The HD Digital Radio Alliance has struck a deal with Best Buy to offer HD Radios in all of their 832 stores nationwide.

"The HD Digital Radio Alliance and iBiquity have created momentum with customers that now make HD Digital Radio one of the hottest electronics choices around," said Chris Homeister, Best Buy vice president of Merchandising. "Product is now available in all of our stores, so no matter where our customers live, they can discover HD Radio and experience the crystal clear sound and new programming choices."

Earlier this year, the HD Radio Alliance struck a major deal to offer HD Radios in Wal-Mart stores. Crutchfield now also sells the first ever HD Radio converter for your existing stereo. Now we can add Best Buy to the list.

"This is another major step forward for HD Radio technology," said Robert Struble, president and CEO of iBiquity Digital Corp., the developer of the HD Radio system. "Following rapid adoption by the broadcast community and an increasing range of products for the mass market, Best Buy's efforts will dramatically accelerate consumer adoption of this great new technology."

Now, I wonder if the HD Radio displays will be placed next to the Sirius and XM displays?

[Radio Ink]

As of today, Clear Channel Communications station 92.5 KZPS FM will no longer run traditional spot advertisements. Instead, they're trying something completely different in an attempt to compete with other commercial-free alternatives like satellite radio and iPods.

Instead of the regular 30 or 60-second spots, advertisers can now sponsor an hour of programming during which the DJ will promote a product conversationally in what Clear Channel calls "integration."

This integration technique will account for about two minutes of chatty product-placement throughout the hour, as opposed to the regular 12 to 16 minutes of commercials that most stations broadcast each hour. Advertisers will not just have the hour to themselves, but also their own unique categories. For example, Southwest Airlines, AT&T, Coors Brewing and Guitar Center; all will enjoy product placementwithout competing sponsorship from other airlines, phone companies, breweries or musical instrument stores on that station.

Whether or not the technique works is still unknown. In 2005, three stations on Long Island experimented with a similar model but eventually returned to conventional commercials. Either way, this indicates that Clear Channel is seeing commercial-free audio sources has competitive threats, and is experimenting with their own competitive response.

As they should, because according to Arbitron KZPS slipped to 17th place in the fall of 2006, from 7th in the fall of 2000 when Clear Channel acquired it.

"People are not as willing to listen to the commercials, and soon we’ll have the Internet streaming directly into cars," said Robert Unmacht, a Nashville-based radio consultant.

Thankfully, Clear Channel has over 1,100 stations nationwide that they can experiment with.

[New York Times]

Many don't realize it, but there's a whole business behind music provided for commercial applications. When you're out shopping for some new clothes, getting a cup of coffee, or laying in a chair at the dentist's - the music you hear is being delivered to you in some form or another.

That music can have varying effects on you, either enticing you to linger in-store a bit longer, or relaxing you (somewhat) during a stressful root canal. All these are meant to enhance your experience at the business, and eventually lead to that business's bottom line.

This is a look at the different nationwide multichannel commercial music packages, and how they compete to provide businesses with that content you hear.

At NAB2007 in Las Vegas, iBiquity Digital has revealed that they've selected NDS Group to provide the industry's first conditional access solution for HD Radio.

NDS Group is the same company that provides the system enabling DirecTV and Cablevision to offer pay-per-view and other opt-in services for consumers. Called RadioGuard, NDS Group's system encrypts content before it is transmitted over the airwaves, then decrypts it once the radio signal has been received and verified.

"We believe this will be key for monetizing HD Radio," said Tom Rucktenwald, director of data applications security for NDS.

Services that could be made possible through RadioGuard include pay-per-listen options for live concerts or other events, improved reading services for the blind, private channels for emergency services, and free opt-in events sponsored by advertisers. So HD Radio will not just be competing with satellite radio for listening time, but soon will be competing for subscription dollars as well.

RadioGuard-capable radio receivers are planned to be introduced to the market by the holidays.

[MediaWeek]

When NAB President and CEO David K. Rehr delivered his opening keynote address at NAB2007 in Las Vegas yesterday, he unsurprisingly used the opportunity to voice the NAB's adamant opposition to the Sirius-XM merger. Rehr said the merger "certainly would not be in the consumer's benefit," adding his view that "this is not about the consumer. It is not about advancing technology. It is about lining the pockets of financiers and corporate executives."

So let's take a look at the NAB's long history of lobbying in Washington against the development of satellite radio. Afterall, this is an organization that is so concerned with the advancement of technology, the benefits of the consumer - and at same time, not concerned with the lining of one's pockets. Surely then they wouldn't try to stifle open competition from satellite radio right?

The reality is that for more than 25 years, the NAB has objected to the evolution of communications technology, including satellite television, "drop in" radio stations, low-power radio and low-power TV band devices... all in addition to their opposition to satellite radio.

Their latest effort to block the merger of Sirius and XM is actually only part of a massive multimillion dollar effort that began 17  years ago. Below is a timeline of the NAB's efforts against satellite radio, long before a single satellite was even launched:

1990: The NAB tried to make end run around government plans to create a satellite system by proposing a digital system using land-based radios.
1992: The NAB mobilized opposition to the FCC’s proposal to set aside spectrum for satellite radio.
1994: The NAB submitted a filing to the FCC opposing any licenses to operate satellite radio technology.
1995: The NAB filed a report with the FCC and mounted a publicity campaign warning that satellite radio “will fragment radio audiences and make local radio unprofitable.”
1997: The NAB paid Kagan Consulting to produce an “independent report” claiming that FM radio would suffer great financial harm from satellite radio.

The NAB’s efforts to stop satellite radio failed. That, however, didn't stop their opposition.

At the heart of NAB’s argument is the claim that the merger is anti-competitive. But to me, the best validation of the true competition in the audio marketplace is the fierce response that the NAB has had to the Sirius-XM merger proposal. Understand this: The NAB is not motivated by serving the greater good. They are in business to advocate for their members.

The NAB knows that Sirius and XM compete with over 10,000 free radio stations in the country. The NAB (and its members in numerous SEC filings), have admitted it:

• Last September, in his remarks to the NAB Radio Show in Dallas, Texas, NAB President and CEO David Rehr declared, “In 2006, we have satellite and internet radio [as competitors]. And barely a day passes without the introduction of a new competing device or service. But we have news for our competitors: ‘We will beat you – as we have beaten those change agents in the past.’ ”
• The NAB in October 2006 provided media ownership comments to the FCC seeking relaxation of radio ownership regulations (how ironic?) and cited satellite radio and other competitors as justification.
• That same month at the National Press Club, the NAB’s President and CEO, David Rehr, cited satellite radio as one of AM/FM’s competitors.  

But as soon as the merger was announced, the NAB embarked on a non-stop campaign to distract regulators and consumers from the facts surrounding the proposed Sirius-XM merger:

• Washington guns for hire...
  
  The NAB has used its money for any Washington hired guns it could find, notably John Ashcroft. The Wall Street Journal reported that "Former Attorney General John Ashcroft, who sent a letter…to his successor Alberto Gonzales blasting the proposed merger of Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc., approached XM in the days after the merger was announced offering the firm his consulting services." The NAB has since hired James C. Miller and Philip M. Napoli to send their own "independent" letters of opposition.
  
  
  
• And the verdict from the Carmel Group is...
  The NAB also paid the Carmel Group, a California consulting firm, to change its views about competition in the audio entertainment market. In an article written a year-and-a-half ago, before being hired by NAB, Carmel’s Jimmy Schaeffler described satellite radio’s competitors as "traditional analog AM & FM radio, as well as burgeoning services like MP3 players, terrestrial radio, and video- and Internet-to-the-vehicle." Yet, after receiving funds from the NAB, Mr. Schaeffler produced a white paper saying exactly the opposite.
  
  
• The best funded college student group I know...
  On February 28th, Corporate Crime Reporter uncovered the real story about the Consumer Coalition for Competition in Satellite Radio (C3SR), a group of law students opposed to the XM-Sirius merger. C3SR claimed to be an independent grassroots consumer organization and refused to say who funded it. But admitted to being "supported" by the NAB. And is able to afford commissioning reports (which reportedly can cost upwards of $400/hour) by Gregory Sidak of Criterion Economics.
  
  
• Legislators legislating on their own behalf...
  Mike Hubbard, Alabama's House Minority Leader, was the lead sponsor of a non-binding resolution against the merger of Sirius and XM, which was passed by the Alabama House of Representatives on March 29th. Interestingly, Hubbard is a member of the Alabama Broadcasters Association who owns a terrestrial radio station and an audio production company serving the national broadcast industry.

And, of course, their rhetoric has changed. NAB President Rehr now claims that satellite radio doesn't compete with AM and FM radio.

Now the competition is "one way" (how convenient), and the $20 billion radio industry will face unfair competition from a combined Sirius-XM (which together have a mere 3.4% of total radio listening, according to a recent Arbitron survey).

NAB members like Clear Channel claim that a merged satellite radio company would unfairly hurt "local" radio (imagine that, Clear Channel is now "local"). Of course, Clear Channel Communications is well diversified and is working to provide nationwide mutlichannel audio content for HD Radio stations, mobile wireless audio providers and more. Don't believe me? Just listen for yourself.

The harder the NAB works to quash competition, the easier it is to see their hypocrisy. "Words have consequences," Rehr said in his keynote yesterday. So true.

Terrestrial Radio:

• AM/FM radio is offered free of charge to all consumers and comes as a standard feature in virtually every vehicle, home stereo, and clock radio sold to U.S. consumers.
• Nearly 14,000 radio stations exist nationwide.
• Approximately 230 million Americans choose to listen to terrestrial radio each week.
  

HD Radio:

• Over 1,200 HD Radio stations broadcasting across the nation.
• Recent FCC decision allows radio broadcasters to provide HD Radio subscription services on an experimental basis. This allows HD Radio to compete not only for listening time, but also for subscription dollars.
• HD Digital Radio Alliance—a consortium of broadcasters including Clear Channel Communications, CBS, and ABC Radio—the terrestrial radio industry has committed hundreds of millions of dollars to promoting this technology. 

Internet Radio:

• 2006 Arbitron study found that weekly listenership is up 50% in one year, and now approaches 1-in-5 Americans among key demographic segments.
• Internet radio broadcasts have no geographic limitations and can provide listeners with radio programming from around the country and the world.
• Mobility coming soon. For example: Slacker will allow users to listen on a portable devices, including in their cars.
• Various Internet radio offerings are already available on mobile phones, and Internet radio is expected to become widely available on portable devices, including car radios, by 2008. 

iPods and Other MP3 Players:

• More than 116 million MP3 players have been sold.
• A variety of accessories available to play MP3 players in cars, through the vehicle’s FM radio or tape deck.
• Apple has teamed with Ford, General Motors, and Mazda to provide iPod integration in more than 70 percent of 2007-model US automobiles.

Mobile Phones:

• Approximately 75 percent of all Americans currently own a mobile phone.
• Several major carriers are now offering audio entertainment options (e.g., Sprint, AT&T, Verizon Wireless)
• Approximately 23.5 million wireless subscribers currently own phones with integrated music players.
• AT&T and Apple make the Apple iPhone available for sale this summer.

Adding to the above, there's a number of other companies have announced plans to deliver broadcast audio and video content through mobile phones and other wireless devices. Three companies - MediaFLO USA, HiWire, and Modeo - have acquired nationwide or near-nationwide spectrum to deliver audio/video content through existing wireless service providers and are in the process of implementing, testing, and launching service. A joint venture of Sprint and several cable companies is implementing a similar mobile entertainment platform.

Here's a key takeaway: products need not be identical, to be substitutable. If they are substitutable, then consumers have a choice.

 

iRiver has released the second generation of their iRiver Clix digital audio player. This little guy isn't just cute, but has some muscle when it comes to audio.

First, there's the ultra-bright 2.2" AMOLED screen, 4GB of storage, support for digital music, video, and photos; oh and there's also a built-in FM tuner.

All for $200 (2GB version goes for $150). For another $50 you can get the FM-transmitter, letting you seamlessly integrate into your car. And since, according to TMF Associates (PDF), over 50% of iPod users have purchased vehicle-integration products, who wouldn't want that?

[Product Page via Engadget] 

Slacker CEO Dennis Mudd was profiled in USA Today, illustrating the history of his roots at MusicMatch (of which he and his founded, and eventually sold off to Yahoo).

It's an interesting look at this "dreamer" who is making some very large steps into bringing Internet radio for on-the-go use and into your car.

One interesting thing to note: Slacker apparently signed contracts with Sony/BMG and Universal Music, has an agreement in principle with Warner and is negotiating with EMI. So they won't be facing the same RIAA "scrutiny" that XM's Inno/Helix is experiencing.

[USA Today] 

Arbitron and research provider Telephia have released a new study on the mobile audio market - that is audio entertainment provided for mobile phone users - and found that it is a major growth opportunity for terrestrial radio providers.

According to the study, 6% of mobile phone subscribers have used one or more audio features in the last 30 days. Over-the-air song downloading has the largest awareness, followed by subscription-based streaming radio and FM radio reception on cell phones.

Interestingly, the majority of these mobile audio users believe that commercials "are a fair price to pay" for free content on their phones. Over 75% of those surveyed who download content to their phones and listen to FM radio agreed they would be open to commercials.

Do you think terrestrial radio programmers are looking closely at this market? You bet they are.

"Most current mobile audio users prefer the ad-supported model over paying a subscription fee. And this group is a very attractive demographic for advertisers to target as it’s comprised mainly of affluent, tech-savvy early adopters." said Wayman Leung, senior product manager for Telephia.

"For broadcasters looking to expand their platforms beyond terrestrial radio, mobile audio represents an untapped marketplace that they can exploit in partnership with mobile phone networks,” said Neal Bonner, Arbitron product development manager. "Radio broadcasters are uniquely positioned to deliver programming for these promising new audio services."

So, when a major terrestrial radio company like Clear Channel, partners with mSpot - a mobile audio provider with over 1 million subscribers - do you think that constitutes a "nationwide multichannel mobile audio service"? You bet it does.

[FMQB]
[Download The Mobile Audio Media Study (PDF)]

In the recent Carmel Group study, Senior Analyst and Chairman Jimmy Schaeffler writes an analysis about the proposed XM-Sirius merger, and drafts point-by-point blows combating each argument in favor of the merger.

One key aspect that Schaeffler argues against is the definition of the competitive landscape. Here's a quote from the Carmel Group report:

"Sirius and XM make an argument that is critical to the success of this proposed merger. They state that their competitive landscape presently includes all forms of terrestrial radio (i.e., analog AM and FM, digital HD and Internet radio), as well as digital services such as MP3 devices and music-to-cellular telephones. This position is ludicrous. In fact, nothing could be further from the truth."

Note that I added the emphasis on the "ludicrous" statement. That's something that the media is picking up on very heavily.

But exactly how ludicrous is this position? Exactly how far from the truth could it be? Not too far I guess, because Jimmy Schaeffler took that position himself in a Carmel Group article written in October 05, 2005:

"...satellite radio, with more than seven mil. subscribers, and its competition comes in the form of traditional analog AM & FM radio, as well as burgeoning services like MP3 players, terrestrial radio, and video- and Internet-to-the-vehicle. "

Now that's not a selectively snipped quote. Read the full article yourself - it goes on to outline and describe satellite radio's competition, and what obstacles they will face in the years to come.

This is an article that was written (free of any funding from the NAB) only a year and a half ago by The Carmel Group, and it explicitly defines satellite radio's competitors. But yet an NAB commissioned report by the same group suddenly claims that any such definition is "ludicrous."

Coincidence?