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News Archive: September 2012

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9/27/12 - Radio Advertisers' Digital Dilemma [link to this story]

Broadcasters are touting the fact that, after a multi-year slump, advertising revenue is looking up. The Radio Advertising Bureau reports that advertisers dropped more than $3.7 billion (estimated) on spots in the second quarter of 2012 - representing a total investment of $6.8 billion for the year so far, and up 1% from 2011. The fastest-growing segment where advertisers are spending their money is in the digital realm: up 7% this year compared to last.

This does not, however, mean that those who are in charge of allocating radio advertising dollars are necessarily satisfied with what they get for their investment. An illuminating compendium of video interviews with media buyers, produced by Edison Research, suggests that radio lags far behind in its knowledge and exploitation of the digital media environment.

Alicia Abele, Media Director of Brothers & Company, thinks radio "continues to be a stepchild in many aspects in terms of the overall look of the presentations and what they offer." Chris Kuenne, founder and CEO of the interactive marketing agency Rosetta, describes working with radio advertising reps on digital campaigns has been "frankly a pretty frustrating experience."

This frustration stems from the fact that many who sell radio simply don't understand the world of digital media, much less where radio might advantageously fit into it. Brad Bernard, the vice president of online media and analytics for Harmelin Media, made this brutal observation: "If they're going to have credibility in the online space, they need to learn the lingo better....[they're] using the [digital] language of five or six years ago," referring to things like "hyperlinks" which most marketers (and Internet users, for that matter) take for granted today.

This knowledge-gap can sometimes be stunning. For example, many radio stations still don't know how to design proper web sites. Bernard describes the majority of them as "cluttered. Too many advertisers on there....Too many party pics of scantily-clad women. It's not the environment that advertisers want to be in." Media buyers report that they'll actually turn down placement on station sites - even if such placement is offered for free - rather than potentially harm the brand of the client they're working for.

This makes it very difficult to organize effective advertising campaigns that meld on-air spots with an online presence. Abbie Korman, president of Impact Marketing and Promotions, says her experience with cross-platform radio campaigns is that the number of people who actually hear a spot and then interact with a station's web site is "appallingly low."

In the streaming space, local broadcasters don't seem to have any idea how to express the value of having an online outlet. Aggregate numbers of listeners remain small at the individual-station level, so much so that to advertisers it's almost worthless. Said Korman: "Seriously, I had a New York station show me 480 people listening. I'm trying to reach millions. Why am I going to bother to spend my time?"

Most media buyers consider Pandora and Clear Channel's iHeartRadio aggregator to be the most effective destinations for streaming adverts, with Pandora being the "behemoth" in the marketplace. Lisa Adams, a vice president and managing director of Allen & Gerritsen, thinks this is why the strength of radio's ability to be local is "probably the biggest [advantage] that radio needs to hold onto."

Abbie Korman agreed. "The panic of the industry as a whole is kind of taking away the fun of radio and they're kind of killing themselves....It makes me sad to see the way the industry is running away from itself...Stick with local radio and continue to invest in that."

Ironically, this is not where broadcasters are making their investments. Also note that not one media buyer mentioned HD Radio in their critique of radio's plays in the digital space. It emphasizes the disconnect between where broadcasters think their future is: at the recently-concluded NAB Radio Show, HD's proponents hammered broadcasters to implement "Artist Experience" - i.e., the ability to broadcast still pictures to a radio receiver - as if that stands to break digital broadcasting out into the mainstream.

Considering that it took years for HD Radio to attain such "functionality" (which is built-in to 'net-based streaming platforms), and it still takes as much as four hours for a broadcast engineer to implement AE on any given HD station, it smacks of a fool's errand more than a great leap forward.

It's easy to brag about the radio industry's revenue growth in the digital realm, especially when the comparative data-point is zero. The future of this slice of the pie is still a wild-ass guess, because radio's digital dilemma is so deep-seated and multi-faceted.

9/20/12 - CEA Throws iBiquity A Bone? [link to this story]

One of the factors that's hindering the proliferation of digital radio broadcasting in the United States is the reluctance of consumer electronics manufacturers to actually commit to making HD Radio-compatible receivers. Stand-alone receivers are nearly impossible to find in stores; only one portable model currently exists; and auto manufacturers are not exactly racing to embrace the technology.

This reluctance has been well-reflected in digital radio policy discourse. The Consumer Electronics Association, the trade group that represents receiver-manufacturers, has been critical of HD Radio for more than a decade now. Early on in the FCC's deliberations over digital radio, CEA backed a standard that would have created a new-spectrum digital radio service; it was highly skeptical that HD would work as promised and was not happy with its wholly proprietary nature.

After massive backlash from the broadcast industry, CEA quietly stepped aside and let broadcasters have their chosen technology. But it got the last laugh when its members effectively boycotted adopting HD Radio - stations could blast ones and zeros into the ether to their hearts' content, but with no way to listen they're stymied.

This year's push by broadcasters to get FM receiver-chips into cell phones has also raised the ire of CEA, which in the past tagged radio as a "horse and buggy" technology simply looking for a way to "preserve its [declining] market share."

That's why its surprising that CEA's under-development flagship publication, It Is Innovation, has named iBiquity Digital Corporation (the proprietor of HD Radio) as a finalist in the small business category for its inaugural "Innovation Entrepreneur Awards." CEA's even produced a short video promoting iBiquity and HD Radio.

The winner(s) will be announced at CEA's Industry Forum next month. iBiquity can certainly use all the positive news it can get, even if it's just a bone thrown from a trade group that otherwise is doing a whole lot of nothing to help HD Radio find any semblance of traction.

Meanwhile, at the NAB's annual Radio Show taking place this week in Dallas, iBiquity's sparing no expense, renting out an entire wall of the exhibition hall to showcase its technology and engender the perception that it's easy to find and listen to.

9/13/12 - ZoneCasting Prepares Further Field Trials, Eyes Official Launch [link to this story]

Radio World reports that GeoBroadcast Solutions, the company behind "ZoneCasting" technology, will commence long-term field trials on a station in southeast Florida this fall and is preparing for a "commercial launch" as of now left undefined.

[For those just tuning in, ZoneCasting uses FM booster stations to break up a full-power station's primary coverage area into "zones," each one covered by its own booster. This allows the parent station to program each zone separately, offering geo-targeted advertisements, news, community information, and emergency messages.]

Although the latest report reads like cobbled-together press releases, there are a couple of interesting observations. The first is that the ZoneCasting system is compatible with both analog and digital FM broadcasts. This is interesting because proponents of HD Radio have been pushing the use of single-frequency booster stations as a way to improve the robustness of FM-HD signals.

The FCC has not put this proposal on a fast track, but if it can be convinced that the deployment of boosters might tackle two issues instead of one (improving FM-HD reception while allowing stations to entice more advertisers through geo-targeted broadcasts) perhaps the idea will gain some regulatory traction. After all, at today's FCC the only metrics that really count are economic.

The second is that trade press coverage of ZoneCasting leaves one with the impression that this technology is desired by the industry as a whole. ZoneCasting's existence hinges on convincing the FCC to modify its FM booster rules to allow such stations to originate programming. GeoBroadcast Solutions filed a Petition for Rulemaking asking for this change in April.

RW's latest story closes with quotes from three parties who filed comments in support of the Petition, but it doesn't say that those folks constitute a full 25% of the commenters (12 in all), none of whom spoke on behalf of the primary constituents that shape broadcast policy in the United States.

The FCC has pretty much checked out of proactive involvement in policymaking related to radio, especially over the last decade, and has a propensity to make post hoc rule changes - such as those sanctioning HD Radio itself and formalizing the speculative proliferation of FM translators. Thus it may not take much real-world impelementation of ZoneCasting to get regulators to sign off on yet another step toward the bastardization of the FM dial.

9/6/12 - FCC Enforcement: Questionably Redundant and Retributive [link to this story]

Two-thirds of 2012 is in the can, and the FCC seems to be adhering to its "new normal" when it comes to pirate radio enforcement. Field agents have conducted 183 enforcement actions as of the end of August - this is up from the 132 actions logged by this time a year ago, but well off the year-over-year record-breaking enforcement pace set between 2006 and 2010.

The FCC's been involved in anti-pirate enforcement activity in 15 states and Puerto Rico so far this year, as opposed to more than two dozen states by this point in 2011. The hottest spots continue to be the New York metropolitan area as well as the state of Florida more generally.

In New York, it's standard practice now for field agents to visit a suspected pirate and follow-up with warning letters to both the operator and the owner of the building in which it is housed, typically within a week or two. This administrative tactic inflates the perceived activity of the FCC's NYC field office, but does suggest that the agency has found pressuring landlords returns a dividend.

In Florida, licensed broadcasters appear to be warming to the use of the state's anti-pirate law to go after rogue broadcasters. Albert Knighten, a retired Navy air traffic controller who ran a bona-fide community station from his home, was busted by local officials in December and charged under state law (these charges will be dropped after he completes a "diversion program," which is essentially a form of community service).

In June, the FCC added insult to injury by issuing a $15,000 Notice of Apparent Liability to Knighten for his electronic civil disobedience, but he was able to successfully whittle that down last month to an actual fine of just $1,200.

There is already another pirate broadcaster teed up for prosecution under Florida's anti-pirate law: a man who ran a fleabag operation squatting a frequency used by one of south Florida's largest public broadcasters. Manifestly irresponsible folks like these get no sympathy; they're just asking for it.

Interestingly, though New York and New Jersey also have anti-pirate statutes on the books, nobody's been prosecuted under them as of yet.

The FCC is also assessing higher monetary forfeitures to pirates in Florida. Whereas the base fine for unlicensed broadcasting is $10,000, the FCC's seeking $15-20,000 or more in most cases there now. The punitiveness seems to stem from two factors: that pirates publicize their stations and refuse to allow field agents to inspect them.

NALs and forfeitures from Florida this year cite "investigation" involving the browsing of station web sites, Facebook pages, and noting how active the stations actually are in their local communities. This, apparently, warrants a heavier hand, and adds evidentiary fodder to the old adage that the life cycle of a pirate station is inversely proportionate to its publicity. There is no easy solution to this dilemma, though it is interesting that the FCC considers this more "willful and egregious" behavior than simply putting an unlicensed signal on the air, which is really the only thing it's supposed to care about.

The more troublesome bump in fines stems from the refusal of station operators to let field agents inspect their gear. For the last year or so, the FCC's been adding such bonus-penalties to pirate forfeitures, citing a legally questionable regulation that supposedly requires all broadcasters to allow FCC inspection of their stations at any time.

The FCC has not always invoked this particular authority - witness this confrontation with the FCC outside Free Radio San Diego in 2003, where one of the operators berated field agents for slinking around. Although the station was raided two years later, it returned to the air in short order. In 2007, one man was initially socked with a $10,000 NAL for the station; no reference or penalty-adjustment was made regarding prior refusals to inspect. Ultimately, the forfeiture was reduced to only $750.

This particular enforcement tactic is just begging to be challenged in the courts - but a recent decision out of the Fifth Circuit Court of Appeals may have made such challenges much harder. The case originates with a couple in Austin, Texas hit with a $10,000 fine for pirate broadcasting in 2010. They went to court over it, and last month the Fifth Circuit ruled that they did not have standing to raise specific points of law in their defense. (That they challenged the FCC on a hopeless point of interstate commerce certainly did not help matters.)

Although the FCC may be tweaking its administrative protocols for dealing with unlicensed broadcasters, it's still wholly unable to cope with the phenomenon of pirate radio.