February 21, 2006

Promoting “Free” Content [7:07 am]

Ready to catch the next wave [pdf]

Pummeled by an enormously successful holiday media and publicity blitz, terrestrial radio this week begins a multi-pronged marketing counteroffensive that it hopes will bring its overhead competitors back down to earth, preferably in one huge crash.

Cooperating in unprecedented ways, terrestrial radio broadcasters are officially unveiling a significant tech innovation of their own and a high profile nationwide campaign to trumpet it. One campaign that began Monday in Los Angeles and more than two-dozen other big cities heralds terrestrial’s long-awaited entrance into the digital age.

[...] Radio’s answer to that long-simmering question is HD digital radio, the industry’s next-generation product that can best compete with satellite’s sound quality and dizzying programming options. In the works for more than a decade, digital radio will enable broadcasters to significantly upgrade their signal — AM will sound like FM, which in turn will sound like a CD, they say.

Further, the compressed digital signal will allow for multicasting, which means radio stations will be able to divide their dial spot into anywhere from two to four channels. For instance, Clear Channel Radio’s KBIG-FM will continue to air an adult contemporary format at 104.3, but now is also playing round-the-clock disco hits on its side channel, 104.3-2.

Nationwide, only about 700 stations are broadcasting in digital and just about 260 of those stations are or will soon be multicasting, including about a dozen in Los Angeles. Industry officials say both those national figures are expected to more than double within the next year.

[...] For their part, XM and Sirius Satellite Radio regard terrestrial’s digital launch and accompanying marketing as more circling of the wagons. Driven by the holidays and a publicity windfall surrounding Stern’s move to Sirius, both companies combined to score nearly 2 million new paid subscribers in the last quarter of 2005.

The huge gains came at a heavy cost — both companies reported a combined quarterly loss of roughly $600 million as they continued to shell out big dollars for publicity and their marquee talent. Meanwhile, a high-ranking XM official resigned from the company’s board earlier this month and warned of a possible financial “crisis.”

Despite the financial hemorrhaging, the two companies contend subscribers will reverse the bleeding, and indeed have made bold predictions for their future — Sirius says it will double subscribers to 6 million by the end of this year; XM says it will have 20 million by 2010.

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