Over the next ten to twenty years there will be a revolution in broadcasting so drastic that I believe TV sets will virtually disappear in American homes within the next 25 years. The in-home AM/FM radio is already going the way of the 1950’s short-wave, and within 15 years will become a curiosity.
After being slapped with several serious fines amounting to over $2.5 million dollars over the last ten years for profanity from the Nanny state under the guise of the FCC, Howard Stern is boasting that he will take his act to the future of radio broadcasting: Satellite radio and move to Sirius Satellite Radio beginning in January of 2006. Sirius is going to pay Howard Stern $500 million dollars over the span of five years. Great deal for Howard Stern? Most definitely. Good deal for Sirius Satellite Radio? Well, desperate people will do desperate things. But most of you folks already know this story. It’s what Howard doesn’t know (and that includes most people) that’s going to hurt. The future of broadcasting is definitely not in satellites.
I’m guessing that most folks are completely unaware of a new product that is about to be sold on the Japanese market in April of 2005. It is called HDD DVD. That would translate into “Hard drive disk, digital video disk.” At first glance, this might look a bit like TIVO — a popular hard disk recorder in use in the United States — but HDD DVD is much more — or much less — depending on how you look at it. HDD DVD will allow you to record programs, sports events, movies, etc., and cut your own re-write-able DVD’s for storage. Not only that, HDD DVD will not have a monthly charge like TIVO does and the units will sell for approximately the same price. With TIVO charging about $12 per month for use of their product, it is easy to see how TIVO will go the way of the Beta video once HDD DVD comes on the market.
Besides HDD DVD completely revolutionizing the mass media as we know it today, it most certainly will bankrupt many satellite broadcasters and possibly TIVO — unless those folks have something up their sleeves. And it doesn’t matter if we are talking about satellite radio, satellite TV, cable, FM radio, or even multi-media TV and radio conglomerates such as Clear Channel. They all have a decidedly dim future. And there’s not a thing they can do about it.
Besides wrecking the mass media, HDD DVD is a device that will also make games like Play-station obsolete. So most parents and intelligent people have more than one reason to cheer.
How does HDD DVD work? From what I have read and seen, the HDD DVD is basically a computer hard drive system coupled with a DVD RWR (Read, write, re-write) player. The unit is merely switched on in the morning — no programming necessary — when you are heading out for work. When you return home, an on-screen menu will show you exactly what was recorded and at what times. The menu listing will allow you to click a button to immediately view only what you want to view and in what order — as easily as choosing a track on a CD. Television and radio commercials, or entire sections of programs, can be automatically deleted. I’m not talking technology that will be outrageously expensive either. Through some investigation, I found that Wal-Mart will be offering units at $299 dollars by this Christmas in the United States. Perhaps $99 dollars by Christmas 2006?
In Japan, all the satellite TV stations — as well as FM stations — have all begun to hit the panic buttons. If the viewer can shuffle playback so easily, thereby cutting out all commercial time, then for what purpose would sponsors pay exorbitant amounts of money to run advertisements? They wouldn’t would they? The higher-ups at the satellite TV stations I work at all see the writing on the wall as clear as day: Do something drastic now or go down on a sinking ship. I’ve been voting for drastic measures.
For the FM radio stations, things look even worse. Many new cars are coming out in Japan that do not even have FM radio tuners in them. And why should they? The cars are all equipped with GPS and are soon to be Internet compatible. Most can already plug into radio via cell-phone. And the cell-phone providers are not lining themselves up with FM radio providers. They are setting up themselves with Broad-band and Internet stations. The AM stations’ saving grace will be the traffic reports — but even that is "iffy" as GPS can do the same thing.
Recent surveys have shown that more and more people are gathering their news from the Internet. Younger people have no problem with this at all. The older generation who has the out-dated (and wasteful) habit of feeling like they need to read a newspaper or watch TV news will not change course. You cannot teach an old dog new tricks. But, this older generation, unfortunately, will be gone soon enough. And when they are, and the subscription numbers of newspapers hit rock bottom; the TV news viewer-ship continues to erode (and it has been eroding for the last 20 years across the board); and the conglomerates are no longer capable of justifying to sponsors spending millions on ads that no one sees, the entire mass media set-up we have been used to for the last 50 years will come crashing down. This is the assumption that TIVO has been working on, somewhat successfully, over these last five years. The problem for TIVO now is: With HDD DVD coming on the market, who needs to pay a monthly subscription to TIVO? I suspect that if you own TIVO stock, you had better sell now. Heck, think about it, any stock in any Big Media is a sure loser.
We now have Internet radio. I work in the music business. It is common knowledge among everyone in my field, that young people who want to hear new music, listen to Internet radio. No one listens to FM anymore. FM radio is beyond repair to the younger crowd as it has a very unfashionable and worthless image. The Internet radio stations are exciting and they are booming. It’s just a matter of time, before Internet radio destroys FM radio for music lovers, be they Classical, Jazz, or even Country music, Rock, or Hip Hop fans. And it won’t matter if we are talking about in the home or in the car.
In Japan, just about all the cellular phone companies are launching their own Internet accessible radio networks. Who needs to buy a $500 to $1200 dollar AM/FM CD player for the car when you can just plug your cell phone into your in-car CD/DVD player and be able to access literally thousands crystal clear Internet stations as well as down-loadable music from the Internet?
And, from what I understand, Internet TV is just around the corner. In fact, several business associates of mine are contemplating starting the worlds first 24-hour-a-day Internet TV News Network. How do they make money from it? Now that’s the $64 million dollar question. But I can see making more money from that in twenty years than I can from how the traditional TV stations do it. The traditional stations are dinosaurs and most of them don’t even know it yet.
Very soon, people won’t need an AM/FM radio receiver. They won’t need a TV screen. Newspapers are already on their last legs. Everyone already has a computer — No, everyone needs a computer. The computer will be able to do them all in one place. And back to satellite radio? Are you kidding, Howard Stern? You don’t think that people are going to go out and actually spend a few hundred dollars to buy a satellite dish and tuner, plus pay monthly subscription fees, when they can most likely get your show pirated over the Internet for free do you?
The Internet is the key. Internet news is destroying the newspapers, and helping Big Media TV news destroy itself. Internet radio is here. Internet TV is just around the corner. HDD DVD is coming this year. And the beautiful part? No sponsors, no fees, no commercials. Some smart person is going to come up with, in short order, a revolutionary way to advertise too, and then it will be game over for Big Media.
So, Howard Stern, congrats on the $500 million from Sirius Satellite Radio…. Try to get the money up-front. And if you can, run like hell and don’t look back.