Ibiquity Fee Reduction

[Carmine5]

Well, iBiquity may not have done away with their fees but they have reduced the one time fee for the main channel by about half.

The fee structure is this:

1. Enclose payment in full with signed contract: $10,500
2. Invoice next business month standard net 30 terms: $11,000
3. 12 automatic electronic payments: $12,500 ($1,042/month)

According to Bob Struble:

“Based on this success and heightened broadcaster enthusiasm, we have created flexible, cost-effective licensing options to make upgrading easier. Radio is now the last entertainment medium to convert from analog to digital, and we want to do all we can to help broadcasters upgrade and deliver the highest quality listening experience to their listeners and generate incremental revenue from new digital offerings.”

I would think that if something is successful and enjoying "heightened enthusiasm", a fee reduction would be unnecessary.

Read the press release here:
http://www.ibiquity.com/press_room/news_releases/2010/1444

c5

 

[Savage]

Did The Stroob perhaps mean, "heightened desperation?"

Oh, right. We were talking about "broadcasters." As opposed to "iBiquity."

 

[Carmine5]

Did The Stroob perhaps mean, "heightened desperation?"

Oh, right. We were talking about "broadcasters." As opposed to "iBiquity."

Desperation indeed.

I'm not sure how pleased those broadcasters who paid full freight, all 25K, are about this announcement (excited, yes, but not pleased).


While I try not to read too much into Struble's statements his use of the phrase "incremental revenue" is somewhat interesting. Is he just referring to iTunes tagging or is the phrase really code for "don't expect a quick ROI?"

c5

 

[RadeoEngineer]

I find this comment to be of great interest.

“In fact, approximately one new HD Radio station goes on the air every three days."

I would like to know who these radio stations are, in fact.

 

[Savage]

I can believe it. That's only about a hundred stations per year.

The significant thing is, probably three or four stations turn HD off per month for lack of audience, excessive costs or interference.

So I would bet the net-net increase in HD stations annually ends up being something like 50, if that.

 

[davideduardo]

I can believe it. That's only about a hundred stations per year.

The significant thing is, probably three or four stations turn HD off per month for lack of audience, excessive costs or interference.

So I would bet the net-net increase in HD stations annually ends up being something like 50, if that.

The FM total continues to grow, and with around 1800 of those, HD covers about 80% of the population without the other 7 or 8 thousand smaller FMs.

Most of the turn-offs are AM, where lots of rearranging of the deck chairs is going on... to no effect. The band continues to age and lose share.

 

[Carmine5]

I found Inside Radio's report about the fee reduction amusing:

"Encouraged by... what it perceives as “heightened broadcaster enthusiasm,” iBiquity has reduced the one-time license fee it charges stations.." Apparently the editors of Inside Radio found that phrase a little hard to swallow.

I'm thinking that with all of these non-coms going online, iBiquity probably figures that cutting the license fee in half will motivate many of them to broadcast digitally. But most non-com stations are built on a tight budget and, let's face it, 10-12K (depending on payment plan) buys a lot of gear and services. You can outfit a studio, or buy the necessary processing gear or pay for engineering services to get the station on the air with that kind of money. Or you can throw it down a rat hole just for the privilege of broadcasting in digital (equipment extra).

A more reasonable fee is about 1200.00. And even then I would be hesitant to sign the check--after all Allen & Heath makes a nice little mixer for about that price.

c5

 

[Savage]

"HD covers 80% of the population." More iBiquity press-agentry nonsense....no, it doesn't. Just because the 60 dBu contours of stations owning HD equipment cover an aggregate total representing 80% of the landmass where the folks live DOES NOT mean HD is "reaching 80% of the population." That's ridiculous.

Even if you believe the iBiquity claim that "1800 FMs now broadcast in HD," which informed sources would correct to more like about "1400 FMs currently have HD," I believe that the regular audience for digital radio in most cases is "too small to measure." (It's been well established that iBiquity's figures include various stations which have LICENSED HD but have never installed the equipment, those who have installed it but never powered it up (Cox) and those who have a current HD license but who have turned the exciters off and are simply letting their licenses expire.)

And the AM audience for HD, always negligible, is probably approximately ZERO now in most markets. HD never represents any bargain in terms of performance, but the AM version is so hobbled by poor coverage and interference - to say nothing of lack of receivers - whatever tiny minority of digital listeners which may have existed at one time left the building long ago.

I'll step aside now and let you sling the usual anti-AM harangue.

 

[Carmine5]

To help put this fee reduction into historical perspective, I came across this RW article from '02 which lays out the entire odious rationale for IBiquity charging these fees in the first place and the initial reaction from broadcasters about it.

In the beginning, the fee structure was more complicated:

"The fees work like this: Annual FCC regulatory fees for radio stations range from $250 to $4,550 based on station service, power class and size of population served. A station would pay Ibiquity a one-time licensing fee calculated as 15 times its annual FCC regulatory fee.

Thus the range for a one-time perpetual license would be roughly $3,750 to $68,250. Ibiquity says the median one-time licensing fee would be about $12,900. Stations also could choose to pay over a 10-year period."

Apparently, that was unworkable and Ibiquity settled on a one-size-fits-all license fee.

The initial reaction to the fees was strongly negative and warned that it would hamper the rollout of HDR:

"Members of Ibiquity's own broadcast advisory rollout board, made up of owners and engineers, advised against the fee system.

"They're going to have to come up with a plan for broadcasters to buy a new transmitter, pay, and be done with it at that point," said one member, who characterized the fees as a "major stumbling block" in the rollout.

"I don't think they've thought them through," said another advisory board member. "If they're trying to entice broadcasters to go digital and require us to spend on average $150,000 just on the hardware, it certainly reduces our enthusiasm."

Even HDR stalwart CPB complained about the fees:

"I think it is unconscionable that they are asking the FCC to adopt their sole technology as the only system and then charge every station an annual use fee on top of the fees you will already pay to Harris etc. that will be built into their digital equipment if and when you decide to buy their transmitter."

The article is an excellent historical read and, for 2010, provides a "hindsight is 20/20" vision of the fee debacle and its impact on the success of HDR.

http://www.www.rwonline.com/article/2204

c5

 

[nd2023]

For an AM station, it might be worth paying $25K so that you can legally jam your neighboring frequencies, especially if it's a competitor.