, is a joke no? Not to NAB and a few knuckle dragging big monied, samll brained radio people. HD is junk, doesn’t work and is dead in the water, and is a threat to no one.
Bob Young
Millbury, MA