Paul Thurst has an interesting table comparing HD Radio and FM radio at similar early stages of development. Not sure that there aren’t some things missing (principally today’s competitive landscape vs. 1950, and Gen. Sarnoff’s role in the abandonment of the original FM band, for example), but it’s an interesting historical comparison.
NB: I’ve always tried to keep my work and this blog separate (see About), but this is an exception -- the first in a series of white papers that I’m doing for my employer, NPR, and cross-posting here. They’re consistent with the theme of this blog. Although written for a public radio audience, readers from television or commercial radio may also be able to pull some takeaways from this series. Hope you’ll read on. --Dennis ______________________________________
“In 1920, we discovered we could get more listeners with voice than with Morse code, and we’ve been selling out to the audience ever since.” -- Jack Mitchell, NPR’s first employee and former board chair, to a Public Radio Conference meeting, of 9XM (now WHA), America’s first public radio station in Madison, Wisconsin
NPR President & CEO Vivian Schiller asked me to write a series of mini-white papers for the public radio community that she calls “All Known Thought.” That’s a weighty, though tongue-in-cheek title but as a longtime student of public radio technology since vacuum tube and razor blade days and a station GM for nearly 30 years, I’m committed and challenged to provide an objective overview on various topics that at the frequently changing intersection of technology trends and public radio economics.
As such, please consider this an attempt to bracket this moving intersection within a plausible and actionable space. As one who has been influenced by Clayton Christensen, I believe we need to pay particular attention to disruptions at that intersection.
As the opening quote observes, public radio began some 90 years ago when the physics and engineering departments at a bunch of universities discovered they could attach modulators to their former Morse code stations and transmit voice and music. Radio has proven to be one of the most adaptable forms of communication in both technology and business practices ever since.
I’ve been writing about this in my Technology360.com blog since 2003, a blog that grew out of an earlier email list that I ran for six more years. Both were efforts to force a discipline to keep up with my professional reading, so this assignment renews that and I’m happy to take it on. The blog, which has always been light on opining and heavy on encouraging readers to draw their own conclusions, will continue but its readers will recognize some themes here.
I have a great group of tech-and-strategy-savvy colleagues here at NPR who I’ll ask for advice along the way. I’ll take responsibility for what gets written, but in the spirit of seeking “all known thought,” those colleagues will be free to write op-eds, which I’ll append if they wish.
Up front, I defined my focus as the intersection of two areas of importance to our future (technology and economics) and observed that these were not static. If not, where are they moving?
The pace of technology change has increased dramatically in the last couple of decades, and along with it the choices listeners have in how and when to consume radio programming. We will assume that this pace will not slow down and may increase. Regulatory constraints, the need for auto manufacturer take-up, and the inherently expensive nature of broadcast technology all contribute to our second assumption that the pace of change for traditional broadcasting will continue to be slower than change in the software-driven web and mobile domains.
As listeners have more media choices, yet finite time, we will assume that some of the attention of some of our current listeners will moveto web and mobile platforms. It seems sensible to assume that most stations will try to serve listeners through the web and mobile platforms; in the process picking up new listeners, likely with a wider demographic array.
The other line through the intersection is public radio economics. Assumptions here may attract some debate, but here goes: The public radio economy is impacted unfavorably by the recession, by increased operating costs, by loss of attention to other platforms (and the perception by advertisers of the efficacy of these new platforms), and by the economic conditions of closely-associated institutions (public TV for joint licensees, supporting universities, and government agencies).
Recessions are cyclical and the economy will eventually recover. Depending on how long the recovery takes, the movement of resources from radio to greater-stressed television at some joint licensees and the loss of tax-based revenue will exacerbate public radio’s economy. Entitlements like Social Security, Medicare and government pensions are eating up discretionary spending for state and federal governments. A more favorable economy will accelerate technology change and spur increases in operating costs.
On the other hand, public radio has the ability to slow or even, if only for a time, reverse the “gravity pull” of unfavorable economics through station acquisitions, investments in emerging platforms and smarter radios, better programming and fundraising practices, cost-reducing collaborations and mergers, and stronger governance.
So, overall, while movement of this intersection will vary, we will assume that the “if we do nothing” direction will be “southeasterly” (see sketch below), and public radio will decline. Our challenge is to make smart moves at this intersection that “fight gravity” and move our mission forward.
Before I present a list of the likely topics, here’s what won’t be included in these white papers. We read a lot in the trade and popular press about death – the death of radio, of television, of newspapers. X will kill Y. The September cover of Wiredheadlined the death of the Web. A friend of mine, tech journalist Steve Gillmor, has, with a scythe in hand, declared the impending death of many technologies. Death. Death. Death! Death is a word to grab headlines, not one to use for thoughtful discourse. Let’s move past that word! Even Morse code has survived modulators in the ham radio community.
That’s not to say change won’t happen. It’s good to distinguish between the future of what we do and the future of how we do it.
Since the talk of death is off the table what is most important about this intersection between technology and economics is its effect on our margin. The late non-profit hospital director, Sister Irene Kraus, was famous for saying, “No margin, no mission.” Our primary focus needs to be on producing and delivering quality content, but to do that, we need to be financially healthy. Disruptive technologies don’t have to kill us to harm our mission; they just need to erode our margins, which are thin or nonexistent already.
Here are white paper topics we’ll start with, in no particular order:
What can trends in mobile and other device-based platforms tell us about future media consumption?
HD Radio, RadioDNS, and other advanced radio systems. What are consumer electronics companies cooking up next that could impact our business?
Mobile providers—are they a threat, an opportunity, or a little of both?
The auto manufacturers are talking about in-car internet availability. How will that work and when?
What's the latest on impending changes in spectrum allocations and how they will impact us?
Is social media something we can use effectively? Should stations make a long-term commitment to it or is it a fad?
Reconciling web metrics and broadcast metrics. Why your web cume is less than you think and your web time spent metrics are greater than you think.
This series of “All Known Thought” will be most successful with your input, and the input of your colleagues (please feel free to share these papers). This will be a platform to generate discussion on the impacts and influences on the public radio community. I welcome your comments and suggestions.
No sooner did I get done posting on this topic earlier this morning, but I found that consultant Mark Ramsey made an excellent closely-related post on his on blog yesterday. Great minds think alike? ;-) See Everything you need to know about FM radio chips in mobile phones at Mark Ramsey Media. He covers more ground than the title implies. Good reading. --Dennis
Steve Yasko, GM of WTMD in Towson, MD (Baltimore area) recently brought up this subject on two public radio lists which I would really categorize as scalability of listening by means other than an analog radio. Here’s my take on this and, as usual in things relating to public radio, comments here are my own, not NPR’s (see About).
Content is like water. Water flows through big channels nicely but also through smaller channels and cracks whenever it has a chance. Continuing the analogy, the effect of those smaller flows over time often makes the smaller openings larger. Radio content is flowing nicely through the broadcast channels we have – they scale very well, but it’s also beginning to emerge through other openings as well. And, just as well-drillers often fractionate bedrock to create more cracks for water to be released, new products for distributing media content are being developed constantly.
With some regularity, I listen to Pandora over my iPhone on my car’s sound system and to Northwest Public Radio’s folk music program while riding my tractor Saturday afternoons in Virginia. Some people to whom I (and others) mention this think, “Well, that’s cool,” and try it themselves, thereby testing a little more the limits of the wireless IP channels that were originally set up for voice calls. It should probably be like not telling your friends about that great little restaurant you found. Already, I can’t reliably do this inside the Washington beltway at most times of day, and it’s a non-starter during rush hour along major roads. Wireless providers are reaching the limits of available spectrum in major markets so are abandoning their “all-you-can-eat” plans (I’m grandfathered – heh, heh), at least for now. The reason mobile streaming is working at all during favorable hours or favorable locations is that so few people – other than us in the radio cognoscenti – are doing it.
But don’t take too much comfort from today’s limitations. They won’t last. The iPhone and iPad are garnering a well-deserved share of attention, but Android devices are now outselling iPhones and an avalanche of cheap Android tablets will almost surely do the same to the iPad in the autumn (WebOS, Windows Phone 7 and Linux tablets in there, too). There will be a lot of mobile media devices out there very soon. 4G systems are being rolled out by all major carriers and reclaiming spectrum from television and government users has a head of steam. The cracks through which content trickles now will enlarge to small channels and the small channels will become larger ones. Do we really want to bring out the Bondo and duct tape or do we want people to find us many places?
Broadcasters even have a (possibly interim) role in mitigating the current spectrum problems. Flo TV is providing white label television streaming services to Sprint and AT&T cell phones using broadcast-style transmission over spectrum that used to belong to UHF TV (seamless to the cell phone user). In radio, the NAB is advocating putting mandatory FM chips in cell phones while a credible research company report says that digital radio will benefit from the spectrum crunch by mid-2011 when carriers use it to mitigate IP audio traffic problems in smartphones. If we’re smart, broadcasters will use the time we have to develop hybrid IP/broadcast radios and/or RadioDNS-enabled radio receivers – not to mention find ways to make it easier for people to find us on their many IP devices.
It’s all about scale. We’ll see lots of strategies to manage it. Right now it’s pricing and the beginnings of non-IP delivery for media content. Soon it will be more IP packets delivered to your devices, and you can be sure that will impact pricing as well – likely in the more for your dollar direction. Carriers have a lot of knobs they can twist, so don’t judge today’s situation in pricing or capacity as significant for much longer than an eye blink in media time.
Update 11:15 Eastern: Coincidentally, consultant Mark Ramsey makes many of the same points plus others in an excellent new (somewhat mistitled) post on his blog. Link: Mark Ramsey Media.
On Friday MediaDailyNews reported erroneously on a new report from ABI Research (picked up by FMQB and others) that “various [European] governments have established HD radio as the national standard” and says that “ABI expects the global ‘installed base’ of HD radio receivers to jump to 200 million by 2015.”
The digital radio market has just began to see consumer adoption in the US and Western Europe. By the end of 2010, about four million digital radios using iBiquity’s proprietary HD Radio technology will have shipped in the US. In Europe (led by Britain) governments have chosen the DAB standard and consumers have purchased nearly 13.5 million radio receivers. By 2015, the worldwide installed base of digital radio receivers, excluding handsets, is expected to reach nearly 200 million units. ¶ “Smartphones are expected to include digital radio receivers starting in mid-2011, driven by carriers’ desire to offer users premium audio content while limiting the use of scarce radio spectrum,” says ABI Research senior analyst Sam Rosen. “This concern is demonstrated by AT&T’s decision to stop offering unlimited data plans, due largely to high data usage in New York and San Francisco resulting from Internet radio sites such as Pandora.” ¶ Digital radio technologies, including satellite radio and Internet radio, are expected to reverse trends of decreasing listenership. Listeners will have access to niche programming targeted to narrower demographic segments and will respond to a more interactive user experience enabled by program guides and other enhancements. Broadcasters, in turn, will have a larger reach and the ability to provide better targeted and more interactive ads. … [bold added]
HD Radio® is primarily a U.S. standard for in-band on-channel digital radio. Europe chose a DAB standard that operates on exclusively digital channels.
For our purposes as broadcasters, the two sentences that I highlighted in bold above contain some encouragement, if they prove correct. Clearly, the carriers are finding it difficult to scale to audio and video streaming on existing networks so incorporating broadcast spectrum capabilities into their handsets can be a good strategy for them. Apple has reportedly included (but not yet turned on) broadcast capabilities in recent chipsets.
I was born on the leading age of the baby boom and FM radio was non-existent in our part of the country when I was growing up. So my introduction to radio was on my family’s Coronado console radio with “magic eye tuning” back when soap operas, evening dramas and westerns, and variety shows still were popular on radio. When I started one-room country school in 1953, our teacher would play a story lady program from KUSD in Vermillion, South Dakota for those of us in the younger grades, so what we now call public radio on AM was one of my earliest media sources.
In my early teenage years, I collected QSL (verification) cards from AM stations all over the country, and KUSD’s towers could be seen blinking at night from where we lived 15 miles away. AM radio had a sort of romantic pull, best memorialized in the 1973 movie, American Graffiti, where Wolfman Jack spun records in the shack under a tower. My first electronic gadget was a 6-transistor AM radio, bought circa 1962 for $21 ($149 today by CPI), and on it I listened to all the top 40 music I could find on KAAY, KOMA and, of course, Dick Biondi on WLS.
When I got out of the Air Force in 1969 and needed a job to help pay for college, KUSD seemed to be a good place to look, and I landed one there. I was now sitting in the shack under the tower as a weekend transmitter operator, but rather than spinning records, all I had to do was get out of my chair every half hour and read the meters. A few years later, I did the engineering to drop in an FM station for KUSD and, quite some time after I left, they shut down the AM station and took down the towers. It’s starting to look like that will be the fate of other public radio AMs.
In the August 9 issue of the public broadcasting industry newspaper, Current, Karen Everhart has what is, therefore, for me a sad recounting of the difficulty of building an audience for public radio news programming on the AM band. She writes:
… Decisions about audience service priorities have never been easy for public radio stations that broadcast both news and music programming, but they’re especially confounding for those with AM stations. AM’s low audio fidelity and interference problems make the frequencies more suitable for news/talk than music, but listeners’ habits of scanning the left end of the FM dial for public radio are so deeply ingrained that building a loyal audience on AM would be a Sisyphean labor. …
Yes, it is difficult to build audiences there. When I took over as GM of KWSU(AM) in 1978, 70% of listening in the market was to AM, but by the mid-80s, that ratio had flipped. The AM band has been greatly compromised as ably described in Karen’s article, and that’s led to it becoming a sort of remainder store for all manner of programming that can’t make it on FM. Public radio alone won’t make a difference there because the AM band is such a rundown neighborhood. The neighborhood determines in large part the value of your property. Even if HD takes hold on the AM band, unless the band is used again for something other than political and religious screamers, cellar-dwelling baseball teams, and the like, the fidelity improvement alone won’t make a difference. --Dennis
I’m reposting the following by my NPR colleague, David Julian Gray. It was originally posted on an internal blog, Technically Speaking. About a month ago, I reposted another essay of his on RadioDNS. --Dennis
At a technology presentation last year, which was sadly more interesting than the Major League ballgame used to lure me there, a vendor's Sr. VP asked what I thought of "cloud computing." I dismissively answered "You might as well ask me what I think of air! -- 'Cloud Computing' is just a convenient marketing term for remote applications and storage accessible over the Internet -- technologies which have been evolving for decades..." But this was too flip, I thought the trend toward so-called "cloud computing" so obvious I missed the forest for the trees -- or the clouds for the air ...
As it happens, I've been thinking a lot about "AIR" -- or better "The AIR" -- as broadcasters think about it -- that is, the Electromagnetic Spectrum or at least that part of it known as the "Radio Spectrum". I'm also thinking a lot about "The CLOUD" -- as the FCC appears to be thinking about it -- that is, the Radio Spectrum. "The AIR" is getting very cloudy these days -- as is the difference between the conglomeration of technologies, techniques, services and resources once known as "The Internet" and those once known as "broadcasting." As Vint Cerf, true daddy of the Internet and now Chief Evangelist for Google, is fond of saying: "IP on everything."
In my last entry in this space, I wrote about RadioDNS as a possible, I think ideal, bridging technology between traditional terrestrial broadcasting and mobile broadband platforms. To briefly recap, RadioDNS propose a collection of technologies to leverage the existing data already included in both standard analog and HD-Radio broadcasts to link to other services and content already and/or potentially provided by broadcasters to a variety WEB and mobile devices. In other words it merges "the broadcast cloud" with "the IP cloud".
As far as the FCC is concerned -- this cannot happen fast enough, but their approach is to annex "the broadcast cloud" and hand it over to those providing IP based services. That's what the conversion to digital TV was all about -- reminds me of old Hollywood's take on the Railroad's great land grab of the mid to late 19th Century -- you know the push to drive farmers off the land to make room for modern commerce. This is the great Radio Spectrum grab of the early 2010's, the push to drive broadcasters off the spectrum to make room for "Mobile Broadband"...puts an ominous spin on the exhortation to "Rule the Air."
But it needn't be ominous at all -- there are models of how providing information and content via an integrated set of radio spectrum based services blur any distinction between "broadcast" and "broadband". I'll get flip again and say it's a specious distinction after all. That seems clear to NBC and Comcast -- who have been trying to elope. One successful model we can point to of an integrated "broadcast/IP cloud" is in service to the Public Broadcasting community: the PRSS Content Depot.
"Radio Towers" aren't going away in five years or any time soon-- even if, or when, the FM band is yanked by some government agency and auctioned off to LTE or WiMAX providers -- for where will those LTE or WiMAX, etc. signals be coming from? "The Cloud" is just an expression ...
-djg (David Julian Gray, IS Sr Product Manager, Content Production
Last week, public radio's audience ratings broke new ground when WAMU's HD Multicast Bluegrass Country made Arbitron's May 2010 broadcast ratings. An HD station appearing in the Arbitron numbers is a rarity; it's a first for public radio and only the second station to achieve this feat. …
Read Ben’s comments at NPR’s Go Figure blog. --Dennis
There is necessarily a lot of interest in the future of internet radio, especially of the mobile kind, within the radio broadcasting community, public and commercial. I say necessarily because of the potential it has to, at a minimum, disrupt the current economics of broadcasters and, at the ultimate, to replace big tower radio with radio delivered by internet protocol (IP). We want to know: is internet radio irrational exuberance, to borrow Alan Greenspan’s coinage or is it something real?
There’s certainly exuberance about internet radio, some of it irrational, but I believe that it will have a real impact on broadcast economics. I concluded the post linked in the next paragraph with this:
… To be consequential to us, these services have to only skim the cream off our listening to harm the thinning margins that most stations are experiencing. …
I’m always interested in analyzing the mechanics of change. What technical and economic hurdles does a new technology have to overcome to be disruptive? Toward that end, I was interested in the issue of how to scale up radio listening in a wireless IP environment. In a previous post on this subject, Does radio need to worry about IP-delivered audio?, I looked at the very real technology issues relating to scaling up IP bandwidth for traffic loads comparable to current radio listening and posited some developments that could mitigate that.
So I’d like this time to consider economic hurdles, specifically the trend toward tiered data pricing. There’s a wide range of actual use among smartphone data users (¼ actually use no data, while the top 6% use ½ of all data). Streaming users are more likely to be heavy users, so in tiered pricing, they’re likely to pay more because their subsidy by light users goes away.
In a paper analyzing the telecommunications market over the next five years, IBM Global Business Services says that as IP-based high-speed mobile data standards such as LTE and WiMAX spread more broadly throughout the world, carriers will give up trying to stop over-the-top providers such as Skype from riding over their pipes and will eventually "enter into formal partnerships" with them. But because the carriers will be losing the revenue they once generated through minute-based cellular plans, they will have to make up for it by eliminating their all-you-can-eat data plans. ¶ "If people value connectivity then they must pay for connectivity," says Ekow Nelson, the global leader for the communications sector at the IBM Institute for Business Value. "With all-you-can-eat models there's going to be no way for carriers to compete. This will be an adjustment because most users have been conditioned to enjoy unlimited access to over-the-top services for free."
There will be some carriers that buck the tiered pricing trend, but IBM’s analysis seems pretty solid to me, especially since in this country it’s being lead by LTE rather than WiMAX companies (the former seems destined to dominate 4G). It’s likely that pricing for both light and heavy users will decline with time, but tiered pricing won’t help adoption of mobile streaming in the near term. Until that general price decline happens, tiered pricing will be a hurdle.
Happily for me, I’m grandfathered into AT&T’s all-you-can-eat 3G data plan, so I can continue to enjoy Pandora in my car from a double-tethered iPhone (audio and power) during low or moderate data use hours. It’s already largely replaced real radio for music listening late evenings and weekends. But it’s a long, long way from replacing traditional radio stations for my news, traffic and weather needs. --Dennis