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Digital Audio's Future Loud, Clear |
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Wednesday, 13 April 2005 |
Digital
Audio's Future Loud, Clear
Reuters -
USA
Satellite radio subscriptions are likely to climb to more than 20 million
in the next five years, driven by early adopters of the technology with
above-average incomes, according to a study released on Tuesday.
After that, however, the industry will have to consider price reductions or
other measures to sustain rapid growth, the study concluded.
Sirius Satellite Radio and XM Satellite Radio might consider a two-tier system,
whereby some subscribers pay $12.95 per month to receive commercial-free music
channels while others pay just $8 or so for channels carrying limited
commercials, said principal analyst Ted Schadler, who authored "The Future of
Digital Audio" report for Forrester Research.
The study's main finding is that digital audio offerings in all its forms will
continue to invade more and more U.S. homes over the coming years.
Competing with celestial and terrestrial radio in more meaningful ways by
decade's end are iPod and MP3 players, online radio and "podcasting," in which
consumers download to their portable digital players spoken-word files for
on-demand listening.
Already, entities such as NPR and BBC are courting podcasters, as are small
start-up firms.
In the future, predicts Schadler, popular talent like Rush Limbaugh might allow
fans to download previous shows -- or capture them with their podcatchers, for
listening at their convenience -- while the show prospers the old-fashioned way:
delivering commercials to a larger audience.
"There are pieces missing from the business model," Schadler acknowledged, "but
if you can measure ad impressions, you can make more money."
Podcasting, which has just begun to catch on with the savviest of Internet
users, has huge potential, Schadler said.
According to the study, about 100,000 people experienced podcasting last year,
though that number will grow to 12.3 million in 2010, when 34.5 million U.S.
households will sport at least one portable digital content player, be it an MP3
player or iPod.
As for music, the study indicates that, by a wide margin, the place where
consumers most listen to it is in the car, which is where the dueling satellite
radio companies have concentrated their efforts.
Helping traditional radio contend with a growing competitive onslaught is
high-definition radio. Clear Channel Communications alone will add 1,000 HD
transmitters over the next three years so that consumers with the appropriate
hardware may hear high-quality sound while the appropriate song titles and
artists scroll across a small screen.
Schadler also says that HD in the future will act as a sort of TiVo for the
radio, whereby programs can be recorded and live radio paused and rewound, much
like XM does now with its MyFi product.
According to radio ratings service Arbitron, consumers listen to three fewer
hours of radio per week now compared with 1993, the result of competing
technologies and frustration over the amount of advertising.
Online radio is another competing force, though away from the automobile. The
study indicates that 18.1 million U.S. consumers were listening to online radio
last year, a number projected to grow to 35.6 million by 2010. Broadband, which
makes both podcasting and Internet radio more enjoyable, will be in 71.4 million
U.S. households by 2010, up from 38 million last year.
Clear Channel and Viacom Inc.'s Infinity Broadcasting are adapting their content
to the Internet, and advertisers are embracing the medium, Schadler said.
"Online radio ads are maturing," he said. "That's a big deal because online
radio didn't have a business model before. And now there's a place to experiment
with targeted ads, because the consumers tell all about themselves when they
sign up for the service."
Schadler said that the good news for the traditional radio business is that,
though consumers dislike advertising, many of them "don't despise commercials so
much that they'll pay to avoid them."
More creative, targeted ads that still will deliver a message even when
fast-forwarded, along with aggressive Internet and podcasting strategies, will
rejuvenate terrestrial radio companies, Schadler predicted.
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