By Cassimir Medford

The HD Radio Alliance said Monday that its members have increased their financial commitment to HD Radio to $250 million in the second year of the industry’s coordinated effort to stimulate demand for a technology that will determine the shape of terrestrial radio for a long time to come.

Traditional AM and FM radio are definitely on their way out, but the radio industry has experienced mixed results in creating a market for AM and FM radio’s successor, HD Radio.

Last year the industry earmarked $200 million worth of airtime and other forms of promotion such as rebates to try to excite radio’s wide market, which includes 270 million Americans, about high-definition technology (see Radio Seeks Retail Groove).

Radio Seeks Retail Groove

While the industry has made a lot of headway in creating market traction for HD Radio, the technology—which takes the form of radio receivers in the retail market—is not showing up on most consumers’ Christmas lists.

It is being buried by everything from iPods to satellite radio receivers to GPS devices in the retail market, even though at $175-plus, HD Radio receivers are priced quite competitively.

HD Radio also represents a massive improvement over traditional radio in sound quality and multi-channel broadcasts, but despite a well-financed marketing program undertaken by an industry with a loud voice and a proven ability to sell products, HD Radio receivers continue to languish.

Checking Retail

HD Radio receivers from Boston Acoustics ($249.99) and Accurian ($174.99), RadioShack’s house brand, are both buried behind ancient technologies such as boom boxes and clock radios on the bestseller lists at RadioShack’s stores and web site.

At CircuitCity.com, a second major retail outlet signed to sell HD Radio receivers, the technology languishes behind everything digital.

“HD Radio has not gotten the kind of awareness that puts it anywhere near products such as the iPod, the Zune, and even satellite radio receivers, but every time the HD Radio Alliance makes a push, we see more people coming into our stores,” said Charles Hodges, spokesperson for RadioShack.

“For us to stock this product in 2,400 stores, you know we think it has great possibilities, but in retail it takes a long time to create awareness for new technology,” Mr. Hodges added.

Other product categories such as digital cameras have built up universal demand, but demand for HD Radio has been spotty, tending to be high only in major urban areas where HD Radio programming is widely available.

“We see excellent demand in Manhattan, for instance, but we would not stock HD Radio receivers in Louisville, Kentucky, where they have only two stations broadcasting in HD right now, so there is not enough mass for us to put the product in our stores in Louisville,” Mr. Hodges said.

LouisvilleLouisville

More than 1,000 radio stations in the United States are currently broadcasting in HD, reaching about 81 percent of radio’s listener base, which works out to about 230 million people. More than 500 of these FM stations are offering multiple channels, up from 89 a year ago, so there is promise.

United States“Over the Thanksgiving weekend, we had our Accurian receiver selling for $99 after rebates across the country and we are very happy with the results,” said Mr. Hodges. “It does even better when the HD Radio Alliance takes to the air.”