Digital Radio

All major forms of media have gone digital over the past decade. Many people read their newspaper online. More and more music is bought or illegally downloaded in MP3 format. Cable television is increasingly delivered digitally. The list goes on and on.

The benefits of digital media are many, but to name a few, we now can search for what we want, we can time shift the delivery of media, marketers can target advertising that’s actually relevant to us, we can consume the media on new devices like iPods and HD TVs, we have more programming to choose from, etc, etc.

The benefits of digital delivery aren’t available today to radio listeners who comprise one of the largest and most loyal media sectors. We have satellite radio which is starting to emerge as a digital alternative to the traditional broadcast radio market. And there is a great piece on the benefits of satellite radio in today’s New York Times circuits section.

Satellite radio costs $10/month and even so, it has over 1.2mm subsribers between the two providers, XM and Sirius.

The success of satellite television was one of the major forces behind the conversion of cable to digital. Now that cable is converting to digital, satellite television has lost a lot of its appeal. It will be interesting to see if the same scenario plays out in the radio market.

What most radio listeners don’t know is that their world is about to undergo a conversion to digital broadcasting. The technology is called HD Radio and on October 10, 2002, the FCC announced that it had approved the use of HD Radio technology as the standard by which the broadcast radio industry will convert from analog broadcasting to digital broadcasting.

Almost 100 radio stations across the country are currently broadcasting their signals digitally using HD Radio technology. But nobody can hear them. Yet. Kenwood has recently released its KTC-HR100 which is its first HD radio tuner. It can connect to any Sirius ready Kenwood car radio. Pioneer will have an integrated HD car radio in the market early next year.

I am more than just an interested observer in all of this. For the past five years, I’ve been an investor in a company called iBiquity Digital that is the sole developer of HD Radio technology. It has been an incredible challenge. First there was the engineering challenge of developing a digital system that could operate in the existing AM and FM bands, require no new spectrum (unlike digital television), and operate on the same channels as the existing stations operate. The system had to offer better sound quality and had to go through the most rigorous testing phase of any technology system i’ve ever been involved with. Then the company had to get the FCC to approve the system. The Company had to get all the companies that currently service the radio industry – reciever manufacturers, chip manufacturers, transmitter manufacturers, studio system developers, etc to agree to manufacture HD compatible equipment. And now the company is working hard to get the radio stations to put the HD radio signal on air. But its happening. And the result is going to be a great improvement in the life of the radio listener.

To start, the listener will get better sound quality. FM will be CD quality, with no noise in the signal. AM will be FM quality. AM stations will be able to broadcast music for the first time since FM came along in the 1960s. And i expect we’ll see niche programming like classical, jazz, bluegrass, latin, folk, reggae, etc emerge on the AM band.

But the most important innovations (like all forms of digital media) will be in the way radio will be consumed and the new things you can do. The radios will tell you what you are listening to. You’ll be able to download (and pay) for the song if you want it. You’ll be able to store and replay the shows you like if you can’t hear them live.

Just like the digital cellphones have all kinds of new features that the analog phones couldn’t support, digital radios will become very different animals than the analog radios we’ve been living with for the past 50 years.

This conversion will take some time. But its starting in 2004. I hope you are as excited about it as i am. If you are, please call your favorite radio stations and ask them to put up a digital signal this year. And then go out and buy an HD Radio for your home and your car.

#VC & Technology