Wednesday, March 28, 2007

The Cost of Offering Show Downloads

American Public Media's Marketplace featured an interview last night with Disney CEO Bob Iger. He talked about his deal with Apple to bring popular ABC shows to iTunes. At $1.99 a pop, Iger freely admitted that their revenue from downloads is far and away overshadowed by what ABC earns by selling advertising during the broadcast. But he said he looks at downloads as a marketing tool rather than a money maker. Most people, Iger reasons, won't be able to catch every episode on TV. So, by making them available to stream at abc.com or download via iTunes, he's hoping that fans will be able to keep up with the shows and then keep bringing them back to the television set.

I never thought of it that way, and as I got out of my car to head inside the grocery store, I wondered how long it would be until radio adopted a similar model. There are plenty of radio shows that offer downloads of their content, and sometimes entire shows. But, I wasn't aware of anyone doing pay-per-download. Usually if there are any fees involved, it's on a subscription basis.

For example, I see that Dennis Miller's new show has a deal to distribute its audio to cell phones for $3.99/month. Subscribers will be able to listen live as well as listen to an "encore tape" 24/7. I really question the wisdom of distributing shows outside of radio stations. I mean why make a point to tune into your local station when you can download it later? The Dennis Miller Show's site even offers free downloads and streams of every day's show.

But, in light of Bob Iger's comments, maybe this sort of thing is a good marketing tool. Will the day ever come when the online revenue outperforms the broadcast revenue? If so, what then?

Tuesday, March 27, 2007

Digital Radio in the United Kingdom

The radio industry in the United States continues to hope that HD Radio will keep people from adopting satellite radio. The radio listeners in the United States continue to ignore HD Radio for the most part.

A while back, Wired.com ran a story about the current state of that technology. According to the article, HD Radio receivers have sold in the low hundred thousands compared to 4.7 million digital radio receivers in the United Kingdom since 1999. That's around an average of 670,000 units per year!

To be fair, there are two entirely different situations at play and the differences are what is making the UK version so hot.

In the UK, the digital radio standard is called Digital Audio Broadcasting, or DAB. Consumers call it Digital Radio. I won't get into the technical differences between HD Radio and DAB, but the two technologies deliver similar results to the listener.

Stations utilizing DAB send compressed digital signals using the same bandwidth that they use for their analog signals. This results in sharper audio for one thing. It also allows for more audio streams. So, like US HD Radio stations do, UK listeners get more stations to listen to.

The key to the technology's success lies in the fact that the BBC partnered with manufacturers to develop the standard and implement the infrastructure. So, it's no surprise that the BBC threw it's considerable weight behind DAB and wholeheartedly supports it.

The BBC, which was an early adopter, offers several digital-only stations in their "multiplex."

There's Five Live Sports Extra which offers play-by-play coverage of cricket, soccer, swimming(!), etc. They also offer 1Xtra which plays "The Best in New Black Music," or more specifically "...the latest in hip hop , RnB, garage, drum & bass and dancehall as well as other styles like house, gospel and soca." I kind of like the choice to use the word "extra" when referring to what HD Radio calls "side channels." It sounds like the consumer is getting more for their money than just something on the side.

With such rich content, it's no surprise that UK consumers have embraced DAB. Right now the BBC is using that content to help usher in the age of digital television by making their digital-only stations available over their digital TV signals.

So far, DAB seems pretty similar to HD Radio. However, DAB offers much more functionality to the listener. Digital Radios come with a small screen that can receive text along with the audio, like the one pictured to the right from Sharp. UK broadcasters are sending lots of information this way including song titles and artists, sports scores, web addresses and other information related to the specific program. Newer radios can even display a program guide.

Speaking of newer radios, the latest DAB breakthrough is the ability to pause, rewind and record live radio. I kid you not. It's like having TiVo for the radio, only it's not a separate device. It's built right into the radio and it's already been activated the minute you turn on your new radio. The model pictured below has a giant orange pause button on the top. Radios with the pause/rewind feature start at around $200 which is what an HD Radio receiver costs. Same price. More functionality. Amazing.

I would think that HD Radio will catch up with DAB at some point. The aforementioned Wired article indicates that text and data via HD Radio is in the works. But, don't we all have at least one device that can receive data? Like a wireless phone? It would be a nice extra for HD Radio receivers, but it's not going to sell radios.

Pause/rewind is the killer app for HD Radio. It would sell radios like nothing else currently can. I'm guessing that the RIAA would put up a strenuous fight over copyright protection if this feature were ever considered, so we may never see that feature in the US.