11/20

Are you waiting in line for your HD radio?

“If you lower the price enough, folks will buy the radio.”

That’s the belief about HD radio that is being stoked in our industry.

And, of course, it’s wrong.

At any given price consumers will purchase an item if the desire is there and if the value of that item equals or exceeds the price being charged for it. This is basic economics.

Ps3For example, if you wanted to be first to own a Sony PlayStation 3 game system, you waited on line for three days for the chance to spend $600 on one of these babies when the doors opened at Best Buy last Friday.

And you did it gladly. No discounts required.

Compare that with the industry’s attitude about selling new radio hardware: “Once the price drops below $100, they’ll fly off the shelves.”

The more you have to drop your price, the lower the chance people value what you’re selling. And the less likely you are to sell your wares at any price the maker of those wares finds appealing.

No matter if you’re selling HD radios or satellite radios or whatever.

You could, of course, give the radios away (as we have argued), but then don’t pretend that your business plan requires people to buy them.

Otherwise you will be judged a failure if they don’t.

Check out this notice from Sirius about their hot new portable Stiletto 100:

Due to high demand, we’re now taking pre-orders on Stiletto 100. Place your order today as new shipments are arriving weekly. Orders placed today are now expected to ship the week of November 27, 2006.

And the price?

$349.99.

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  • George

    I’m not sure whose “business plan” requires people to buy HD radios. Most radio stations I know are streaming their HD channels on the internet. They include stations owned by Greater Media, CBS, and Clear Channel.

  • http://www.mercradio.com Mark Ramsey

    George, you’re being argumentative. If people don’t have to buy HD radios, why are we spending money on HD transmission and why are we broadcasting instead of webcasting?
    Would any broadcaster have spent a penny if they believed there would be no demand for radios?
    Answer: No.

  • George

    Do broadcasters make any money from the sale of radios?
    As far as I know, no.
    So they don’t care about people buying radios, which is why they’re making the channels available for free on the internet. Unlike the satellite radio folks.
    In answer to your last question, I don’t think it was considered. The radio industry was only thinking of content, not hardware. That’s all they’re contributing to the deal. Which may be part of why no one wants the radios.

  • Vytas Safroncikas

    If radio stations broadcasting in HD aren’t trying to sell radios why are they playing free spots for HD radio retailers?
    If radio stations weren’t tying their plans and expectations to HD radio – where the bandwidth is limited to 2, 3 or 4 stations – we’d see lots of broadcasters streaming dozens or scores of stations and promoting them heavily. It ain’t happening! A reliance on HD radio is stunting some broader thinking.

  • http://www.mercradio.com Mark Ramsey

    This is a ludicrous argument George. And I can’t believe you’re actually trying to suggest that the radio industry doesn’t care whether consumers buy hd radios or not.
    They’re not making the channels available on the Internet for free because they don’t care about listeners buying radios – they’re doing it to demonstrate what the listeners can get when they DO buy radios.
    My information comes from the horse’s mouth. Where does yours come from?

  • http://playnetwork.com Tom Killorin

    HD represents yet another example of the ever-expanding “long tail” of content available to anyone with a line of credit. For some broadcasters, it will be the usual – fast/cheap short term bombast of a 90 day ROI. For others, HD Radio represents an opportunity to provide a financially sustainable value that over the long tail/term serves to build community by provide useful information and entertainment to an underserved consumer – one example is a well educated 50+ population that grew up listening to FM radio and today loathes the existing menu of repetitive insipid broadcasts that lack substance and style. HD is not unlike the quote John Lennon nicked years ago from someone else about electricity: “one can use it to light the room or to build bombs that cause great destruction”. No doubt, there is plenty of bandwidth available for both destruction and light in the HD radio world. One would hope that at least a few content providers will consider the old school notion of “serving the public interest”.

  • George

    “My information comes from the horse’s mouth.”
    They’re obviously not all speaking from the same mouth.
    I don’t want to argue this. But just answer one question: Do broadcasters get money from the sale of HD radios?
    Follow the money. It worked in Watergate, and it works here.

  • http://www.mercradio.com Mark Ramsey

    If there are no HD radios sold there will be no money for broadcasters.

  • George

    Oh well.

  • http://hdradiofarce.blogspot.com Greg

    George – your arguments carry no weight. iBiquity’s investors include those forming the HD Alliance, and iBiquity charges about $45 – $50 to implant an HD chipset into every radio.

  • bobyoung

    The broadcasters are financially behind HD of course and will make money if it is ever successful which is highly doubtful as there are many more drawbacks than benefits from it. Do you think these people are doing this for nothing? Have you ever heard of the HD Alliance? This is a group of big broadcasters who are behind HD, who push it and give it free advertising. Why do you think they are doing that, philanthropy? Out of the kindness of their hearts? Do you think the hard core HD nuts are risking alienating 95% of the broadcasters in this country for nothing?

  • Paul Vincent Zecchino

    Why does BigRadio think HD’s success is a simple matter of money? Lower prices and listeners will buy? Why? To subsidize Wall Street shonks and their BigCorpseorate sock puppets who can’t distinguish compelling programming from a three weeks dead bilge chaugie? Whom are they kidding? In addition to themselves, one wonders?
    Why does BigRadio believe we’ll discard billions of radios worth trillions of dollars and buy balky HD sets?
    Haven’t citizens rejected HD? Why does BigRadio persist in dismissing its audience?
    Do BigRadio’s dwindling stock prices reflect a reflexive callous disregard for both audience and talent?
    How will jamming public airwaves with HD, allegedly falling stooge-radio prices, and real cool ‘streams’ fix that?
    Dr. Paul Vincent Zecchino
    Manasota Key, Florida
    05 June, 2008

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