Friday, March 14, 2008

HD Radio: Why no one is buying


You gotta eat – that’s why.

Some food costs have increased at a rate not seen since Gerald Ford was President.
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For the past two decades the cost of food staples – eggs, dairy, and flour grew minimally. Now, the U.S. Labor Department is informing us that the same food staples have increased in double-digits. Dairy is up twenty-six percent, beef – fifty.

I paid thirty cents a gallon more for gas on Wednesday than I did the previous Friday.

But that’s not the problem.

The average household spending for gas is around four percent. Food accounts for thirteen percent!

Let’s go back one year ago today. You paid sixty percent less for eggs. You paid thirty percent less for veggies.

Oil + production and transportation costs = even higher food prices.

The demand for corn and soybeans for alternative fuel sources like ethanol and biodiesel, corn prices have more than doubled and soybeans have tripled in the commodity markets over the last two years.

The rise in corn prices also adds to cost of livestock feed, which translates to higher prices for meat, poultry and eggs.

And a bad wheat-growing season caused their prices to triple.

The higher food costs hack away at discretionary income and slaughter consumer confidence.
When one spends more for the basics - other expenditures have to give.

Add this: Few are making more money than they did two decades ago and more are out of work.

The weakened US dollar, which has fallen to historic lows against other currencies, is also impacting consumers with higher prices to make up for the loss in value.

Inflation fears increase, which in turn make commodities a buy to investors viewing them as holding value during inflationary periods. Follow this. Investors buy. Demand grows. Commodity prices go through the roof.

If you were around in the seventies, you remember those nine percent a year increases in food prices.

Get this. They’re already up a full five percent from a year ago. That’s over double the average rate of the previous decade. Some forecasters who follow such things now predict an annual food increase of seven and a half percent!

Do you really believe anyone is going to spend a hundred bucks or more on an HD Radio?

Just asking.
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photo: President Gerald Ford in 1976 with Dick Cheney (left), then Ford's chief of staff, and Jim Baker.
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The weekend edition of All Things Considered on National Public Radio will feature a special piece on The Buzzard book.... and see a classic Buzzard St. Patrick's Day ad here.

16 comments:

Anonymous said...

I will applaud the first radio chain that says it is abandoning its HD side channels.

Even if the economy was doing well I doubt that anyone would be interested in the folly known as HD Radio. It's a flawed technology.

Anonymous said...

I assume this is elaborate satire. Do you think anyone would be buying HD radio if food and gas prices were going DOWN? Every time I listen to Kiss 96.5 I hear a blitz of those ads for HD radio and they are so lame they would make me NOT want to buy one if I was thinking about it, which I was't. I can't get over how stations which sound horrible and predictable because they have slashed resources to the bone believe they can convince listeners that they are going to spend resources to provide fresh, exciting, innovative programming on side channels few have access to.

talex said...

John, I loved the blog today. I hope it doesnt go over the heads of too many people. I did get the joke and the bigger picture you were illustrating or should I say pictures, including the one with Ford, Cheney and Jim Baker. Very clever. HD Radio is not the only thing that is dead. Have you looked at a station's log lately? I cannot see how any major market station in making money based on the rates they are charging combined with the bonus spots. Something smells fishy.

Anonymous said...

i'm reading this & saying gorman has finally lost it. what does this have to do with radio. then i figured it out. it has everything to do with radio and not just hd. nice zinger though.

Anonymous said...

Hey John: Write about radio. Not this other b.s. If you want to write about politics do it with the Huffington Post. You speak wisely about the state of radio and that is where your real strength is. Lately you are going off in tagents. You should be writing about the Clear Channel-Bain Capital deal which looks like it may close and the state of internet radio. Please keep this a radio blog. Thank you.

Anonymous said...

Gorman, you don't get it. Why President Bush just said this morning that "better economic times are coming". How can you dispute such a great leader?

Anonymous said...

Good blog today. It should be standard reading for radio salespeople. Of course there are no sales manager leaders anymore. Now they are called general managers or market managers and have no time to direct their sales people. Our log is empty. Trades, HD radio promos, network. I do not know how the station I am working at is making money. Clearly they are not doing it by selling airtime.

Giu said...

Hey John

How did you know the stock market was going tumble today. Your timing is unbelievable.


Giu

PocketRadio said...

"Black Friday for HD Radio"

"Nor was I surprised when Kurt veered left to discuss - and dismiss - HD Radio. What fascinated me was the reaction. Any room full of broadcasters is full of HD radio doubters, nowadays. But the vibe in this room was remarkable for the eye-rolling and audible snickering that greeted virtually any mention of HD... Hope that we're too smart to be taken in by pyramid schemes."

http://www.hear2.com/2008/03/this-weeks-desp.html

Funny As hell - Ramsey finally admitted that HD Radio is a scam! Finally, those leeches, or should I say maggots, at iBiquity are being exposed.

Anonymous said...

John....get back to talking about media. The overly political stuff doesnt belong on your site. Leave that for Drudge and the boys.

Anonymous said...

Nice wrap up there. Had to read it twice before I got the joke that wasn't really a joke. We are in hard times and the real joke is that it takes statistics to convince some who may not be as close to the problem that there is indeed a problem. The radio industry victimized itself and HD radio has to be one of the dumbest ideas ever hatched. The side channels should not have been allowed in the first place. They will never make money and serve no purpose because most of them don't work well. Frankly I still think that audio sounds the best from tube amplifiers. I prefer the warmth of that sound to the coldness of digital. By the way I am 27 years old. Not an old fogie.

Anonymous said...

It's all dominos. You can only imagine what it will be like a few weeks, months from now. Your HD radio mention was hillarious. Loved it.

Anonymous said...

While I agree cost is a major factor, it isn't the only one. People will easily spend $300 for an iPhone or Blackberry. Price isn't the issue.

The issue is it's a radio, and people simply aren't buying radios. They're not buying AM/FM radios, they're not buying satellite radios, and they're not buying HD radios.

And it's not a function of the programming. You could invest billions of dollars in programming, and make it the only place to hear top air talent. It won't matter. A radio is one-way communication, which is easily beaten by a cell phone. The cell phone can perform the function of a radio. You can get weather and traffic info texted to your cell phone.

It's also not a function of the "technology," such as it is. There's really nothing technically speaking that will get people to buy a radio, other than to either combine it with a phone or some other device. No one cares about quality, no one cares that it causes interference (except the handful of AM DXers, who've been unhappy for 20 years), and no one cares that it isn't really HD.

It's a radio, and it requires people to buy a new radio. That is the plain and simple problem. If you find a way around that, it will be a huge success.

Anonymous said...

To the last anonymous. I agree with you about Blackberries and other high ticket items but Blackberries in particular are almost always purchased by an employer or if personal is at least partially written-off for work use. HD radio serves no "work" purpose unless you are a radio program director and I know of some PDs who work with HD stations that don't have HD radios because their company wouldn't spring for one. I don't see a consumer running out to buy an HD radio even if that person has disposable income and/or is one of those 'first on the block' guys that has to have everything. There is already a stigma attached to HD radio among younger people. The word is "radio".

Anonymous said...

To the last anonymous. I agree with you about Blackberries and other high ticket items but Blackberries in particular are almost always purchased by an employer or if personal is at least partially written-off for work use. HD radio serves no "work" purpose unless you are a radio program director and I know of some PDs who work with HD stations that don't have HD radios because their company wouldn't spring for one. I don't see a consumer running out to buy an HD radio even if that person has disposable income and/or is one of those 'first on the block' guys that has to have everything. There is already a stigma attached to HD radio among younger people. The word is "radio".

bobyoung said...

People are not going to buy HD receivers for this reason (along with many other reasons such as economic): They probably already have at least 3 or 4 analog receivers that work perfectly fine. I've been listening to CHWO 740 from Toronto on my 1941 Hallicrafters SX-28 with an 8 inch coaxial speaker here in central MA and it sounds great, few fades here and there but that's it for problems with reception, that's about 500 miles from here, let's see an iBlock receiver do this, in fact let's see an iBlock receiver do this from 10 miles away. Problems like terrible reception, drop outs and interference to other stations could also have something to do with the fact that consumers are avoiding them like the plague, .... well actually stores are also avoiding them like the plague. In fact..... I think it's safe to say that just about everyone besides iNiquity, the iBlock Alliance and a few brainwashed cheerleaders who are trying to make money from it are avoiding it like the plague. Hmmm... it's failing, maybe?? Jeez, that would be terrible wouldn't it? I feel bad for Strubie, but I guess he could always sell old Yugos with his experience at selling junk.