Taking stock

December 1, 2001

It's been a year to remember — or perhaps to forget. Wall Street witnessed figurative and real collapses, and radio has felt the ripples generated from that.

All this short-term noise makes it hard to discern the real trends in the industry. The best we can do is make a year-end inventory of the issues as the tumultuous first stanza of the new millennium comes to a close.

Hot buttons

Satellite radio finally got started in 2001. XM Satellite Radio came from behind and launched its service first(originally scheduled to debut on September 12, it was postponed to the 25th), while we're still waiting for Sirius Satellite Radio to get going. Early response has been positive, with XM receivers jumping off the shelves by some reports. The loudest complaints have been that each radio has to have its own subscription, with no discounts for multiple-receiver households.

IBOC continues to develop but faces unresolved regulatory, broadcast deployment and consumer retail-channel obstacles. Its prospects remain uncertain, and compared with other here-and-now developments, IBOC appears speculative and distant, and its benefits (at least for FM) seem negligible.

Online radio services continue to proliferate. While most streams are still geared for the dial-up user, with audio data rates around 20kb/s, a growing number of services target the broadband listener with audio at 60kb/s to 100kb/s. When properly implemented, the latter rates are indistinguishable from CD or DAB services to most consumers.

The rights picture changed radically in 2001, with broadcasters who stream the air signals becoming liable for new music, sports and talent usage assessments. This caused many broadcasters to rethink their online business plans, and curtail their webcasting efforts. Thus, the primary focus of online radio is shifting from an alternate or extended method of delivery for local broadcast services to a new medium of its own, with Internet-only radio streams now beginning to dominate the environment. Given the concurrent cutbacks in peer-to-peer file-sharing services like Napster, many online music seekers have turned to streaming radio services for legal and easy access to free music online. Navigation improvements and program listing services on streaming media players and third-party websites have made surfing easier and more elegant.

Next up

It seems likely that satellite radio will become a force with which terrestrial broadcasters must reckon. Not all is rosy in S-DARS land, but the future seems promising for XM and Sirius, with ripening opportunity to gain a foothold in 2002 and beyond.

As broadband Internet deployment continues, and broadband wireless Internet emerges, online radio (dominated by Internet-only services) will also become a stronger competitor. Consider that today's broadband brings around 1Mb/s to the consumer's home, while next-generation systems will typically provide >20Mb/s, with such service likely to become available by 2004.

In other countries (notably Canada and the UK), Eureka 147 DAB services are slowly gaining momentum as affordable receivers begin to hit the market. The new year should see some progress there, though worldwide the largely replacement approach favored by Eureka DAB broadcasters has minimized the new services' attraction.

As mentioned here in the past, new broadcast channels that offer fresh and otherwise unavailable content appeal far more to listeners than those that simply improve the quality of existing services (particularly when new hardware purchases or subscriptions are involved). Thus, iBiquity's choice to make the IBOC format a qualitative-only enhancement (like most Eureka services) seals its fate as a less interesting development to consumers, who prefer the many new content offerings of other emerging platforms.

Perhaps the best outcome is that U.S. terrestrial radio may be gradually encouraged to increase or restore its localism, reduce its commercial loads, and increase its programming diversity and quality in order to compete with advancing new services. As elsewhere, what doesn't kill radio will make it stronger.

The ultimate asset in radio remains its human resources. Without them the medium is worthless. There are new opportunities emerging to lure them away, so broadcasters should do their best to keep these crown jewels intact.

A final watchword as we gather for this particularly poignant holiday season can be borrowed from Garrison Keillor: “Be well, do good work, and keep in touch.”

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