July 14, 2010
WASHINGTON – Only 14 percent of U.S. radio stations have gone digital, despite the fact it has been nearly eight years since the government approved the technology, according to an Investigative Reporting Workshop analysis. (Find digital radio stations by area here).
What’s more, the number of stations making the switch is actually decreasing, according to one report.
Digital radio draws only about 650,000 of 239 million weekly radio listeners – about three-tenths of 1 percent – according to a report by Bridge Ratings released in December.
Unlike with television, Congress did not mandate a switch to all-digital signals and many cash-strapped radio stations are reluctant to pay the expensive equipment and licensing fees required to go digital – despite the fact the technology represents a new revenue source for the industry.
What we found
As of March 1, the total number of analog stations licensed to broadcast digital signals was 2,073, according to data from the FCC and iBiquity Digital Corp., the company that licenses the technology. That’s out of a total of 14,420 licensed, full-power stations in the U.S., according to an analysis by the Workshop.
Like analog radio, digital radio is free and broadcasts locally. Specially designed tuners can pick up digital signals, which are squeezed in between analog signals on the radio dial. This is called in-band on-channel technology, or IBOC.
In the U.S., digital radio is synonymous with HD Radio, which is a trademark of iBiquity, the sole company approved by the FCC to license IBOC technology. Digital stations are actually hybrids – they broadcast their original analog station plus a crisper-sounding digital simulcast.
In addition to the 2,073 digital simulcasts (known as HD1), broadcasters can transmit additional digital-only channels, which are referred to as HD2, HD3 and so on. Among digitally licensed stations, there are 986 HD2 channels, 174 HD3 channels and one HD4 channel.
The top 10 digital radio markets all fall within the country’s top 25 largest metropolitan areas.
Chicago – the country’s third-largest media market – has the most digital radio stations.
Clear Channel Communications Inc., the nation’s largest broadcaster, also owns more digital radio stations than any other company – about 25 percent of the total. Big commercial radio groups transmit the greatest number of HD1 simulcasts and HD2 digital-only channels, representing 64 percent and 74 percent, respectively.
However, non-commercial licensees, like universities and other public radio stations, broadcast just over half of all HD3 channels.
Public radio stations have been receiving extra help since 2003, when the Corporation for Public Broadcasting began giving out grants for digital conversions. The funding has made a “tremendous difference,” for public radio, according to Mike Starling, chief technical officer and vice-president of NPR Labs. More than 600 public radio stations have benefited from CPB’s grants, he said.
Digital formats mimic the most popular analog formats. For HD1 channels, news/talk/information, country and variety – a catch-all that often denotes public radio – are the three most popular. Classical music is the top HD2 format and news/talk/information is the top HD3 format.
Digital radio stations are most successful when they focus on a niche, according to Starling. He noted that public radio tends to air several formats on one station, alienating listeners who tune in to news, for instance, when they expect jazz. Digital multicasts allow broadcasters to devote an entire station to these “pent-up program needs” and win listeners, he said.
Starling called Washington, D.C.’s, WAMU* “a classic example of doing digital right.” WAMU spun off its bluegrass programming to an Internet stream in 2001 before ultimately airing it on its HD2 channel. WAMU also airs BBC news, National Public Radio’s “Talk of the Nation” and programming from Baltimore public radio station, WTMD, on its HD3 channel.
Some other niche stations have formats that receive little to no play on traditional radio. Gay and lesbian programming, salsa and Americana all have homes on digital radio channels.
Some digital channels air programming that would otherwise be forgotten. KBCO-HD2 in Boulder, Colo., plays its back catalog of live rock performances from artists like Elvis Costello and Emmylou Harris. Public radio station WHRO-HD3 in Norfolk, Va., broadcasts “The 1920s Radio Network.”
WTMD broadcasts “The Baltimore Channel” on HD2. Other stations with a local focus include Native American variety on Anchorage’s KNBA-HD2, “The Irish Channel” on Boston’s WTKK-HD2 and local hip-hop, R&B and go-go music on Washington, D.C.’s, WPGC-HD2.
This sort of specialty programming “might not draw a huge audience, but will draw a passionate audience,” said Dennis Wharton, executive vice president of media relations at NAB.
But some stations aren’t so unique. At least 11 percent of HD2, HD3 and HD4 digital channels are rebroadcasts of other stations. The majority of these come from AM stations owned by the same companies.
Broadcasters are also leasing stations for extra revenue. For example, radio groups Emmis Communications Corp. and Bonneville International have leased several stations to WorldBand Media, which broadcasts South Asian programming called HumDesi.
The FCC’s involvement with digital radio officially began in 1990, when three digital radio companies submitted petitions to start broadcasting. FCC Commissioner Ervin S. Duggan said he hoped the agency would act more quickly to implement digital radio than it had to adopt other radio technologies.
“I hope we can avoid charges in future years, that concerning this new service, the expert agency [FCC] was asleep at the switch,” he said then.
The National Association of Broadcasters supported adopting the European technological standard, called Eureka 147. But some worried that it would be too confusing to listeners because it required stations to move to another frequency. It also called for a new swath of valuable radio airwaves, something the government was not willing to provide.
This led to a “frenzy of scientific experimentation to seek a home-grown in-band solution,” said Tom Taylor, executive news editor of industry website Radio-Info.com.
Soon after, the NAB put its support behind the development of IBOC technology, which did not require new spectrum. USA Digital Radio, a company formed by CBS Radio, Gannet Co. and Westinghouse Electric, emerged as a digital radio frontrunner and publicly demonstrated IBOC in 1992.
Meanwhile, using the Eureka standard, the British Broadcasting Corp. reached a digital milestone in 1995 when it aired digital simulcasts of its analog stations for London listeners. Today, 86 percent of Britons have access to digital radio, according to the BBC.
The FCC began considering a digital radio standard in 1999, having struggled for years to solve the problem of how to avoid interference between analog and digital signals, according to Janice Wise, director of media relations at the FCC’s Media Bureau.
USA Digital Radio, backed by 15 of the nation’s largest broadcasting companies, merged with rival Lucent Digital Radio in 2000 to become iBiquity. Two years later, the FCC selected iBiquity’s IBOC as the technological standard for digital radio.
In 2007, five years after stations began digital broadcasting, the FCC decided that stations could operate indefinitely in hybrid mode – meaning they may never be required to go all-digital.
The adoption of digital radio has not been as swift or widespread as the FCC and early advocates had hoped.
Conversion to digital peaked in 2006. Only 184 stations converted last year, according to the “State of the News Media 2010,” a study by the Pew Project for Excellence in Journalism.
However, because stations that have converted are generally big broadcasters in big markets, digital radio reaches about 90 percent of the U.S. population, according to Bob Struble, president and CEO of iBiquity.
But availability is not translating into listenership. Only 3 percent of those aged 12 and older own or use HD Radio, compared with 92 percent for analog radio, according to a February survey by Arbitron and Edison Research. In fact, many people are unaware of digital radio’s existence. Only 31 percent of people had heard of HD Radio and only 7 percent were “very interested” in the technology, according to the survey.
Even people who are paid to sell the radios may not be familiar with them.
A Best Buy electronics store across the street from WAMU in northwest Washington, D.C., sells a single model of a table-top HD Radio – the existence of which was unknown to a salesman there. Meanwhile, in the automobile stereo section, another salesman confused satellite radio with digital radio.
Still, sales of digital radios in the U.S. reached 734,000 in 2009, more than double 2008’s total, Struble said.
The failure of broadcasters to convert may be due to a decrease in industry revenue of nearly 19 percent from 2008 to 2009, according to a report by media analysis firm BIA/Kelsey.
Small, “mom and pop” broadcasters have been hit the hardest, as radio stations experience “the worst advertising recession in 50 years,” according to Wharton.
But in the long run, it makes sense for owners of analog radio stations to invest in the technology – it will pay off by drawing in more listeners, attracting more advertising and bringing in profits from leased channels.
“It’s not a good recipe for the survival of the media” if radio is the last remaining analog technology in the broadcast industry, Struble said.
There are hopes sales will pick up. In February, a month after the FCC allowed stations to increase power levels, iBiquity announced that it was cutting digital licensing fees from $25,000 per station to payment plans that range from $10,500 to $12,500 per station.
Digital radio has been available in cars since 2005, when BMW began offering the technology as an option in several models. At this writing, 15 automakers offer digital radio as a standard or optional feature in more than 80 vehicles.
Struble said digital radio now has “the strongest momentum” with automakers.
Buying an affordable radio for the home is a different story.
Of more than 100 digital radio devices shown in the Buyer’s Guide on the HD Radio website, only three were stand-alone digital radios that cost under $100. Many more of the devices were home theater components that cost hundreds or thousands of dollars.
The difficulty with selling digital radios is that few people shop specifically for radios these days. Digital radio is essentially “an upgrade to a feature that [most people] are not asking for to begin with,” Struble said.
To address the general public’s lack of demand for big stereo systems, iBiquity is trying to get digital radio included on other music devices. HD Radio is available on Microsoft’s Zune portable media player, and Best Buy’s Insignia brand sells a portable HD Radio player for under $50.
Digital radio’s song-tagging feature allows readers to save information about songs so they can later buy tracks from iTunes or other online music stores. There is also an HD Radio application for iPhones.
“It will take a while to filter down,” NAB’s Wharton said of the adoption of digital radio. “This will be a marathon, not a sprint.”
* The Investigative Reporting Workshop is a project of American University, which is the license-holder for WAMU.