Every
day new platforms and devices are introduced, many with great fanfare. Many
looked good while in the lab but they were ultimately not embraced by
consumers. History has ways of separating winners and losers. There are lessons
we can learn from each dud from the past.
HIGHWAY HI-FI RECORD PLAYER
In 1955 Chrysler debuted
the Highway Hi-Fi, an in-car
turntable offered to Imperial buyers for $75 per unit. Ad copy crowed:
It’s another Chrysler Corporation first! The Highway Hi-Fi
record player slides in and out easily and can be operated without taking your
eyes off the road.
Columbia
Records poured thousands of dollars into developing vinyl records for
the Highway Hi-Fi. The records were
thick 7-inch discs that played at 16 rpm, providing up to one hour of
playing time. Chrysler sold over 18,000 Highway Hi-Fi
record
players.
Sales
were hampered by the fact Columbia only released 42 titles that were compatible with the Highway Hi-Fi. What sunk the Highway Hi-Fi was gravity and common
sense: The needles skipped whenever the driver of a hit a pothole or
had to stop suddenly.
LESSON: Things that are developed in the lab need real-time testing
for obvious flaws. In the 1950s and even today Connected Car manufacturers downplay the “distracted driver.”
Research shows that drivers want safety above a media experience.
RADIOSOPHY HD RADIO
In
the mid 2000s the future looked bright for HD Radio. I did some consulting
work for Radiosophy, a tech start-up
company located in a Midwest tax haven called Dakota Dunes, South Dakota. The company
started in 2007, founded by former Gateway Computer folks. They believed the
early hype about HD Radio and put their life savings into manufacturing
low-cost HD Radio receivers. Hundreds, perhaps
thousands of Radiosophy sets were
purchased by public radio stations and used as pledge drive premiums to promote
new HD channels.
Unfortunately,
HD Radio did not catch on with consumers. The founders of Radiosophy lost all of their investment. Today Radiosophy sets are sold online for pennies.
LESSON: Beware of hype. HD
Radio’s in-band on-channel digital broadcasting system was cooked up in corporate
boardrooms and designed in the lab without ever testing it with consumers. Even
today, HD Radio is over hyped and under deliver. However, HD Radio is good for
one thing: Feeding FM translators.
AM STEREO
In
1980 the FCC selected the Magnavox system and named it the official
standard. That FCC action didn’t sit well
with owners of competing AM Stereo systems who were also expecting
approval. Things turned ugly and lawsuits were
filed charging the FCC with unfair corporate influence and “sloppy” research
By
1982 the FCC sought a way out and revoked the 1980 decision. They authorized four
different AM Stereo systems. The FCC said at the time: The
market should decide. The market said NO! AM Stereo languished and
then faded away.
As
with HD Radio, car companies were early champions of AM Stereo because they
could charge more for the new super-duper AM Stereo sets. By the 1990’s most
music programming had moved to FM.
LESSON: The FCC doesn’t
always know best. They often respond to
corporate pressure with eager acceptance. If the FCC endorses something it
doesn’t guarantee success.
QUADRAPHONIC
FM
What’s better than two channels of FM? Four channel's – FM Quad!
The
concept of FM Quad originated at the BBC. In the early 70s, the FCC chose the Dorren
Quadraplex System as the standard for FM quadraphonic broadcasting. WIBQ in
Detroit was the first station to “go Quad.”
With
Quad you could put four speakers around your waterbed and make it a magnet for
adventurous dating. But record companies put out very few Quad discs and not
many stations adapted the system.
FM
Quad played a role in a historic FCC change of policy. The FCC decided to stay
out of format change disputes. The case
involved classical station WNCN, New York and its flip to AOR FM Quad WQIV in
November 1974. That is still the FCC
policy today. We told the complete story last January [link]
LESSON:
Like HD Radio and AM Stereo, FM Quad was cooked up in the lab. Listeners were
not at the planning table. The need for these
devices was never properly considered by the FCC. These are classic marketing blunders sort of
like the development of the New Coke. Buyer beware!
It's worth mentioning that the utter failure of the "let the market decide" approach to AM Stereo loomed large over the NRSC-5 standards-setting process for HD Radio. Nobody, and I mean nobody, wanted anything less than a single standard for HD Radio that the FCC would decide and endorse.
ReplyDeleteThe problem, of course, is that it stifled competition, and allowed a markedly unfair advantage to iBiquity during the NRSC process. To this day, the actual codec is still a "black box" that nobody except iBiquity really knows what's going on in there...and to get a license to make use of the codec is expensive and hard to experiment with due to restrictive licensing.
To be fair, people involved with NRSC-5 understood that "the internet was coming" and that HD Radio better move fast to get adopted and cemented as "the standard" before something new came along. At the time (late 1990's and early 2000's) satellite radio was viewed as a bigger threat and with good reason: they seemed well-capitalized (neither XM nor Sirius actually were, but they seemed like it), they offered a compelling reason to switch (no commercials), and at the time there was no iPhone so mobile internet wasn't on most people's radars. Unfortunately, iBiquity REALLY dropped the ball by insisting that stations do all the promotion instead of a centralized promotional effort like XM or Sirius.
And throughout HD Radio's development I don't think anyone really realized how disruptive mobile internet would become. I can't blame people too much for that. It's obvious in hindsight but at the time it was hard to envision. With that in mind, a lot of iBiquity's decisions make perfect business sense...even if they largely doomed the system to irrelevancy. Hindsight is 20/20 and all that.
Still, as bad as the HD Radio process was, I'd argue it was still better than a market-based solution. It would've been AM Stereo all over again: nobody would want to pay for transmitters because there was no guarantee that receivers in a market would be able to decode it. And nobody wanted to buy AM Stereo transmitters because who knew if your favorite station(s) were transmitting in the matching schema?