It’s been a good year for NextRadio. The Emmis-developed smartphone application that enables FM listening on compatible devices is making great headway with wireless carriers. After paying Sprint to become the first-adopter, well-coordinated lobbying and social media campaigns this summer convinced T-Mobile and AT&T to request that the device manufacturers they work with enable FM reception. (Verizon remains a holdout, but that campaign continues).

With the consumer-side adoptive trend gaining momentum, efforts are now afoot to bring more broadcasters into the NextRadio fold. The back-end system that broadcast stations interface with is called TagStation; it maintains the NextRadio directory, provides all images and supplementary content to the audio broadcast, and manages the in-app advertising experience. Stations can sign up with TagStation for free, which means they’ll be listed in the NextRadio app and can display their logo to users.

The cost for utilizing enhanced content/advertising on NextRadio/TagStation, up until last week, was $35 per month per station. That price has now been cut to just $10 month for analog FM stations, and setup fees for all stations have been eliminated. In addition, TagStation is developing “content acceleration teams” to facilitate stations’ engagement with TagStation/NextRadio’s enhanced content delivery options.

One particular note in this announcement caught my attention: the monthly cost for feeding HD Radio-related digital content to NextRadio will remain at $35 per month “due to the higher cost of supporting HD Radio systems.” Why would that be?

You can thank the wholly closed nature of the HD Radio system. In order to broadcast an HD Radio signal, audio content must be encoded using an algorithm wholly proprietary to the HD system. This has caused problems in the past for broadcast-adopters who utilize digital audio which has already been encoded by another algorithm, and constituted a hidden cost of adoption as stations converted their audio libraries en masse to HD-friendly digital formats. While many smartphone devices contain the hardware necessary to receive analog FM signals, none have the capability to decode an FM-HD signal.

Thus what, exactly, is the benefit of having FM-HD subchannels displayed or promoted in the NextRadio app? Since you can’t listen to them directly within the app, the best you can do is point listeners to an online stream and serve up supplemental content. That said, NextRadio and HD Radio are working together to jointly develop a unified automotive radio listening interface, and in cars with HD the two content sources can actually be melded together into a unified experience. Problem is, the installed user base of automobiles with both HD and NextRadio is very small relative to the installed user base of smartphones consuming analog FM via NextRadio.

The fact that HD-station participation in TagStation/NextRadio is three times more expensive than analog station participation speaks volumes to the prohibitive nature of closed technological systems when it comes to innovation and uptake. The technological and business model of the HD Radio system seeks to charge high up-front costs for entry and monetize the use of its features. For more than a decade now, broadcast stations and electronics manufacturers have balked at paying tens of thousands of dollars in equipment and licenses to adopt a technology with no demonstrated return-on-investment and little support from its developer (you need to speak to the transmitter-manufacturers about that stuff).

Contrast that with TagStation/NextRadio, which developed its technology to work on a shared technological platform (the Android operating system), gave away the tools to listen for free, and has now dramatically lowered the up-front costs for broadcaster adoption while simultaneously instituting an active support system for them. Paid participation in the system is incremental, manageable, and spread evenly among users (save HD stations).

While both systems remain peripheral players in the mobile audio content delivery universe, NextRadio has much more momentum than HD Radio ever did, despite being wholly incompatible with some radio stations (AM) and mobile devices (Apple). But when business philosophies overtake design philosophies, nobody wins.