Paul Brenner of Emmis shows off the prototype NextRadio app in iBiquity Digital’s booth. The app ran on a Samsung Galaxy S running Android and a Nokia Lumia 900 running Windows 7.5. Credit: Photo by Leslie Stimson

Sprint’s announcement that it will put FM analog chips in some of its phones later this year heralds more work for the radio industry and for Emmis Communications. So says Emmis Senior Vice President/Chief Technology Officer Paul Brenner.

Sprint has agreed to activate FM analog tuners in a total of some 30 million devices over three years. The carrier will determine which models get chips, but Brenner said devices will include smartphones and possibly tablets and “phablets,” which are large form-factor phones.

Free local FM radio would be delivered on these devices through apps like one Emmis is developing called NextRadio. Consumers today who want to hear radio stations on most smartphones must do it via streaming and thus incur data charges.

Serious negotiations on the FM chip took some six months to a year, according to radio executives involved.

The structure of the legal agreement remained a work in progress in early February.

Emmis is acting as a place-holder or “point” for what will become an industry consortium so Sprint can negotiate with one party, according to Emmis CEO Jeff Smulyan. Under the deal, Sprint would embed and activate FM tuners in a minimum of 30 million Sprint phones over three years. In exchange, the industry would provide the carrier $15 million worth of station ad inventory for each of the three years, according to Smulyan.

He told Radio World, “If every broadcaster gives up $10,000 worth of inventory per year per station, it will easily take care of itself. … We will translate those into dollars for Sprint.”

Smulyan last fall proposed that the radio industry offer incentives to persuade carriers to integrate or activate FM reception. Since the deal was announced, Smulyan has been working to get broadcasters to pledge inventory; he said every major radio group and several smaller ones have agreed.

Broadcasters hope this will serve as the model to encourage other wireless companies to sign on.

“Mobile ad spending is the growth business for technology right now,” Brenner emphasized.

Reacting to the news, Pandora Senior Vice President of Sales Steve Kritzman told Radio World that in the past, companies valued radio advertising because it was the last thing a consumer heard before making a purchase. Now, he said, that role is filled by mobile phones.

“We’re thrilled,” said iBiquity Digital President/CEO Bob Struble in response to the chip news. If stations can show the case for FM analog chips in phones, he said, it also helps iBiquity make the argument for HD Radio chips.

The radio industry hopes the Sprint announcement is just the first of many.

NextRadio

Emmis has helped lead the effort to convince wireless companies to offer over-the-air FM reception of local radio signals; the Sprint development is seen as its first big win. For such reception to be possible, though, the consumer will need an app to play that content. Multiple companies could develop such apps.

Emmis has been working on its NextRadio app in hopes it will be adopted by others in radio. The app will allow playback of all local FM signals but also provide access to enhanced features that connect to a multitude of content types on the Internet.

Asked whether NextRadio was part of the Sprint agreement, Brenner said, “NextRadio has been presented as a universal FM radio application with the ability to present a common-listener experience and mobile advertising features synchronized with over-the-air radio. Sprint will launch with NextRadio because they need a single party to represent this commercialized application.”

In addition to the ad time promised by the agreement, Sprint will receive 30 percent of the revenue from ads on the app. Emmis will manage that traffic, make sure Sprint gets its money and receive a small management fee, presumably from broadcasters that use the app. The yet-unspecified fee would apply only to stations that use Emmis’ TagStation software in conjunction with the the NextRadio app; conceivably, stations could do this on their own instead, but they would need to develop an app that complies with Sprint’s specs, he said.

At the behest of NAB Labs, Emmis developed a predecessor of the app last spring that included HD Radio. Asked why the initial app will be only analog, Smulyan said carriers didn’t want to spend the extra money to include a digital radio chip right now. He characterized the analog chip as a “first step.”

Now Emmis’ goal is to make the analog app work in several iterations of Sprint Android and Windows devices.

“We’ve turned a dirt road into a gravel road,” Brenner told Radio World as he demoed the prototype in the iBiquity Digital booth at the CES Show in January.

Shortly after CES, Emmis Senior Vice President/Treasurer Ryan Hornaday shed more light on the deal.

Speaking to the Nobel Financial Conference, Hornaday said NextRadio will be pre-loaded on the Sprint devices, so consumers can “hear over-the-air radio without data charges.” But the richer app experience also “opens up a new advertising category for us.”

“We can deliver unique advertisements that you can see at the same time you hear the audio,” Hornaday said. The app user can see album art and playlists delivered over the backchannel of cellular or Wi-Fi. He described location-based advertising that can include couponing or QR codes, for example.

As noted above, non-Emmis stations that want enhanced content to appear on the NextRadio app will need a licensing agreement with Emmis plus its TagStation software — or must build their own source content solution that complies with the mobile app capability and obligations for inventory, reporting and processing mandated by Sprint.

“Through TagStation we know what content is being played,” including the songs and ads, Hornaday said. With the TagStation software, the audio is synched with visual elements.

He described the NextRadio app as a revenue share product. “We’re paid based on the advertising.” Emmis would receive a portion of the ad revenue that airs on the phone to cover the cost of developing the product, Hornaday said, adding the company hopes to roll out commercial smartphone product and an associated broadcaster content network by summer.

Smulyan confirmed that the broadcaster is in talks with other carriers. Hornaday said Emmis would love to have the app on the same platform with other telecom carriers like AT&T and Verizon.