Making Money with Multicast

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A few months ago I wrote about some different ideas that could provide a good revenue stream using the HD2 and/or HD3 channels. The main point of that article was that it is not enough to just provide some programming out there and wait for the listeners to flock all over this new gem, rather there needs to be programming that will make a listener want to listen, or more importantly, want to purchase an HD Radio receiver.

I come from a slightly different perspective than many others who write in this industry trade. My first 25 years of employed bliss was working in radio and television in an engineering capacity, mainly director of engineering positions at the local and corporate levels, primarily in the top markets. I left that to form my own business that focuses on building wireless communications systems for a variety of private and municipal clients. That now makes me a listener in terms of having an outsider's viewpoint and as such, perhaps can provide a different spin to this particular subject.

HD Radio receivers

The dilemma of HD Radio

To understand the money-making opportunities of HD Radio, let's look at the problems that need to be defused.

Problem 1: In researching this article about making money with multicast, I see a lot of buzz words that describe the phenomena of HD Radio like "revolutionary." While that may be true, there are a whole bunch of revolutionary technologies out there competing with it. They may also be able to compete with HD Radio more creatively, since:

■ Many are not a slave to qualitative audience measurements. Most broadband services can get real-time data of how many people are listening, what they are listening to, and generally a much broader knowledge of the listener/subscriber.
■ Many services are not constrained by a service area or interference from atmospheric noise, etc.
■ Services like Pandora can also tailor content to the listener level and get real-time feedback about their preferences.

Problem 2: Getting enough radios in the market is another challenge. The most recent numbers suggest about 20 percent of new car models (under $35K) coming out in 2012 offer HD Radio standard. I've also seen numbers that place total HD Radio receiver penetration well under 5 percent. The last I checked, keeping up with the demand of HD Radio receivers has not been an issue with any manufacturer.

There is a push to make it mandatory that mobile phone manufacturers include FM receivers inside of each phone. While this would certainly increase the count of deployed receivers, it is unlikely that most people would use it, if for no other reason, than phones that do offer FM receivers require the use of earphones, since they use the earphone wires as the antenna. In my personal observations, the only people I have seen (myself included) use the FM receiver are at the gym listening to the rebroadcast TV audio feeds. Another issue to consider is that new car radio receivers are not traditional receivers; you know the kind with buttons? They are now simply command consoles that offer everything from entertainment to control and monitoring of the automobile systems. People are going to need a reason to choose the terrestrial station over the broadband or satellite provider. The radio is essentially going to be buried inside of this console.

- continued on page 2

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