10/11

The ongoing tragedy of HD radio

Supposedly, it costs a manufacturer about $50 to implant an iBiquity HD chip into a radio, thus transforming it into an HD radio. That $50 (or so) is the fee the manufacturer pays to iBiquity. The actual cost of this technology is, of course, likely to be a few dollars at most.

Is it any wonder why the cheapest HD radios aren’t so cheap? And, more importantly, will it ever be possible for the $15 dollar clock radio you buy at the CVS to be, by default, HD-powered?

Anyone in the radio industry knows that the average listener tunes us in on a crappy-ass radio, not on a fancy-pants premium acoustic device. You spend more on your weekly coffee than on your bedside radio.

Witness this tone creeping into reviews of HD radio products, like this one from Business Week:

It’s true that the RadioShack Accurian is the most affordable way into the appealing new club that is HD Radio, but it’s costly for all the wrong reasons. One look underneath the base of an Accurian explains its $200 [now $150 on sale] price tag. There, a sticker reads: “HD Radio Technology Under License From iBiquity Digital Corporation.” Instead of developing a radio capable of superior sound quality, I’m guessing that RadioShack paid iBiquity a fortune for the license, cheaply put together a subpar product, and passed the licensing cost on to consumers.

Ouch!

Let me say this clearly:

The Radio industry must subsidize the cost of HD radios, not simply market the heck out of the technology on-air.

HD must transparently appear everywhere. And the only way that will happen is if it’s feasible to build it into a $15 dollar clock radio. The “HD advantage” must be free and invisible to consumers.

This is not about better content, better distribution, or more committed promotion. It’s about the tragedy of creating spreadsheets instead of creating markets.

End of rant.

* = required field
  • Dave

    Hello?? Hello?? It’$ a great point. It’$ been brought up many many times. But doesn’t it seen that tho$e in charge aren’t li$tening. Are they?

  • http://hdradiofarce.blogspot.com/ Greg

    “HD must transparently appear everywhere. And the only way that will happen is if it’s feasible to build it into a $15 dollar clock radio. The ‘HD advantage’ must be free and invisible to consumers.”
    And, what is going to happen when consumers realize that their HD clock radios require external AM-loop and FM-dipole antennas, which add another $60 to the cost of their $15 HD radios:
    “Why are you not buying HD radios?”
    “I already have 4 of them..You might ask ‘Why are you not buying another HD radio’ It would be because the first 4 did not work worth a Damn. The Radio Shack, unlike the others, actually picked up HD signals but did not sound very good. The BA sounded good but couldn’t get HD without MAJOR antenna upgrades..just 12 miles from Xmiters. I have been so TOTALLY unimpressed by HD radio performance so far…It will be a long time before I buy another one.”
    http://www.avsforum.com/avs-vb/showthread.php?t=887579&page=6
    Also, a while back you ran a piece on the cost of HD radios, as being a moot-point:
    “More mixed press about HD Radio and what it really means”
    “When reciever prices drop, demand will explode This is a tremendous myth.”
    http://www.hear2.com/2006/07/more_mixed_pres.html
    This all kind of sounds like having to get HD Radio standard in automobiles, but take a look at this really excellent piece by Gorman of Ford’s Sync versus HD Radio:
    “Radio: Internet Radio or HD Radio. You choose!”
    http://gormanmediablog.blogspot.com/2007/10/blog-post.html
    Read the comments – that says it all.

  • http://hdradiofarce.blogspot.com/ Greg

    Mark,
    I forgot to include this article as a comment, but it is one of the few articles that addresses HD’s poor coverage and first-impressions about HD Radio:
    “Is HD Radio Toast?”
    “There are serious issues of coverage. Early adopters who bought HD radios report serious drop-outs, poor coverage, and interference. The engineers of Ibiquity may argue otherwise and defend the system, but the industry has a serious PR problem with the very people we need to get the word out on HD… In New York City, the #1 market in the country, there are 25 stations broadcasting 42 HD channels. You’ll find CHR, AC, Classic Rock, Hip-Hop, News, Talk, and Sports. In other words, everything you can find on the regular FM dial… The word has already gotten out about HD Radio. People who have already bought an HD Radio are telling others of their experience (mostly bad) and no amount of marketing will reverse this.”
    http://www.fmqb.com/article.asp?id=487772
    I don’t see how making HD Radio available everywhere is going to to help in HD’s success, with these above problems – there would be just mass returns of these “defective” radios.

  • George

    You’re taking the wrong approach. iBiquity must subsidize their own technology. They must invest in themselves.
    Why isn’t radio subsidizing iBiquity? Because there could be other technologies that will come along that will be better. The clock is ticking. Unless iBiquity makes its technology the industry standard, some other company will come up with a better way to do the same thing. That’s what the radio industry is waiting for.

  • http://profile.typekey.com/mramsey1/ Mark Ramsey

    Interesting comment, George. I’m inclined to agree.
    But don’t you know that those alternative are already out there – in other countries? And the Broadcasting Industrial Complex has hitched their horse to a different wagon.
    Do you really, really believe that given the effort and investment placed into iBiquity-style HD, we’re really going to change gears now?
    No way.

  • http://hdradiofarce.blogspot.com/ Greg

    I understand what you guys are saying, but what good is any HD Radio product, if consumers just consider the products “defective” and return them?

  • http://hdradiofarce.blogspot.com/ Greg

    Sorry Mark,
    Just a side comment – I don’t think $15 HD radios will ever happen, with iBiquity eating the cost of the licensing fees:
    “AM radios with square-wave generating circuits inside, whether used for a power supply, a display timing signal, or frequency sythesis all get an ” F” for ignorance of the laws of physics and modulation.
    Two to three times as much design, shielding, and bypassing are necessary to shield such a radio, greatly increasing costs, just to
    make one as good as a totally analog design.
    http://www.radio-info.com/smf/index.php/topic,82698.msg615467.html#msg615467
    I’m really surprised to see you suggest such an angle – this smacks of iBiquity’s tactics. So, it would be okay to sell radios that didn’t work as well as standard analog radios?

  • George

    “But don’t you know that those alternative are already out there”
    Yes I do.
    “Broadcasting Industrial Complex has hitched their horse to a different wagon”
    For the time being.

  • George

    “given the effort and investment placed into iBiquity-style HD”
    Huh? What effort?
    You said it yourself. All radio has contributed has been programming and promotion. That should tell you how they really feel.

  • Rob Usdin

    I’ve said it before. Radio needs to just forget HD and start working with the cell phone companies in a big way to get their stations on cell phones. Get a jump now – because the cell phone companies are going to be the key to always on internet wherever you go – which is what makes streaming of your station possible. Forge those partnerships now so radio isn’t left in the dust. Isn’t Pandora already on cell phones? I bet Sirius and XM announce partnerships soon.
    And where is radio? It needs to be on the ubiquitous device everyone has, not on a device no one wants to pay for.
    –*Rob

  • http://profile.typekey.com/mramsey1/ Mark Ramsey

    George, what you’re suggesting has not been suggested by anyone at any decision-making level in radio and it never will be.

  • http://www.bridgeratings.com Dave Van Dyke

    Hey, Mark:
    I’m sure you’ve spent time talking with the fine folks in London who oversee Britain’s Digital radio initiative.
    When they described to me why Digital radio was so successful there, it sounded to me like they have been using the satellite radio playbook, but, they claim, they did it before satellite radio did and that U.S. satellite radio is using Britain’s digital playbook!
    HD radio in the U.S. lost the ‘first to market’ race to satellite radio which beautifully marketed all the key issues that make Digital (HD) radio in England such a strong phenom.
    Digital radios are everywhere there, priced right and marketed as unique specialty channels that Brits hadn’t the opportunity to enjoy much of before Digital radio.
    HD-U.S., among other things, is suffering from being too late to establish a beach head.
    dvd

  • http://steve.diamond.typepad.com Steve

    Interesting thought, but it doesn’t matter because the content itself is painfully inadequate on the main as well as the side stations. So who cares? BTW, I live 25 miles south of San Francisco. Do you think HD stations come in clearly for me? Hell no. Right now I’m listening to Jango. Commercial radio is the next San Francisco Chronicle, i.e., it’s dead man walking.

  • http://hdradiofarce.blogspot.com/ Greg

    Mark,
    There are two views concerning the cost of the iBiquity fees:
    “U.S. automakers not jumping into HD Radio” April 2007
    “The radios are estimated to cost about $45 each to install, or each of the three carmakers about $150 million to $200 million annually, automotive industry sources said… An executive who oversees satellite radio services for GM said the carmaker had no plans to install HD radios until the devices catch on.”
    http://www.reuters.com/article/businessNews/idUSN2632750220070427
    “Ford Offers HD Radio (Yawn)”
    “The chipset and rights from Ibiquity Digital runs somewhere south of $25, I believe, which is why makers of replacement car radios can offer a CD player and AM/FM radio with HD Radio for as little as $200. Asked about the high cost of HD Radio relative to the component costs, an executive at BMW said, The next version of HD Radio will be called ‘radio’, meaning it will be built into the radio head unit, not sold or charged separately.”
    http://findarticles.com/p/articles/mi_zd4439/is_200709/ai_n20530459
    You are correct in assuming that the cost of HD radios is going to have to be subsidized, but it seems that radio execs have no faith in HD Radio:
    “Where is the Cool, the Content, the Charge?”
    “Here is another bad sign: almost every time I speak with a GM or PD about HD Radio, they say, …it’s a non-starter, isn’t it? If we don’t believe in HD Radio, who will?”
    http://www.paragonmediastrategies.com/theblog/?cat=3
    Any thoughts?

  • http://hdradiofarce.blogspot.com/ Greg

    Dave,
    DAB in the UK has not been such a “smashing” success – there are various sales figures for DAB radios, but I have read that it is mostly-hype, as about 4 million have been sold in ten years. This is all a moot-point, because DAB is a mess in the UK, and they are moving to DAB+. All of the 4 million DAB receivers will be useless – this is the problem with software-defined radios SDRs, as constant upgrades are required:
    “All DAB receivers will be obsolete in a few years’ time”
    http://www.digitalradiotech.co.uk/articles/All-DAB-receivers-will-be-obsolete-in-a-few-years-time.php
    For example, to access iBiquity’s new Radio Guard HD channels, consumers will have to purchase new HD radios.

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  • Frankr6345

    Let's see now. At $50 for each HD chip, then Best Buy is losing $10 on every Armband radio it sells.

  • http://pulse.yahoo.com/_6ZRPMPQVPTRZOAFCRJI3K5ZEZU Gregory Smith

    This post was written over three years ago, so in time, iBiquity royalties have come down a bit, as more HD radios are sold. The point being made is that iBiquity does collect royalites, manufactures build inferior HD radios and pass the licensng costs onto consumers. Now, iBiquity and the automakers are under investigation by two law firms for forcing consumers to absorb the costs of installing standard HD radios, and hiding HD Radio chipsets in expensive navigation systems.