HD and Arbitron: A Match Made in Hell

They’re at it again in the engineering discussion group. This is a continuation of a previous post, but the newer comments contain some good information, and this string delves into Arbitron numbers, as well as HD radio. One tidbit for Austin listeners: The June Arbitron book will be based on the portable people meter (PPM), the new set of questionable numbers churned out by the company. (As Lowell Kiesow says: “Don’t count on PPM numbers being any more useful than diaries. The numbers are only as good as the quality of the sample distribution, and that appears to be horrible.”)

In other comments, Jon Cyphers launches into HD, in comparison with iPhones, the latest in content on the go:

The iPhone apps are free to anyone who spent at least $100 on a phone and pays at least $70 a month for usage. So it’s not as if someone went with an iPhone app because it was free in comparison to buying an HD Radio. Right? These were probably even bigger spenders than the ones who bought HD Radios.

As far as the 2.5 million HD Radios sold (I saw that quote today too), how many of those are Zune HDs that have a really good chance of not being used even 10% of the time as HD Receivers? How many were bought in clearance sales? How many were Sony’s to get a hold of the superior analog tuner?

Dan mentioned the C Crane catalog with the Sony HD receiver in it. Problem is two C Crane catalogs back, there were 6 HD radios in the catalog. With the car manufacturers, there have been so many different press releases about Ford alone, and they never come true. It will take a car that sells for <$25,000 to come with HD Radio standard to even get close to surviving.

You can bet wifi will take off and HD will never make it as standard equipment. People will use their music collection or analog radio if streaming audio doesn’t work in the cars. Every time someone brings up the AT&T problems it drives me nuts. AT&T is investing billions to improve things and iphones will be on Verizon soon, spreading the load across more networks. HD has problems with transmission, marketing, and sale/distribution of the receivers, compared with mobile broadband having problems with just transmission in just a few key major markets (where HD has problems, too, BTW), and some rural coverage.

The Arbitron study that compared HD, streaming, XM, and other things is a wakeup call to anyone who still thinks HD has a chance. I can’t imagine a GM reading this study and then turning around and investing more money in HD. HD Radio ranked last in impact of people’s lives at <1%, even below e-readers. Only 7% were very interested in HD Radio, and only 3% owned and used it. Only 31% have heard of or read about HD recently. Then you look at the numbers for online radio listening and they are huge compared to HD and growing dramatically.

What’s the percentage of HD stations with ERPs over 25kW that are increasing power to -14 or -10?  I only know of one in our market even considering it. So that hail mary of power raising is not going to save it. It’s dead, we gave it a good chance (and blew a lot of money) for several years, and it didn’t happen (actually it was an abysmal failure). Now it’s time to stop the bleeding of resources that could be used for creating content for analog and streaming transports.

Novel thought, but so many big-name companies — including Ford motor company — have bought into the swindle that it’s not likely to happen anytime soon. Michael Leclair chimes in directly, with a cautionary note about the internet and its lack of a real revenue stream:

Gee Jon, you are on a roll again today, aren’t you? The same Edison study showed that internet usage has stalled and that the trend of little to no growth in broadband delivery continued in 2010. The overall trend seems to indicate that until and unless there is a build out of Marshall Plan proportions in wireless access networks (a la 4G or WiMax) that internet usage is stalled. Thus the “great spectrum grab” of 2010 has begun in order to get more services out there.

I’m the first to agree that content is going be where we as radio producers and news organizations can preserve our role in the media and importance in our listeners lives. Hey, I work for a news station and we have our content going out over just about anything we can think of internet related. But it remains true that the overwhelming majority of our revenue is radio related. IMHO this is due to the exclusive use of the radio platform. In contrast, with all of our web investments we still can’t cover our costs — it’s a loss leader. Sadly, the more that it succeeds in reaching people the more it goes underwater — you can’t “make it up on volume” when you lose a penny every time someone uses your site.

As a group we need to manage our transition to the web very carefully because we don’t want to go where the newspapers went. For news organizations if you jump with both feet into the internet exclusively it means standing everyone up in a line saying goodbye to 2 out of 3 in your staff… So I find it hard to embrace with the same passion what you are advocating, which is turning off the transmitter and leasing an OC-3.

By all means I would encourage public radio stations to invest appropriately in staff and resources to become news and information sources for their community. News stations develop powerful bonds with their audiences who will then follow them to new platforms. But the costs of building a news department make the cost of investing in HD look like a blip (note that electricity for high power HD might run another $800 per month . . . staff costs for a city-size news department run about $500,000 per month and up).

And Michael Leclair chips back in about Arbitron: “Yes, PPM has been a big step backwards in accuracy due to the lack of adequate sample sizes. Basically it’s a crap shoot that penalizes stations that don’t play music continuously.” He adds:

There is a lot of smoke and mirrors going on with PPM. My take on the somewhat “random” increases or decreases that happened after the conversion is that there is a slight amount of sample bias that isn’t being filtered out because the sample sizes are still quite small (for statistical averaging to work you have to get a representative sample of the population . . . this can be pretty hard since people can be so different in the ways they use media and if you don’t get enough samples the bias will come through). Arbitron has said they are working on larger samples and that should help get better measurements.

In general, though, the trend for voice/talk stations to lose audience relative to music is so well known that program directors across the country are telling their DJ’s to cut back on their mic time because it kills their PPMs. That’s not a good sign.

But as another pointed out, sometimes it’s just a matter of what a store is playing in the background that can alter ratings:

In NYC the number one station has seen a further increase in ratings with PPM. No one I know across a number of demographics actually listens to that station but it is played in many shops and delis. Since PPM measures exposure; anyone who walks into that establishment wearing a PPM device will be counted. In my neighborhood one deli that serves a lot of people from the hospital across the street is picking off listeners that otherwise would be listening to drastically different formats and at the expense of those other stations. This is reflected in a drop in ratings on the other stations. I think the only correlation with talk is that most businesses do not play it in the background.

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One Response

  1. “HD Radio Initiatives: Today’s New Opportunities”
    September 2009

    “Struble began the session by citing the latest HD radio sales and broadcaster data. He noted that while sales of HD Radios are sharply increasing, especially with the new portable Best Buy Insignia and Zune HD models… We’re selling millions, but we need to be selling in the tens of millions.”

    http://tinyurl.com/yjpsuvz

    “Struble: Radio Is the Last Analog Medium Standing”
    September 2009

    “Insignia HD — I think this will be a nice little interim step for jogging or working out. It proves the viability [of the technology] and hopefully we’ll get sales; but no, this is not going to sell in the hundreds of thousands… Radio alone — the sad reality of where it is — as a standalone device, it just doesn’t exist anymore as a category. Nobody goes into Best Buy and says ‘Where’s the radio department?'”

    http://www.rwonline.com/article/87370

    I did finally catch Struble in a lie, as these two quotes were both made September 2009. HD Radio sales figures have always been “floating” numbers, whichever is convenient for Struble. There is always the Google Trends graph, which Struble can’t spin, showing virtually no interest in HD Radio since inception:

    http://tinyurl.com/2v5wevy

    Oh yes, CBS engineers stated that CBS will not be implementing any power increase for its FM-HD stations, and surely, they are not the only ones.

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