Saturday, 4 December 2010

GERMANY: DAB "is not financially viable", internet radio on the rise

“DAB or DAB+, in its current form, is not financially viable for commercial radio stations,” said Stefan Schmitt, managing director of RTL’s Berlin radio stations, in Promedia magazine. He pointed out that user numbers were increasing steadily for the internet, wireless via PC, laptops and smartphones. “Under these circumstances, I do not know where exactly the added value is for DAB,” he said.

Schmitt argued that the whole radio business model is still based on FM broadcasting and will remain so “for the foreseeable future.” He believes that the best alternative to broadcasting is currently ‘online radio’: “We are achieving market penetration [with online] much more rapidly than with DAB, which is not market driven.”

In Germany, a dispute continues to rage over the funding of DAB radio. The CDU party’s media expert Thomas Jarzombek has
argued that “more than €200m of public funds were wasted on DAB” and that “these resources should be used for technologies that are well received by the public.”

Negotiations have been proceeding for months over a further €42m of public funds earmarked to be released to re-launch DAB radio nationally using the DAB+ codec, following the failure of the earlier launch using the older DAB codec. Initially, the contracts between transmission provider Media Broadcast and the station owners were meant to have been signed on 22 July 2010. Then, the subsequent 22 September 2010 deadline for negotiations passed without agreement, as a result of commercial radio’s unwillingness to commit financially to broadcasting on DAB+. This deadline has been extended again to 15 December, which experts in Germany
now suspect is “the last chance for DAB+.”

At its annual conference on 12 November 2010, the German association of commercial broadcasters, VPRT, reiterated its opposition to the government forcing the introduction of DAB+ radio upon the German market. Outgoing VPRT vice president Hans-Dieter Hillmoth
said: “The current draft of the new Federal Telecommunications Act ignores the existing interests of commercial radio in the functioning infrastructure, whose core business is FM radio.”

research in Germany by the Frankfurt Link Market & Social Research Institute has demonstrated the increasing popularity of listening to radio via the internet platform. Consumers’ preference for radio delivered to a PC or laptop increased 84% year-on-year, and is now exceeded only by traditional radio hardware – car radios, kitchen radios and stereo systems. Amongst 14-29 year olds, radio via a PC/laptop scored second only to the car radio.

The question put to respondents was: “Radio can now be received on many different types of appliances. Please indicate which appliances you particularly appreciate, regardless of duration of usage.”


Anonymous said...

All valid and factual but the implication of the statistics is IMO quite a stretch...

"Consumers’ preference for radio delivered to a PC or laptop increased 84% year-on-year, and is now exceeded only by traditional radio hardware – car radios, kitchen radios and stereo systems"

Traditional radio hardware represents 96% of listening.
Internet radio represents 9.4% of listening.

Could Germany's IP infrastructure cope with 80m consumers listening to internet radio?

Grant Goddard said...

Dear Anonymous -

You write: "Traditional radio hardware represents 96% of listening. Internet radio represents 9.4% of listening."

This is not what the statistics are about. I had included the full question put to respondents in the blog entry, which is clearly not about time spent listening. Your assertion is obvously incorrect because the percentages you quote add up to more than 100%.

Your comment about the capacity of the internet is an increasingly common arguing point of pro-DAB lobbyists. It is irrelevant because the argument is not about internet radio replacing analogue radio. There is absolutely nothing wrong with FM and AM radio that requires it to be replaced. The platform choice is not between DAB and internet radio. Internet radio will continue to grow its usage without a marketing budget of millions of pounds, simply because consumers value it.

Please point me to any occasion where I have argued that internet-delivered radio should, could, or will replace analogue radio listening in its entirety. I certainly don't remember it because I do not hold that belief.

I always welcome comments, but it is more useful to comment on what is actually written in the blog entry, rather than what you imagined you had read.


DP said...

The 9.4% preferences is for Internet radio on PC/Notebook, increased 84% compared to last year. There is an additional 1.0% for special [primarily] Internet radio, increased 100% from last year. And, some of the Mobile telephone 3.6%, increased 80% compared to last year, would be Internet—split with FM (with zero DAB). All three include increased portions of younger, 14-29 years old listeners.

Particularly important, DAB radio doesn’t show on the list of preferences at all.

Internet radio exists and is growing, as a complement to all terrestrial broadcast systems—FM/AM/DAB/DAB+/DMB/HD. Internet radio adds location and time transfer flexibility, on multiple device platforms and globally. Almost all terrestrial broadcasts are now available on Internet, and the rest are adding Internet access. And, the BBC’s 800,000 simultaneous World Cup match video streams proved capability last summer for more than 8 million simultaneous audio streams—with more, multiple listeners.

Why should listeners invest in DAB/DAB+/DMB/HD radios to get only some local stations and only live? And, with sound quality—reception and resolution—inferior to FM (and to Internet)?

Anonymous said...

@ DP

It's interesting that you mention local radio via the internet.

Whenever I access my BBC local station via the internet to listen to commentary of my local football team I just get a message saying "this broadcast is unavailable due to copyright restrictions".

A friend of mine who lives in the UK cannot receive Test Match Special via the internet because the broadcasts are blocked for some reason, so he has to use DAB or long wave.

As the licence fee has been frozen for six years I assume the BBC won't have the spare cash to resolve this until 2017.

On this basis internet radio isn't fit to replace FM.

DP said...


Internet radio is not trying to replace FM. DAB is trying to replace FM.

I said Internet radio is growing as a complement to all terrestrial radio--adding time and location transfer.

With FM, AM, and Internet radio there is no need for DAB radio. No justification to spend money for DAB to receive only some local stations, only live, and with worse quality reception and sound

As Internet radio develops, more live sports will be available--but organized sport wants to be paid, directly or indirectly.

Would you rather the BBC spend more hundreds of millions on more DAB network to increase reception (and as much again for commercial radio) or much, much less for expanded sports licensing rights on Internet?