Sunday, 14 August 2011

Growing DAB radio usage in the UK. Confused? You should be!

"Digital listening at an all-time high," shouted the headline of one online news story. Yes, it was the quarterly RAJAR radio ratings, offering opportunities for some journalists to pitch their stories just about any which way they wanted. The opening sentence of this particular report said:

“The digital revolution shows no signs of slowing down, and not even the radio airwaves are set to maintain their analogue tradition, as a new [RAJAR] study suggests.”

Hardly. This news story was interesting because it achieved two simultaneous feats of confusion:
• ‘DAB radio’ and ‘digital radio’ are two different things. ‘DAB’ is the platform on which the UK radio industry bet the farm in the 1990s. ‘Digital radio’ is radio received on any platform that is not analogue (AM/FM) and includes the internet, smartphones, digital TV … and DAB
• The fact that DAB listening is growing does not necessarily mean that it is replacing analogue listening at a rapid rate of attrition. Why? Because DAB listening, even after 12 years, is still at a remarkably low level.

These confusions are not accidental. At every opportunity, statements made by Digital Radio UK have sought to confuse the public by referring to ‘digital radio’ as if it means precisely the same as ‘DAB radio.’

A look at the graphs below of the latest RAJAR data illustrate clearly that the “analogue tradition” in radio remains so dominant that the real question to be asked is: how come DAB usage is still so low after so many years and after so much money has been invested in content, transmission systems and marketing?




The adage ‘a picture speaks a thousand words’ has never been more true than with DAB/digital radio usage. The four graphs above – all taken from the industry’s latest RAJAR data – say it all by showing:
• how little impact DAB radio has had on analogue radio usage in the UK
• how slow the rate of growth is of DAB receiver take-up and of digital radio station listening.

Far from radio losing its “analogue tradition,” as the news article asserted, the old FM/AM platforms look, from these data, to be as strong as ever in the market.

One hint that some digital radio stations on the DAB platform could be on their way out is the BBC’s latest decision to aggregate listening for Radio 4 and Radio 4 Extra in RAJAR. It had been doing this from the outset for Five Live and Five Live Sports Extra, on the premise that ‘Sports Extra’ was only a part-time broadcast station.

I would not be at all surprised to see the BBC:
• similarly aggregate Radio 2 listening with 6 Music
• similarly aggregate Radio 1 listening with 1Xtra
• downgrade its digital radio stations from full-time DAB broadcast stations to online, on-demand ‘extra content’ available via RadioPlayer, iPlayer and applications.

The problem with national broadcast BBC radio stations, whether analogue or DAB, is that the BBC Charter insists they must be made available universally to all Licence Fee payers. Given the huge cost of extending the BBC’s national DAB transmission multiplex to near-universal coverage equivalent to FM radio, particularly at a time when the BBC is having to cut budgets massively, it would be more sensible to downgrade ‘1Xtra’, ‘2Xtra’ and ‘4Xtra’ to ‘red button’ status whereby they offer additional content on a part-time basis. The consumer would access these Extra 'stations' via a complementary platform (IP) rather than the BBC having to shoulder the financial burden of programming them as 24-hour broadcast entities.

It would prove a convenient solution for the BBC. As it found with 6 Music last year, public controversy surrounds any decision to close a radio station, however small its audience in absolute terms. Alternatively, by pursuing the 'Extra' route, the digital stations can be re-branded, re-purposed and re-platformed away from expensive, fixed-cost DAB and towards IP, where the cost of delivery varies proportionately with the number of people using it. What better way to deliver value for money to Licence Fee payers? And what better way not to face public wrath for 'closing' a digital radio station.

As BBC Radio 2 DJ Steve Wright said on today's Broadcasting House show:
"Maybe full digitisation [of radio from FM/AM to DAB] may well take thirty years …"

As the graphs above demonstrate, there IS slow growth in DAB usage, but the rate is insufficient to replace analogue radio as the dominant consumer platform any time soon. It's time for BBC strategy to catch up with that reality.

Saturday, 6 August 2011

UK DAB radio receiver sales fell in 2009 and 2010, but "digital radio sales have held up - they are flat" insists Mr Switchover

For an organisation that has been charged with marketing DAB radio to the British public, Digital Radio UK has managed to remain remarkably invisible during 2011. This alone made the appearance of Digital Radio UK’s chief executive on BBC Radio 4’s ‘You & Yours’ show notable. The fact that nothing new was said was hardly surprising – there is nothing new to say about DAB.

Out in the real world, as opposed to the imaginary world inhabited by Digital Radio UK, the notion that ‘DAB radio’ will replace AM/FM radio is already a dead duck. The only believers still worshipping ‘DAB’ seem to be Digital Radio UK, RadioCentre, Ofcom and government civil servants.

The evidence is transparent. The number of DAB radio receivers sold in the UK fell year-on-year in both 2009 and 2010 (by 6% and 2% respectively). These data are collected by GfK and supplied to Digital Radio UK. These numbers, together with a nice colour graph, were distributed at last month’s RadioCentre members’ get-together. These are industry data of which Digital Radio UK is perfectly aware.

Yet, Digital Radio UK’s chief executive insisted in this interview on national radio that “digital radio sales have actually held up – they are flat year-on-year.” This is untrue. ‘Down’ is not ‘flat.’ ‘Down’ is ‘down.’ DAB radio receiver sales peaked in 2008 and have been falling since. DAB receiver sales in 2010 were 8% below that 2008 peak. That is clearly not ‘flat.’

I wonder how it is that:
• The chief executive of a high-profile marketing organisation can appear on Radio 4 (audience: 11m adults per week) and flatly state something that he must know not to be true?
• The board of Digital Radio UK does not haul him in and remind him that his job description is to ‘persuade’ consumers of the value of DAB, not deceive them?
• A substantial proportion of this organisation’s funding is derived from the BBC Licence Fee, so the public is effectively paying for an executive to tell them untruths about consumer take-up of DAB radio?


You & Yours
BBC Radio 4
29 July 2011 @ 1200

Ford Ennals, chief executive, Digital Radio UK [FE]
Wiiliam Rogers, chief executive, UKRD [WR]

Q: Are you not disappointed with the lack of a rise in [DAB] radio sales?

FE: No, I think what the Ofcom report confirms is the solid progress that is being made. We see growth in overall digital listening, we see growth in terms of the number of homes that have a digital radio receiver in there. So, 40% of all homes now have a DAB receiver in them, we know that 47% of all listeners are listening to digital radio every week, and we have seen growth in digital listening. So I think progress is being made. I think we are in a difficult sales period for overall retailers and we have seen a decline in overall consumer electronics sales. Digital radio sales have actually held up – they are flat year-on-year. We have now sold 13 million DAB digital radios, but the key thing, just lastly, to remember is that you can receive digital radio via digital television, via a computer or, indeed, via a smartphone and many, many households and consumers have those.

Q: William Rogers, are you surprised by the lack of increase in interest in digital radio?

WR: No, not in the least. And I think we have to remember that Ford, with respect to him, is being a little disingenuous because, of course, the switchover is about people being forced to move way from analogue and onto DAB. So that’s the issue we need to focus on. And what this report highlights, and I’m personally delighted to see it, is it really does shine a light on the shambles that is this proposed DAB migration.

Q: But things aren’t that bad. There are increases in radio usage, as Ford has just indicated.

WR: Well, hang on a minute. The whole premise behind the switchover is that it will be, quote, consumer led. And the one thing we know from these statistics is that, whatever else it is, it’s not being consumer led. As your reporter quite rightly said earlier, of the eight-and-half million radio devices sold in the twelve-month period we are talking about, four out of five of them did not have a DAB receiver capacity. And, more interestingly, of those people who were asked whether they were likely to buy a DAB set at any time in the next twelve months, four out of five of them said they were not likely to. So the consumer is making it very clear what they want and, after eleven years, it’s time this thing was put to bed.

Q: Ford Ennals, one of the things that we constantly hear from listeners is the whole issue of reception. That’s really what, I think, the message is that we get from people. That is what they are worried about. Whether they approve or not [of DAB], what they say is an awful lot of people can’t get them [DAB radio signals] and, if they can get them, they can’t get them consistently.

FE: Well, I think, where the industry and the broadcasters are absolutely unified and agreed is that digital is the future of radio in the UK. And I think it’s just a matter of the timetable and the transition path for that. One of the big issues is, as you have said, is about coverage and about the ability of everyone to get a strong [DAB] signal. Now, what Ofcom have done is developed a plan to extend coverage, both of the local services and the national services, so that people can receive those services and get more confidence. But there is a direct parallel here with TV and digital television – I ran the TV switchover programme – and, back in 2006, the majority of TV sales were analogue and only 75% of the population could get digital television. Now, what happened over the next few years is we saw a very swift transition and we saw transmitters built out that so everyone could get digital TV. We’ll see the same on radio.

Q: What about that, William? We don’t jump ‘til we have to. We don’t buy ‘til we have to.

WR: Look, look. Let’s be clear about this. Ford Ennals is paid to market the DAB switchover, so I understand why he has to say what he has to say, because the message from this report is clearly embarrassing for him to make a case which clearly doesn’t exist. There are a number of points we have to remember. First of all, the comparison with TV switchover is plainly an absurd point to make. They are not remotely, in any way shape or form, similar. And people are choosing not to endorse DAB as an alternative [to FM/AM]. The critical thing we have to understand here is three elements. First of all, ….

Q: You’ll have to confine yourself to one because we are really tight for time.

WR: Okay, the fundamental problem with this whole process is that you cannot migrate an entire sector if the [DAB] platform you have chosen does not have the capacity to allow you to do so. And there are scores of radio stations in this country who will be denied the opportunity to move to a DAB platform, because the choice was wrong in the first place.

Q: A ten-second response.

FE: Just finally. People love digital radio. We’ve seen it with [BBC] 6 Music and we saw the campaign to save 6 Music. We’ve seen it with the response to Radio 4 Extra. And they’ll continue to enjoy it in the future.

Q: I’m sure our postbag and our e-mails will be as big as usual. William Rogers and Ford Ennals, thank you both very much indeed.

...................................
Point of information:
Ford Ennals was chief executive of Digital UK, the TV switchover marketing organisation, from April 2005. He announced his departure in November 2007, the same month that the first UK region entirely switched off analogue television broadcasts.

Thursday, 4 August 2011

UK listening growth demonstrates radio's strengths in a multi-tasking world

The latest RAJAR ratings data for Q2 2011 demonstrate the continuing strength of the radio medium in recession Britain. Maybe if your TV or mobile subscriptions are having to be pruned, you turn to radio instead. In times of austerity, one of radio’s greatest attributes is that it appears to consumers to be available ‘free’ at the point-of-use.

‘All radio’ listening (1,076m hours per week) is at its highest since 2003. Adult weekly reach is 91.7%. Each listener spends an average 22.6 hours per week with ‘radio.’ These are impressive numbers. In this respect, it is important to remind ourselves that the RAJAR definition of ‘radio’ excludes:
• ‘listen again’ consumption of broadcast radio (online catch-ups of ‘The Archers’, for example)
• all podcasts
• listening to pure online radio stations
• listening to online music streaming services or personalised online radio (Last.fm, Spotify, etc).

If these additional ‘radio’ consumption sources could somehow be added to the RAJAR data, it looks likely that, using a wider definition, ‘radio’ would be performing at an all-time high. This is not at all surprising in our time-precious, multi-tasking world. Radio proves the perfect aural accompaniment to online social activities, whereas it is nigh impossible to watch television or read a newspaper at the same time as you browse the internet. Radio is a secondary medium – it never monopolises your time.

Commercial radio has benefited from this uplift in total radio listening. Total hours listened to commercial radio (470m per week) have risen from what is beginning to look like a nadir in early 2010.

During the last two quarters, commercial radio’s adult weekly reach has jumped above the 65% threshold (65.5% in Q2 2011) that had not been breached since 2003.

In absolute terms, commercial radio’s adult weekly reach has almost caught up with the UK population growth experienced since 1999, rising to 34m in Q2 2011, marginally below its all-time high the previous quarter.

The remaining stumbling block for commercial radio is that its average hours consumed per listener remain stubbornly low (13.8 in Q2 2011). As noted previously, young people are spending less time with radio [see blog]. Commercial radio's audence is considerably more youth-orientated than BBC radio, which is why the average length of time for all adults listening to commercial radio remains in the doldrums.

With all this good news for the commercial radio sector, you might imagine that its share of total radio listening had started gaining in leaps and bounds at the expense of the BBC. Unfortunately, this is not the case. The BBC has benefited just as much as commercial radio has from the overall increases in radio listening. As a result, everyone’s volumes are ‘up’ and the share of commercial radio versus BBC radio has remained relatively constant. In Q2 2011, commercial radio’s 43.7% share was certainly an improvement on the situation in 2008, when it had looked as if the 40% barrier might be plumbed for the first time.

In fact, the BBC’s sustained strength in radio is becoming increasingly understated as more and more ‘radio’ listening is attributable to ‘listen again’ on-demand usage and podcasts. The BBC dominates the content available on both these platforms, whilst commercial radio’s offerings remain relatively sparse. At present, neither platform is measured within RAJAR. If they were, commercial radio’s share would undoubtedly be diminished further.

At present, this status quo (using RAJAR’s anachronistic definition of ‘radio’ as purely live and broadcast) suits both parties. The BBC does not wish to be seen to be even more dominant than it already is (54.0% of radio listening in Q2 2011). Commercial radio does not wish to be seen to be weaker than it already is (43.7%) in comparison to the BBC.

And who pays for RAJAR? The BBC and commercial radio. So we are stuck with an old fashioned metric that does not measure radio consumption in the 21st century sense of what we now call ‘radio,’ but which keeps both its paymasters happy … particularly as neither the BBC nor commercial radio would currently wish to demonstrate publicly the increasing popularity of online ‘radio’ consumption – which remains the biggest long-term external threat to them both.

Thursday, 28 July 2011

UK commercial radio sector revenues Q1 2011: local advertising hits 10-year low

Data published last week for 2011’s first quarter demonstrate that revenues of the UK commercial radio sector are still struggling to rebound from the previous two years’ ‘credit crunch.’

A large part of the problem is the coalition government’s swingeing cuts to its marketing budget since May 2010, which have afflicted commercial radio advertising much more significantly than other media [see blog]. Additionally, and very worryingly, in Q1 2011, revenues from local advertisers fell to their lowest level for a decade, even at a time when local radio might be thought to be making client gains from the decimation of the local newspaper industry.

As has been suggested here previously [see blog], the strategy of the largest commercial radio owner, Global Radio, to transform its local stations into ‘national’ brands would seem to be a recipe for disaster at a time when:
• the national advertising market for radio is shrinking so rapidly (down 34% in real terms between 2004 and 2010)
• the BBC continues to dominate the national radio marketplace with exceptionally well-funded, ubiquitous brands [see blog]
• Ofcom’s market research points to overwhelming demand from consumers for more local radio rather than more national radio [see chapter 4(d)]
• many local commercial radio offices have been closed just as local newspapers have closed in many local markets.

TOTAL UK COMMERCIAL RADIO REVENUES:
• Q1 2011: £126.9m (£137.9m in Q1 2010)
• Down 8.0% year-on-year
• First year-on-year decrease since Q3 2009

UK COMMERCIAL RADIO NATIONAL REVENUES:
• Q1 2011: £69.2m (£78.6m in Q1 2010)
• Down 12.0% year-on-year
• First year-on-year decrease since Q3 2009

UK COMMERCIAL RADIO LOCAL REVENUES:
• Q1 2011: £33.7m (£35.9m in Q1 2010)
• Down 6.1% year-on-year
• Lowest quarter since Q1 2001

Although the quarter-on-quarter trend during the last three years appears to be relatively flat, once the data is viewed in the longer term, it is apparent that the commercial radio sector has been unable to grow its revenues back to the peak achieved in 2004. Adjusted for inflation, the ‘real’ peak occurred in 2000 and, by 2010, commercial radio total revenues had fallen by 33%.

Following the impact of the ‘credit crunch,’ the subsequent blow to the sector caused by the government’s slashed expenditure on commercial radio advertising from its Central Office of Information [COI] has been catastrophic. COI spend on radio in the twelve months to March 2011 was down 80% year-on-year. In the year to March 2010, the COI had been the radio sector’s biggest advertiser by a factor of eight but, only one year later, it had been diminished to almost par with the second biggest radio spender, Autoglass.

In June 2011, the government confirmed that the COI will be axed altogether, offering no respite to the commercial radio sector. According to The Guardian:
“Instead the government intends to run advertising and marketing activity out of the Cabinet Office, hiring about 20 extra staff to complement existing communications teams.”

With local advertising revenues having hit a decade-low in Q1 2011, and national revenues having fallen 34% in real terms between 2004 and 2010, surely it should be time for commercial radio to ask itself:
• is the current local-station-turned-national-network policy the appropriate strategy for the current advertising market?
• is the current local-station-turned-national-network policy the appropriate strategy to satisfy radio listeners?
• how much longer can the ‘slash and burn’ strategy (as pursued by GWR, then by GCap, now by Global Radio) be applied to the commercial local radio industry before there is simply nothing left to cut?
• how much more shareholder value can be destroyed in commercial radio before revenues fall faster than costs can be cut?

A question I was asked by one senior radio executive last week was: how will all this commercial radio ‘slash and burn’ end? I wish I knew. Of one thing I am certain: it must eventually end in tears once the net book values of dozens of commercial radio licences have to be written down by millions of pounds in the accounts of their owners.

This process has already started tentatively:
• Global Radio valued its licences at £333m on 31 March 2010, after having swallowed a £54m ‘impairment’ write-down in 2008/9
• in 2009/10, the Guardian Media Group suffered an ‘impairment’ of its radio licences by £64m and now values them at £68m
• Times of India looks likely to have to take as little as £20m for Absolute Radio, a national station it had acquired for £53m only three years ago.
We have to anticipate more write-downs like these.

At some point, even millionaires must not enjoy watching as their radio assets are reduced to dust by shrinking audiences/revenues. But what can be done when those same owners have already starved the goose that had once laid the golden local commercial radio egg?


[Historical data from some previous quarters have been revised marginally at source]

Saturday, 23 July 2011

Andy Parfitt leaves BBC Radio 1 on a high: separating the man from the myth

Andy Parfitt’s departure from the station controller job at BBC Radio 1 after thirteen years marks a significant event for the UK radio sector. Parfitt’s accomplishments during his tenure were many, but did not extend to significantly turning around the station’s audience ratings.

At the time Parfitt took on the controller job in March 1998 at Radio 1:
• its share of listening was 9.4%, compared to 8.7% in Q1 2011
• its adult weekly reach was 20%, compared to 23% in Q1 2011
• its average hours per listener per week were 8.1, compared to 7.8 in Q1 2011.

One metric did demonstrate a healthy increase – Radio 1’s absolute weekly reach was up from 9.7m adults in Q1 1998 to 11.8m in Q1 2011. However, part of that increase is attributable to the UK adult population having grown by 9% in the interim. Certainly, more adults listen to Radio 1 now than in 1998, but for shorter periods of time, and so the station’s share of total radio listening has declined.

Given this impasse to the improvement of Radio 1’s ratings, I was surprised to read in the BBC press release announcing Parfitt’s departure that:
“Appointed Controller, BBC Radio 1, in March 1998, Andy has led Radio 1 and 1Xtra to record audience figures …”

… and surprised to read Parfitt’s boss, Tim Davie, declaring that:
"Andy has been a fantastic Controller and leaves Radio 1 in rude health – with distinctive, high quality programmes and record listening figures …”

The one person still working at Radio 1 who should know for sure that “record audience figures” had not been achieved during the last quarter, last year, the last decade or during Parfitt’s entire tenure is Andy Parfitt. Why? Because, between 1993 and 1998, Parfitt had been chief assistant to then Radio 1 controller Matthew Bannister, a turbulent period during which the station’s audience was decimated by a misguided set of programme policies that failed miserably to connect with listeners.

Between the end of 1992 and March 1998, when Parfitt took over from Bannister (whom the BBC had promoted to director of radio), Radio 1’s:
• share of listening fell from 22.4% to 9.4%
• adult weekly reach fell from 36% to 20%
• average hours listened per week fell from 11.8 to 8.1
• absolute adult reach fell from 16.6m to 9.7m.

Radio 1 lost an incredible 58% of its listening, and 7m listeners, within that five-year period, a calamitous disaster from which the station has never recovered [see graph above]. Since then, Parfitt has kept the ship relatively steady, having been appointed in 1998 as a safe pair of BBC hands for Radio 1 after the tragedy of Bannister (who had come from Capital Radio via BBC GLR and had a fantastic track record in news radio, but not in music radio).

Never again will Radio 1 achieve a weekly audience of 17 million adults, as it had done in 1992. Those days are long gone. In recent years, fewer young people are listening to broadcast radio, and they are listening for shorter periods of time. Sadly, radio does not prove as exciting for them as the internet, games or social networking.

Of course, it would have been nice for any incumbent to leave the Radio 1 job on a ‘high.’ But, unfortunately, it was never going to happen with Parfitt, or probably with any successor. Radio 1’s ‘golden age’ was wilfully destroyed twenty years ago. Nevertheless, somewhere, somebody in the BBC must have decided to invoke the notion of Parfitt’s “record audience figures,” regardless or not of whether they were a fact.

What surprises me is that every BBC press release must have to pass through endless approvals – within the originating department, in the press office and in the lawyers’ office – before it reaches the public. Did nobody out of the dozens of people that must have checked this particular press release ask the simple question: can you substantiate this “record audience figures” claim?

RAJAR radio audience data are publicly available for all to see. Anyone from the BBC could have checked and found that, using every radio listening metric known to man, Radio 1’s “record audience figures” were all achieved two decades ago, rather than at any time during Parfitt’s tenure. Maybe they didn’t check. Or maybe they did, but pressed ahead anyway.

The ability to play fast and loose with numbers and statistics, particularly those that can be said to be at an ‘all time high,’ might appear to be endemic within the UK radio industry. I have highlighted similar instances of the industry’s abuse of statistics in other claims. Now that the consumer press only seems interested in ‘radio’ stories involving celebrities, and now that the media trade press has been reduced to recycling radio press releases, ‘myth’ can quite easily be propagated as ‘fact.’

I am reminded of a passage in my new book about KISS FM when, two decades ago, I had asked my station boss why an Evening Standard profile of him and his car had featured a vehicle that was not the one he owned or drove.

“It seemed to make a better story,” he told me.

Monday, 18 July 2011

When is a consultation not a consultation? When Ofcom consults about radio

Each of us has dozens of ‘consultations’ every day. You know the sort of thing. 'I’m going to the corner shop – anything you want? A Kit-Kat? OK.' However, if I came back with a cat rather than a chocolate bar, you would understandably be unhappy. That had not really been a consultation at all.

Ofcom’s consultations on radio are increasingly like that. Ofcom pretends it is going to listen. It doesn’t listen. And then it does whatever it wanted to do in the first place. Mmmm. Surely that is not really a consultation at all.


In June 2011, an Ofcom consultation asked six questions about a proposal by Now Digital (owned by radio transmission provider Arqiva) to extend the coverage of its Exeter and Torbay DAB multiplex to North Devon. One of those questions was:

“Q6. Do you consider that there any other grounds on which Ofcom should approve, or not approve, the request from Now Digital? Please explain the reasons for your view.”

However, Ofcom had apparently already decided that its ‘consultation’ was not a genuine consultation at all, when it explained:

“Before deciding whether to agree to Now Digital’s request, Ofcom is legally required to seek representations on the request from any interested parties. … Provided that the request meets the terms of the statute, the decision whether or not to agree to the request is at Ofcom’s discretion.”

So, Ofcom’s 21-page consultation document was really a complete waste of time and money. The decision was already made. And it would be even more of a waste of time and money for anyone to respond. But respond they did.

In July 2011, Ofcom admitted that, out of 234 responses submitted to its consultation, “the vast majority … were opposed to Now Digital’s request.”

Most objected on the grounds that:
• “agreement to the extension of the multiplex would enable the holder of an existing FM local commercial radio licence for Barnstaple to secure the renewal of that licence, precluding the advertisement of a new such licence (which otherwise would have been due to take place forthwith); and;
• the level of coverage of North Devon proposed by Now Digital was unsatisfactory as it would leave 30% of households in the area with no access to radio services in the event of a digital radio switchover.”


Did Ofcom care about this volume of public opposition? Not at all. Did it investigate why the share of listening to the merged Heart FM Devon had fallen dramatically to an all-time low last quarter (behind BBC Radio 2, BBC Radio 4, BBC Radio 1 and BBC Radio Devon) [RAJAR, 2011 Q1]? Apparently not. Ofcom explained:

“The [Ofcom Radio Licensing] Committee [RLC] noted the strong opposition to the fact that approval of Now Digital's request would allow Lantern Radio Limited, the holder of the local [Heart] FM commercial radio licence for Barnstaple, to apply for a renewal of the licence and thereby preclude advertisement of a new licence. However, the RLC did not consider that this fact should preclude the granting of Now Digital's request.”

And why not? Because Ofcom’s wholly unrealistic policy objective, for DAB to replace AM/FM radio, is still being doggedly pursued to the exclusion of any wider regulatory issues – consumer choice, market competition or the removal of barriers to sector entry. As well as to the exclusion of the majority of the 234 respondents to this consultation.

To put the same thing in Ofcom’s own weasel words: “What Now Digital Limited sought in its request is provided for in section 54A of the 1996 Act. Agreeing to the request would be consistent with the broad policy aims of that section. Namely, the extension and promotion of local DAB broadcasting with the consumer benefits of greater choice of services.” [emphasis added]

Now Digital promised to launch the first of three new DAB transmitters in North Devon within six months of Ofcom’s approval. And what about the remaining two? Now Digital promised these will be installed “six months after a positive decision in 2013 by Government regarding digital switchover”. Oh, so you mean ‘never.’

The ulterior objective of this proposal was that the promise to build a single new DAB transmitter in North Devon would enable Global Radio to automatically renew its existing FM licence in Barnstaple for a further eight years without a public contest, thus denying any potential new entrants. Ofcom simply rolled over and complied. And what did Ofcom suggest to the complainants who might not have felt that London-based Global Radio was offering them a genuinely local radio station in Heart FM? It stated:

“The RLC recognised the strength of feeling among many respondents to the consultation for there to be an opportunity for an alternative provider of a local radio service in North Devon to apply for a licence … Ofcom is always keen to facilitate new local radio services for listeners where such services are viable and therefore able to offer consumer benefits over the long term. To this end, the RLC noted that, in its response to the consultation, Arqiva stated that there is presently capacity for at least one further new station to be accommodated on the Exeter & Torbay local [DAB] radio multiplex.”

This is patronising rubbish. "Viable"? "Consumer benefits"? Can Ofcom please name any DAB-only radio station that is making an operating profit as a standalone business? No? Because there isn’t one. DAB radio has proven to be one massive financial black hole that has wasted approaching £1bn. Suggesting to consultation respondents that they start their own new local radio station on DAB is akin to Ofcom recommending these correspondents burn down their own houses.

All Ofcom has done is raise two fingers to the people of North Devon in this consultation. If I were Ofcom’s director of radio, Peter Davies, I would not consider booking a holiday in North Devon any time soon.

Unless Global were to return the favour by picking up the tab for his bodyguards?

Friday, 15 July 2011

SPAIN: DAB digital radio switched off in most of country

A new law in Spain has reduced the coverage requirement of the country’s DAB radio transmissions from 50% to 20% of the population.

From 10 June 2011, a new Royal Decree required that DAB broadcasts “must ensure a minimum coverage of 20% of the population,” replacing the 50% requirement that had been stipulated in legislation since 1999.

Within the next three years, the government will be able to change this coverage requirement once again if digital radio does not grow its audience share to more than 10% of total radio listening. In the unlikely event that digital radio’s audience share ever exceeds 10%, DAB radio coverage will be required to increase from 20% back to 50% of the population.

As reported here in 2010 [see blog], commercial radio in Spain has found no incentive to broadcast on DAB because “the audience is zero.” This new legislation relieves broadcasters from having to underwrite an expensive DAB radio transmission system that, to date, had generated no incremental listeners or revenues.

The Decree noted that:

“The development of terrestrial sound broadcasting has been hampered in recent years by, amongst other things, a lack of digital radio receivers which has significantly reduced the audience share initially anticipated and, thus, has jeopardised the possibility for station owners to achieve a return on their investment.”

The web site marketing DAB radio in Spain has not been updated since April 2008. The web page for state radio’s DAB transmissions no longer exists. It has been reported that DAB radio broadcasts will now be limited to only two metropolitan areas.


[thanks to Eivind Engberg and Wohnort]

Tuesday, 12 July 2011

PORTUGAL: DAB digital radio switched off

On 1 June 2011, Rádio e Televisão de Portugal [RTP], the state broadcaster in Portugal, instructed Anacom, the national transmission provider, to switch off all DAB radio transmitters.

RTP explained in a press statement that its decision was the outcome of budgetary constraints and the fact that no commercial broadcasters had agreed to broadcast on DAB. Additionally, it said that “high priced radio receivers had prevented many people acquiring them.”

According to one Portuguese newspaper:

“The DAB terrestrial digital radio system was launched in August 1998 by RTP and by Anacom, which manages the national transmission system. Despite having national coverage, which was decreed by law in July 1998 that permitted broadcasts by all radio stations interested in the platform, DAB never took off in Portugal. Until now, the platform has been limited to relays of existing FM broadcasts by state radio because no commercial radio station signed up. The implementation of DAB also struggled with the fact that there was insufficient supply in the Portuguese market of DAB radio receivers, according to sources consulted by this publication. Apparently, the DAB system was costing €250,000 per annum over more than a decade. The need for RTP to invest in replacing this transmitter network may have weighed heavily on the decision to suspend the service.”

GMCS, the Portuguese media regulator, explained in April 2011:

“RTP claims that, despite the significant investment totalling €6.3m to date, the reality is that few Portuguese used the [DAB] system, which leads us to conclude that the allocation of resources to this project does not meet the efficiency requirement and good practice required for public funds.”


[thanks to Eivind Engberg and Wohnort]

Tuesday, 5 July 2011

DAB in cars: the straw that will break digital radio switchover's back

Speaking today at the Intellect conference in London, broadcasting Minister Ed Vaizey tried to assure us that digital radio switchover was still “on course” to happen in the year twenty something or other:

“On cars, the move to include digital radio as standard in new vehicles has continued over the last year. Around 14% of new vehicles have DAB as standard, up from 4% a year ago.”

Within hours, this news was misinterpreted by one online news source as Vaizey having said:

"Forty per cent of cars have DAB [Digital Audio Broadcasting] radios as standard now, up from just four per cent a year ago.”

From ‘14% of new cars’ to ‘40% of all cars’ in a stroke of a keyboard! No wonder the article went on to assert that “the key driver to the take-up of the [DAB] technology looks like it will come from the car industry as manufacturers start to fit digital radios as standard.”

How wrong can this statement be? Fewer than 1% of vehicles on the road currently have a DAB radio. That proportion is not going to increase quickly, even by 2013 or 2015, as the government wants it to. Rather than being “the key driver” for DAB radio take-up, cars will become THE major sticking point for digital radio switchover.

The UK car industry appears to be nearing the end of its tether over the confused information that has been fed to consumers in recent years about the so-called DAB ‘switchover’ and FM ‘switch-off’ date(s). This frustration boiled over at the last government Digital Radio Stakeholders Group meeting on 17 May 2011, when Bob Davis, who heads the Digital Radio Committee of the Society of Motor Manufacturers & Traders [SMMT], stood up to offer what he referred to as a “naughty” comment:

“Jane [Humphreys, Department for Culture, Media & Sport] said earlier ‘around 2015’ for a digital radio switchover. The automotive industry has made it very, very clear, since the process began, that it needs certainty. We’ve got 2013 [as the date for a government decision on switchover] and we think we’re working towards a 2015 switchover date. With respect, Jane, I can already see tomorrow’s headlines that DCMS says ‘digital switchover delayed from 2015’ because you used the phrase ‘around 2015’. That implies a delay. It may be what potentially happens in the market – it may be 2016, it might be a bit later than that – but, for the moment, from an automotive industry perspective, every time there’s a suggestion that 2015 has stopped being the aspirational date – or might stop being an aspirational date – all that happens is [that] the automotive industry, or parts of it, is given another opportunity to say ‘it ain’t going to happen, forget all about it’ and we will end up with the bigger problem of converting vehicles already in the parc to digital, because people will just say ‘if DCMS can’t give us certainty’ – and I accept that, at the moment, you can’t – but if DCMS are saying ‘around 2015’ instead of ‘in 2015’, it reduces the opportunity for SMMT to keep telling its members there’s a deadline, and it’s ‘this’. So please could we have a little bit of caution, from an automotive industry perspective, in (particularly) government references to switchover dates.”

Jane Humpreys: “Thank you, Bob, though I think I’m right in saying that the Minister has never said ‘it will be in 2015’. He too has said that it will be in terms of … that is the target to which we are working, but what is the principal objective is that we have to meet the criteria that have been set out and we have a piece of legislation – unless I’m much mistaken – that says there will be a minimum of two years’ notice. So….”

John Mottram, DCMS: “That’s right. I’m aware of three Daily Mail articles that suggest it’s seven years, two years, five years’ delay depending upon the date, so I think in terms of coverage and it being delayed, I think that delay is already out there. But to Jane’s point, I think the Action Plan and Ed [Vaizey]’s words make it clear that it’s a consumer-led approach. The industry target date is 2015 – we’ve never shifted from that – but that decision is based on the criteria….”

At that point, the meeting was abruptly closed. What had been scheduled to be merely another ‘tick the government box’ faux consultation meeting had suddenly started to spin out of control. The natives had started to get restless. It was time to turn them out onto the street again.

Friday, 1 July 2011

Radio Invicta: the genesis of black music radio in London .... still unfulfilled

I only knew Roger Tate through listening to his programmes on the radio. He was a DJ on Radio Invicta, London’s first soul music radio station, launched in 1970. Invicta was a pirate radio station. Back then, there were no legal radio stations in the UK other than the BBC.

The notion of a campaign for a soul music radio station for London had been a little premature, given that no kind of commercial radio had yet existed in Britain. But that is exactly what Radio Invicta did. As Roger Tate explained on-air in 1974:

“Who are Radio Invicta? You may well be asking. Well, we’re an all-soul music radio station. We’re more of a campaign than a radio station, I suppose. We believe in featuring more good soul music on the radio.”

By 1982, Black Echoes music paper reported that Radio Invicta was attracting 26,000 listeners each weekend for its broadcasts. By 1983, Radio Invicta had collected a petition of 20,000 signatures in support of its campaign for a legal radio licence. There was sufficient space on the FM band for London to have dozens more radio stations. By then, local commercial radio had existed in the UK for a decade. But nobody in power wanted to receive the station’s petition and Invicta’s Mike Strawson commented:

“I have tried to speak to the Home Office about it, but it shuts the door.”

Radio Invicta eventually closed for good on 15 July 1984, the date that the new Telecommunications Act had dramatically increased the penalties for getting caught doing pirate radio to a £2,000 fine and/or three months in jail. By then, Capital Radio had enjoyed its licence as London’s only commercial radio music station for eleven years. Its monopoly reign was still to run for a further six years.

It might have seemed in 1984 that Radio Invicta’s fourteen-year struggle to play soul music on the radio in London had come to absolutely nothing. The Invicta team went their separate ways after the pirate station’s closure. Roger Tate continued his career as a successful technology journalist. After his death in 2001, aged only 47, one of his friends, Trevor Brook, spoke of Tate’s determination to play soul music on the radio in the face of opposition from the government and the radio ‘establishment.’ His eulogy at the funeral of his friend ‘Bob Tomalski’ included these comments:

“The government told the story that there were no frequencies available. Now Bob was not stupid. He had enough technical knowledge to know that this was simply not true. So, either government officials were too dim to realise the truth of the situation ... or they were just lying. Nowadays, we have 300 independent transmitters operating in those same wavebands, so you can probably work out which it was. Anyway, in Britain, the result was that any proper public debate about the possible merits of more radio listening choice was sabotaged by this perpetual claim that it was impossible anyway.

So, we had pirates. Other countries which had not liberalised the airwaves had pirates as well, but some of them took the refreshingly realistic approach that no harm was being caused, and they permitted unlicensed operations to continue until they got round to regularising the situation. Ambulances still reached their destinations and no aeroplanes fell out of the sky. Not so in this country though. The enforcement services here were too well funded and the established orthodoxy too well entrenched. That 'frequency cupboard' was going to be kept well and truly locked!

Bob had thrown himself into running a regular soul station, Radio Invicta. He built a studio, tore it apart and built a better one. He eventually sectioned off part of the flat as a separate soundproofed area. He built transmitters - and got them working. But Bob was nothing if not multi-skilled, and he excelled in producing the programmes themselves. Using nothing more impressive than an old four track reel to reel tape recorder, Bob would create highly polished jingles and station identifications. ‘Roger Tate, super soul DJ.’ Other stations, both official and unofficial, listened to what Bob and his colleagues did and their ideas were copied or imitated.

Faced with the authorities, Bob was remarkable, because he was absolutely fearless. He was certain they were in the wrong and, given enough time, were going to lose the battle. It was a war of attrition and only perpetual piracy was ever going to bring about change. And he was quite right about that. The government kept winning the battle in the courts but began to lose the moral one. Eventually the law was changed.

Do we have free radio now? In the sense that anybody can decide to start up a new magazine, find the finance and get on with it, no, we don't have that for radio. The process is bound up with a long winded regulation and approval process involving a statutory body which has had its fingers burnt in the past by the odd bankruptcy and the odd scandal. So they play safe and issue more licences to those who already have stations. The consequence is that originality and creativity get crushed into blandness and mediocrity. My own teenagers constantly flip between stations in the car, but they don't care enough about any of them to listen indoors. Fresh people don't get to control stations. Behind boardroom doors, they might think it privately, but in what other industry would the chairman of the largest conglomerate in the market dare to say publicly that even the present regime was too open and, I quote, ‘was out of date and was letting inexperienced players into the market’? That is a disgraceful statement. Where would television, theatre, comedy, the arts, and so on be, if new and, by definition, inexperienced people didn't get lots of exposure? The industry is stale, complacent and rotten. Bob, there are more battles out there and we needed you here.”

Ten years later, these words are just as pertinent. It is hard to believe that a bunch of enthusiastic soul music fans who wanted to play their favourite music to their mates could have posed such a threat to the established order. But the history of radio broadcasting in the UK has demonstrated repeatedly that ‘the great and the good’ consider the medium far too important to let control fall out of their hands. Their arguments, however ridiculous, were taken completely seriously because they were the establishment.

Peter Baldwin, deputy director of radio at the Independent Broadcasting Authority, said in 1985: “We wouldn’t want to be dealing with two current local stations [in one area]. If it’s Radio Yeovil [operating as the only commercial station in Yeovil], well, that’s okay ... But we couldn’t subscribe to competition [for existing local commercial pop music station Swansea Sound] from Radio Swansea, unless it was in Welsh or concentrated on jazz – and there probably wouldn’t be sufficient demand for that kind of service.”

James Gordon (now Lord Gordon), then managing director of Radio Clyde, wrote in The Independent newspaper in 1989: “It has to be asked whether there is really evidence of pent-up demand from listeners for more localised neighbourhood stations ... Eight to ten London-wide stations would be enough to cater for most tastes.”

David Mellor MP told the House of Commons in 1984: “The government do not believe that it would be sensible or fair to issue pirate broadcasters with licences to broadcast. To do so, on the basis suggested by the pirate broadcasters, would be progressively to undermine the broadcasting structure that has evolved over the years.”

However, within five years, the government did indeed license a pirate radio station to broadcast in London. Once Invicta had disappeared in 1984, it was superseded by newer, more commercially minded, more entrepreneurial pirate radio stations – JFM, LWR, Horizon – that played black music for Londoners. In 1985, a new pirate station called KISS FM started, quite hesitantly at first. Its reign as a London pirate proved to be much shorter than Invicta’s but, by the time KISS closed in 1988, it was probably already better known than Invicta.

KISS FM went on to win a London radio licence in 1989 and re-launched legally in 1990. It carried with it the debt of a twenty-year history of black music pirate radio in London started by Radio Invicta and then pushed forward by hundreds of DJs who had worked on dozens of London black music stations. KISS FM would never have existed or won its licence without those pirate pioneers.

Sadly, the importance of KISS FM’s licence as the outcome of a twenty-year campaign seemed to be quickly forgotten by its owners and shareholders. The lure of big bucks quickly replaced pirate ideology during a period of history when ‘get rich quick’ was peddled by government as the legitimate prevailing economic philosophy. KISS FM lost the plot rapidly and soon became no more than a money-making machine for a faceless multimedia corporation.

Right now, there remains as big a gap between pirate radio and the licensed radio broadcasters as existed twenty years ago or even forty years ago. London’s supposedly ‘black music’ stations, KISS FM and Choice FM, now sound too much of the time like parodies of what they could be. Whereas, pirate radio in London still sounds remarkably alive, unconventional and creative. More importantly, only the pirates play the ‘tunes’ that many of us like to hear.

The issue of how black music was ignored by legal radio in London, and then betrayed by newly licensed black music radio stations, is on my mind because of my new book ‘KISS FM: From Radical Radio To Big Business.’ It documents a small part of the history of black music pirate radio in London, and it charts the transformation of KISS FM from a rag tag group of black music fanatics into a corporate horror story. I was on the inside of that metamorphosis and it was an experience that, even twenty years later, remains a sad and terrible time to recall.

In 1974, Roger Tate had wanted more black music to be heard on the radio in London. Ostensibly, that objective has been achieved. But the black music I hear played on white-owned stations in London (there is no black-owned station) is a kind of vanilla K-Tel ‘black music’ that is inoffensive and unchallenging.

If Croydon is the dubstep capital of the world, how come there is no FM radio station playing dubstep in Croydon, or even in London? How come I never hear reggae on the radio when London is one of the world cities for reggae? How come I had to turn to speech station BBC Radio Four to hear anything about the death of Gil Scott-Heron in May? Why is that Jean Adebambo’s suicide went completely unremarked by radio two years ago?

Legitimate radio in London seems just as scared of contemporary cutting-edge black music as it was in the 1970s when Roger Tate was trying to fill the gaping hole with Radio Invicta. Nothing has really changed. Except now there exists the internet to fill that gaping hole. And FM pirate radio in London continues to satisfy demands from an audience that legitimate radio has demonstrated time and time again that it doesn’t give a shit about. Is it any surprise that young people are deserting broadcast radio?

Forty years ago, I listened to Roger Tate and London pirates like Radio Invicta because they played the music I wanted to hear. Forty years later, I find it absolutely ridiculous that I am still listening to a new generation of London pirates because they still play the music I want to hear. As Trevor Brook suggested at Roger’s funeral, our radio system is so consumed by “blandness and mediocrity” that “the industry is stale, complacent and rotten.”

Roger Tate R.I.P. You may be gone, but you and your campaign at Radio Invicta are as necessary as ever today. Sad but true.

Monday, 23 May 2011

GERMANY: "DAB [radio] remains a problem child"

On 2 May 2011, a panel convened at the Central Germany Media Conference in Leipzig to discuss the future of digital radio. The panellists were: Gerd Bauer from LMS, Erwin Linnenbach from Regiocast, Christophe Montague from NRJ International Operations and Willi Steul from Deutschlandradio.

The panel felt that one of the main problems around the planned (re-)launch of digital radio in Germany on 1 August 2011 was the lack of DAB+ capable radio receivers in the market. “The left shoe is there, but not the right one,” commented Erwin Linnenbach, who was concerned that it would be difficult to persuade consumers to buy a digital radio if they did not know what they would be able to receive on it.

Willi Steul said that he had had to visit three shops before he had found one that stocked a DAB+ radio. “An ordinary customer would not make that effort, but would have bought an FM radio from the first place,” he suggested. Deutschlandradio would save €12m per annum from being able to shut down its Long Wave and Medium Wave transmitters, said Steul. However, even if DAB+ were available nationwide, he did not believe that FM switch-off was an issue.

Christophe Montague suggested that, where there were already a wide range of FM radio stations, there was no need for new channels. This was the reason why it would prove so hard to launch digital radio in France. Whereas, in many parts of Germany, Montague said that it was a “radio desert.”

The panellists agreed that the biggest problem was the lack of DAB+ radios in shops. Linnenbach did not believe that this issue could be fixed by 1 August because there was not enough time. The objective had to be to make radio listeners understand the benefits offered by DAB+. If that succeeded, he believed the chances were good for a successful launch.

The panel proceedings were reported in the German press under sceptical headlines:
“DAB Plus before launch – an uncertain outlook for success,” said Business-on
“Media conference – success of DAB Plus not guaranteed,” said Digitalfernsehen
“Media conference – DAB remains a problem child,” said Rein-Hoeren

According to the latter publication, Erwin Linnenbach had said that the monopoly of transmission company Media Broadcast was the major obstacle to nationwide digital radio in Germany. He felt that Media Broadcast’s requirements did not offer a sensible business model to potential DAB+ broadcasters [see blog Dec 2010]. Christophe Montague agreed and said he had the impression that Media Broadcast would make the most out of the DAB tender process.

Heinz-Dieter Sommer, director of radio at Hessischen Rundfunks, said that economically viable conditions had to be created to enable commercial radio companies to participate in DAB+ alongside the public service broadcasters. “Otherwise,” he said, “in ten years time, FM will still not be switched off.”

Two British digital radio companies have committed financial support to the roll-out of national DAB+ in Germany in August 2011. This follows the slow-down of DAB radio receiver sales in the UK in 2009 and 2010 [see blog].

In December 2010, Frontier Silicon announced that, in order to persuade four commercial radio broadcasters in Germany to persevere with DAB+, it had promised them it would purchase an unspecified amount of their advertising airtime over the next four years [see blog].

Then, in March 2011, Pure Digital announced that it had forged “a strategic marketing partnership with Germany’s commercial radio stations in advance of the launch of the first nationwide digital radio multiplex.” It said that “the partnership and financial investment” it was providing would ensure that its digital radios would be “heavily promoted in various German media.”

Germany could be under the mistaken impression that DAB radio is already a roaring success in the UK market. It was reported in the German press last week:
“While listening in Germany is still dominated by analogue radio, the British have long joined the digital age. Figures from RAJAR have shown that, in Q1 2011, nearly 92% of the population have listened to digital radio, on average for more than 22 hours per week.” [source]
“Britain remains a pioneer in listening to digital radio via DAB. On Thursday, new RAJAR record figures were recorded. 47.3m listeners (91.6%) in the first quarter listened at least once a week to digital radio.” [source]

In fact, the most recent RAJAR research found that 43% of the UK adult population listened to digital radio in a week, and only 27% listened to DAB radio. The high percentages quoted in the German press are for listening to ALL radio via ALL platforms, not for digital radio or DAB radio alone.

I recall Frontier Silicon chief executive Anthony Sethill having been quoted in his company's press release in 2008 saying: “Digital radio is here to stay, with DAB sets outselling analogue models by six to one.”

In fact, in the UK, analogue radios outsell DAB radios by four-to-one. Mmmm. It looks as if the DAB propaganda war in Germany has only just begun.

Thursday, 19 May 2011

Government expenditure cutbacks clobber UK commercial radio

As soon as the coalition government came to power in May 2010, it implemented Conservative Party policy to make substantial cutbacks to the amount of public money spent on government marketing campaigns. Commercial radio was hit the hardest because, more than any other medium, it had become increasingly dependent upon government expenditure on advertising airtime.

In 2010, before the general election, I had predicted [see blog] that the impact of these cutbacks would prove “disastrous” for the commercial radio sector. I had calculated that a 50% cut in total public expenditure on commercial radio advertising would lose the sector £44m to £48m in revenues, equivalent to 9% of total sector revenues.

Interviewed by BBC Radio Four, I was asked if my scenario was not overstating the potential impact on commercial radio. I argued that it was not – the amount spent by the government’s Central Office of Information [COI] on commercial radio dwarfed all other radio advertisers by miles. By February 2010, government expenditure on radio commercials was greater than that of the second, third, fourth and fifth largest advertisers combined.

The Radio Advertising Bureau had put a brave face on the losses from its biggest advertiser. In June 2010, it said: “We are optimistic that radio’s strengths will be recognised as COI budgets come under ever greater scrutiny.” In September 2010, it said it was “working with a wide range of advertisers to bridge the gap” left by public expenditure cuts.

However, the latest data from Nielsen show that the impact upon commercial radio has been even greater than I had forecast. In the year to February 2011, COI expenditure on radio advertising was down 70% year-on-year, much greater than the 50% cut that had been anticipated from previous Conservative Party pronouncements. In total, commercial radio lost £44m per annum from all public expenditure on radio, compared to the previous year.

The worse news was that, as the graph above shows, the fall in COI expenditure has become steeper in recent months. As a result, the impact on the sector in 2011 is likely to be just as severe as it was in 2010. The hard fact is that this is not a temporary cyclical loss for commercial radio – these revenues will not rebound for as long as the coalition government remains in power.

The graph shows clearly that no individual or group of advertisers have been able to substitute entirely for the losses caused by government cutbacks, although some gains were made from clients in 2010 [see blog]. No commercial advertiser spends more than £10m per annum on radio, whereas the COI had spent £58m in the year to March 2010 (but was down to £17m by February 2011). This is simply too big a gap to be filled by a few individual commercial advertisers.

Media Week reported recently that “the more optimistic media owners are hoping the COI’s former spend [on radio] can be clawed back by year’s end.” It is hard to see how that can be realistically achieved, given the scale of the £44m per annum loss from public sources to date, particularly in the face of declining consumer disposable incomes.

In an attempt to offer a positive outlook, Media Week suggested: “But the situation is set to improve. From April [2011] onwards, there will no longer be any comparable year-on-year COI spend left in the system, as purdah [sic] kicked in 2010.”

Perhaps what Media Week was trying to say was that COI expenditure will level off this year once the savage cuts have been in situ for more than a year. Yes, inevitably, but that does not in any way help an industry that has just witnessed £44m per annum of revenues disappear into thin air. Remember that total commercial radio revenues in 2010 were only £523m, already down from £641m in 2004. Now a further huge 8% chunk of income has gone.

Another commentator recently noted optimistically: “The [radio] medium took £523 million in revenue in 2010, up 3.3% year-on-year, and 2011 looks like another positive year of growth, not the inevitable management of decline forecast by some.”

However, once inflation is taken into account, 2010 commercial radio revenues fell in real terms [see blog]. Far from a decline being “forecast by some,” the industry’s own data demonstrate that decline has been occurring since 2004 in real terms, long before the recent cuts to government expenditure. Adjusted for inflation, commercial radio revenues in 2010 were lower than they had been in 1998.

This is not the time for spreading unfounded optimism based on ignorance of the facts. If anything, the impact of government cuts has proven to be more than “disastrous” and will necessitate even more restructuring of the commercial radio sector in the short term. This could include the closure of further unprofitable digital ventures and of sector support agencies whose subscriptions will begin to appear increasingly discretionary when the axe has to fall somewhere.

Sunday, 15 May 2011

FRANCE: government report recommends 2-3 year "moratorium" before launch of digital radio

A new report on the introduction of digital terrestrial radio (‘DAB radio’ in the UK) in France has recommended to the government that the launch should be delayed by two to three years. In the interim, the French media regulator CSA would be asked to establish a project to investigate the “overseas experiences” of digital radio, according to the government press release.

David Kessler, former head of state radio station France Culture, was commissioned in June 2010 by the government to produce a strategic analysis of the launch of digital radio in France. His interim report, published in November 2010 [see blog], identified the “paradox of DAB radio – it is a sufficiently attractive technology to be launched successfully, but it is insufficiently attractive to successfully allow FM broadcasts to cease.”

In the final report, published this week, Kessler said that not all the conditions had been met from an economic standpoint to permit the widespread launch of digital terrestrial radio. His report identified the significantly different challenges between digital radio switchover and digital television switchover:

“An error in logic has probably contributed greatly to making the debate [about digital radio] opaque rather than transparent. The error came from having planned digital radio switchover with reference to digital television switchover, which started in 2005 and the success of which has been staggering and immediate, so that the changeover from analogue to digital TV will be completed throughout the land by 2012. Many parties imagined that the route to digital opened up by television would be followed by radio. But this plan was wrong for three reasons.

Firstly, the television market was dominated in 2005 by five channels (TF1, France 2, France 3, France 5/Arte and M6) that attracted 75% of television viewing. The transition to a score of free channels was obviously very attractive. However, as will be discussed later, the situation in radio is quite different – the current choice of stations is one of the richest that exists in the world, after the landscape opened up in the 80s. Even if the choice is not the same in every region, none of them – some near – are in a situation where only five major stations dominate the choice.

Second is the difference in receivers. Even if digital radio switchover had been launched simultaneously with that of television, where the evolution of televisions (flat screen, HD and now 3D) resulted in a faster replacement of equipment than anticipated, digital television was accessible without changing the set through the purchase of a single adaptor at a moderate price. Digital radio switchover requires the replacement of all receivers, and households have multiple radios and the market is sluggish. Without doubt, digital radio switchover could re-invigorate the market with a simple, inexpensive high-end (with screen) radio. At this point, no one can say how quickly take-up of replacement receivers will happen. Examples overseas – particularly Britain – demonstrate a relatively slow rate of replacement, and the different situation in countries where take-up is faster – Korea, Australia – make comparisons difficult.

The third reason is that the history of television demonstrates that it works through ‘exclusive changes’ where one technology replaces another quickly. Colour television pushed out black and white television. Digital television is about to push out analogue television. But experience shows that far from all media work this way. On the contrary, some go through ‘cumulative change’. Over a short or long period of time, different technologies co-exist and content is distributed through several technologies. As Robert Darnton noted about the book, we often forget that the printed word has long co-existed with the manuscript. From this perspective, the history of radio is the opposite of television: different transmission systems are cumulative rather than exclusive. This does not exclude the possibility that, in the long run, some transmission systems will decline and no longer be used, just as printing marginalised the manuscript. But what it means is that one cannot plan the launch of digital radio by imagining that all other transmission systems will be switched off, particularly FM. Even today, despite the success of FM, Long Wave and Medium Wave transmissions are still used because they reach a sufficient number of listeners not be switched off by broadcasters.

In fact, a careful examination of the launch of digital radio in other European countries shows that a ‘cumulative change’ scenario exists that we must anticipate in France too. Indeed, the launch of digital radio in other European countries had been presented as a quick substitute for analogue radio, even though the existing choice of analogue stations was less than in France, and the choice of digital stations seemed more attractive and content-rich than offered by analogue. Even if a proportion of listeners are quickly adopting digital radio, a greater proportion are still sticking with their traditional radios, with the possible exception of Norway, where analogue switch-off seems to be seriously considered at present. This leads to a situation in which the government initially adopts a goal of analogue switch-off but then, given the impossibility of switch-off, drops or postpones the switch-off date by several years. As the choice of existing radio stations is particularly substantial in France, it would appear that this situation is most likely to be repeated if digital radio were to be launched. Radio station owners are not mistaken. Very few want a quick switch-off of FM, and some do not want any switch-off.”

These points echo evidence on digital radio switchover in the UK that I had presented to the House of Lords Select Committee on Communications in January 2010:

“With television, there existed consumer dissatisfaction with the limited choice of content available from the four or five available analogue terrestrial channels. This was evidenced by consumer willingness to pay subscriptions for exclusive content delivered by satellite. Consumer choice has been extended greatly by the Freeview digital terrestrial channels, many of which are available free, and the required hardware is low-cost.

Ofcom research demonstrates that there is little dissatisfaction with the choice of radio content available from analogue terrestrial channels, and there is no evidence of consumer willingness to pay for exclusive radio content. Consequently, the radio industry has proven unable to offer content on DAB of sufficient appeal to persuade consumers to purchase relatively high-cost DAB hardware in anywhere near as substantial numbers as they have purchased Freeview digital television boxes.”

The Kessler document should offer significant food for thought to the British government for its unworkable plans for DAB radio switchover. Whereas Kessler correctly identified that TV and radio digital switchover are two very different undertakings, our public servants working on digital radio policy in the government and in Ofcom have long failed to understand these differences. The appointment of Ford Ennals as chief executive of Digital Radio UK in 2009, on the back of his work between 2005 and 2008 managing digital television switchover, should have been viewed as barely relevant experience to achieve successful digital radio switchover.

Have any of the people managing digital radio switchover for the UK ever actually worked in the radio industry? At DCMS? No. At Ofcom? No. At Digital Radio UK? No. If, like Kessler, they had radio sector experience, they would realise that all their speeches and presentations that repeatedly cite digital TV switchover as the precedent for radio are completely off-target.

Is there any wonder that failure of DAB public policy was inevitable?