Savage said:
Here's where the soft-drink and fast-food analogies fail when you try to justify fragmentation of radio audience through HD Radio. There are actually TWO problems.
One: you can't expand the product lines infinitely to accomodate new consumption, because the real product radio sells is...TIME. It's fixed and linear in nature. There are only 60 minutes in every hour and 168 hours in every week. So if you divide the listening among multiple products, like HD subs, the penetration of any given station/channel has to go down. It's simple arithmetic. The audience dilution is unavoidable unless you (a) increase overall cume or (b) hugely increase TSL, possibly some combination of both.
This ia a valid point, but only if applied in a vaccuum. As Big A says, if you don't like what's on, you'll find something else. Radio no longer has the commnand of the audience it once had. That's why stations have much more specialzed formats now than they had in the past. You just can NOT limit your offerings. Radio doesn't have that clout anymore.
I get the food-court/multiple product line approach used by YUM! and malls and so forth. But it's not a valid analogy. For you to draw this comparison, hypothetically for every order of chicken poppers or whatever sold at KFC, you would have one less Taco to sell at TB. For every pie sold at Pizza Rut, you'd have one quart less of root beer syrup to sell at A&W. If you sold too many root beer floats on a hot day, you'd be totally screwing the Colonel. This would shed an entirely different light on the "food court" concept.
Again this only works in a vaccuum. If you are the only restaurant in town, it works. However, I'm not losing a Taco Bell sale because I gained a burger. I'm gaiining a burger sale at the expense of McDonalds. The idea that you're cannibalizing your own audience is a stretch. Let's assume I'm running a classic Rock format on HD-1. How much dilution is there if I put Radio Disney on HD-2? And soft rock on HD-3? Obviously you'd like to not compete with yourself, but you could do that in any analog cluster today. It just doesn't happen.
Which brings us to why the "fragmentation" breaks down when applied to the way radio advertising is bought....
Two: everybody knows that radio is bought "in-demo" a certain number of stations deep, depending on the market. So if you lose quarter-hours and drop in the ranker vis-a-vis your competition, you lose out on the buy. It only takes a few listeners noting in their diaries that they're listening elsewhere - for example, to your own HD sub - to pull you down in-demo from #2 to #5. Your client just bought four-deep. And thanks to your own HD genius, you've just screwed yourself out of a buy....probably future ones as well.
You're trying to limit the available entertainment on the radio to increase your ratings.
That will not work, bevause if people can't find what they want,
they'll go elsewhere. Like I-POD, Internet, etc..etc.. That's why there are very few head to head competitors anymore and we no longer see the great radio battles of years gone by. We no longer have 3 top 40 stations. We'll have a rhymic CHR, a HIp Hop and a straight CHR. All fairly different, personalities aside. Beisdes, if a station had any sense, they woud program their HD-2 to go against their COMPETITOR, not themselves.
Again, in your fast-food analogy, every YUM! customer who crosses from the Taco Bell line over to the KFC line doesn't cost you the equivalent of hundreds of present and future Taco Bell customers. It's just one guy less in column A and one more in column B. Doesn't work that way in radio. It's as if every crossover customer changing from one product to another costs you hundreds of future customers.
I see where you are coming from and it's the land of "The Unchangeable Total Radio Cume". It's right out of the "Broadcast Network Affiliate Handbook". It worked against Dumont, but times are different now. Saying you won't provide a certain format doesn;t eliminate the demand for it. It just assures you will never see any revenue from people who want it. Because they're not going to say "Well since there's no more Smooth Jazz, I'll just listen to Rush." Not going to happen. That was the message in the excruciatingly long video clip Big A linked to. Perhaps the issue is not so much GROWING the total cume as DEFENDING the total cume.
With soft drinks, assuming you have enough pull with the supermarket chain, if you proliferate the brands of Coke products you can "persuade" them to just increase your shelf space, which automatically improves your chances of selling more native products vis-a-vis your competitor. Since presumably your radio competitors can also add HD products (assuming it were ever to reach any kind of critical mass in implementation) the potential advantage of "making your own pie bigger" can instantly be negated.
Which would also be the case in the supermarket, if it were true. It just isn't, IMHO. Look at what Chuck says. Most of his listeners are NEW LISTENERS. They had given up on radio long ago. That's total cume change. They left a while ago It went down. Chuck went on the air, Choices were increased... It went UP.
That's not to say that the concept of HD subs has no practical application. I think that eventually the best app for HD-FM subs will be some kind of narrowcasting and third-party or brokered sales, essentially the role which used to be fulfilled by analog SCA. At least that strategy would produce some measure of cash flow and wouldn't be likely to injure the main channel's competitiveness.
I believe, with a couple of notable exceptions, most of radio is heading that direction. just like TV. When cable TV first started there were 12 channels. 2-13. That was 3 network affiliates, maybe a PBS station. A couple of indies (If you had them near) Later A single pay channel which operated nights only, WTCG and the obligatory weather dials. Now we have channels 5 varieties of sports channels, Food Channel General entertainment networks, Celebrity channels, Childrens channels, Old TV Programs channels, History Channels, Womens Channels, Mens Channels, African American Channels,Spanish Channels, Music video channels, Country Channels, Country music channels, Spanish music video channels, Local governemtn channels, Local education channels, General news channels, Left wing News Channels, Right wing news channels, Multiple CSpan channels, Weather channels and the list goes on and on.
Radio is the same way. Just saying "We don't want more channels because it creates a problem for our business model" isn't going to cut it, IMHO. These other choices are going to be available and frankly a lot sooner than radio would like. As I see it, they can join in the party, or WATCH the party from the outside. Either way it's happening.
Clouseau
