Wednesday, 23 February 2011

Does the nation love its digital radio stations? 86% of UK adults say 'no'

In his perceptive commentary on last quarter’s RAJAR radio audience figures, IPSOS’ research manager Andy Haylett noted:

“18.5 million adults are DAB owners, yet only an estimated 12.6 million are confirmed listeners. What are the other 6 million doing with their DAB sets? Further investigation shows that there are only 7.4 million listeners to digital-only stations, of which under half (3.3m) comes from DAB listening. This suggests that around three quarters of all DAB listeners are tuning to stations readily available on a traditional analogue transistor.”

This reiterates a point I have made previously in this blog [
Feb 2009, Aug 2009, Feb 2010]. After more than a decade, it is a sad fact of life that digital radio stations on broadcast platforms have not succeeded in setting listeners’ hearts on fire:
· Only 4.6% of all radio listening is to digital radio stations
· 18.2% of all radio listening via digital platforms is to digital radio stations
· 7.4m adults per week listen to digital radio stations (14.3% of adults)
· 3.3m adults per week listen to digital radio stations via DAB (6.4% of adults)

Of course, the corollary is that digital platforms are being used predominantly for listening to radio stations that are already available to consumers on the analogue platform:
· 95.4% of all radio listening is to analogue radio stations
· 81.8% of all radio listening via digital platforms is to analogue radio stations
· 44.2m adults per week do NOT listen to digital radio stations (85.7% of adults)

These figures might have been understandable during the early years of DAB radio. But now? After more than a decade? Planet Rock launched in 1999; the BBC digital stations in 2002. Compared to the influence that digital terrestrial television stations have had in the UK over a shorter period, digital radio stations have had very little impact on radio listening patterns to date.

The overwhelming use of digital platforms to listen to analogue radio stations begs the question: so what is the point of DAB? There was never anything wrong with FM radio anyway, and there is no proposed alternate use for FM spectrum, so why is the government insisting that consumers and the radio industry both spend huge sums of money to enable the public to listen (on DAB) to exactly what is available already (on FM/AM)?


In the graph above, the listening to digital radio stations is shown in red (analogue stations in grey). It remains tiny. Despite BBC Radio 6 Music’s uplift after last year’s consumer campaign, it still languishes as the UK’s 18th most listened to national radio station. Fortunately for the BBC, the funding for its digital radio stations continues to come (for now) from the public purse.

For commercial radio, the funding for digital radio stations has to come from deep pockets. Not one digital radio station has yet made an operating profit. History is littered with commercial digital radio stations that used to be on the national DAB platform: ITN News, Talkmoney, The Storm, PrimeTime Radio, 3C, Capital Disney, Core, Virgin Radio Groove, Oneword, Capital Life, TheJazz, Fun Radio, Virgin Radio Xtreme and Panjab Radio.

Some of these digital radio stations had offered fantastic content unavailable elsewhere (PrimeTime, OneWord). Other digital stations had had very little thought put into their creation. Former GWR staffer Steve Orchard
boasted that his company’s strategy for Planet Rock had been conceived in The Lamb Inn, Marlborough: “Going into a pub with Ralph Bernard, my boss, listening to the classic rock jukebox and coming out, several pints later, with Planet Rock sketched out on the back of an envelope.”

GCap Media sold Planet Rock in 2008 to an ‘outsider’ and it has been the commercial radio industry’s most listened to digital radio station since 2009. It speaks volumes that the entire UK commercial radio sector’s efforts at digital radio stations over more than a decade have been trumped by a music enthusiast with no previous radio sector experience.

However excellent it is, Planet Rock alone cannot save the DAB platform from continuing consumer disinterest. It would require a dozen stations of this calibre to create a portfolio of sufficient interest to stir consumers. Worse, for those consumers who have tried DAB and given up due to the platform’s other issues (poor reception, lack of mobility, lo-fi audio, expensive hardware), even a dozen stations might not tempt them back.

It is understandable, therefore, that Planet Rock’s owner, Malcolm Bluemel, should be frustrated with the rest of the radio industry for not following in his wake. This month, he said:

“I’ve only been in the radio industry about two and a half years now and I’ve never actually come across an industry that has such a collection of self-interest in discussing this matter [digital switchover]. I’m quite amazed at this need for certainty around the future of business. I came from an era where, to get a decent radio [station], I had to stick my AM transistor under the bedclothes and listen to Kid Jensen from Luxembourg at night. Well, now we’ve got people saying ‘Well, I want to know this, I want to know that, I want to know that my radio stations will be this, and I can have that, and I want it all, and I want it all now.’

It’s fairly obvious to me that, as an industry, we should be all sticking together. Digital is here. It’s not a question of a switchover date. Digital is out there. It’s being listened to. There’s 1.1 million people listening to 6 Music, there’s 827,000 people listening to Planet Rock on digital radio NOW. So why don’t we just accept the fact that digital is here and all get together and say ‘Right, how are we going to make this work for the industry?’ For all those people with their self-interest and their stupid press
statements over ‘20 years [until digital switchover]’ or whatever it is (how ridiculous is that?), and just get together and have a consensus of opinion about how we are best going to do this, but collectively for the radio industry, and stop fighting amongst ourselves because of our own petty little grievances.”


Planet Rock’s 827,000 weekly reach last quarter is a remarkable achievement. Compare this to the dismal performances of some analogue commercial radio stations. Absolute Radio, with the benefit of a national AM licence and a London FM licence, reached only 1,375,000 adults per week. Xfm reached 938,000 adults nationally with the benefit of a London FM licence. Choice FM reached 734,000 adults nationally with the benefit of a London FM licence.

By comparison, Planet Rock has performed miracles, given that the only broadcast platform it has access to is DAB. As Bluemel identified, paradoxically, the thing that is stopping him from turning Planet Rock into the profitable radio station that it should be is the very industry in which he is working. Whilst (post-GCap Media) Planet Rock is doing all the right things for all the right reasons, the rest of the industry, where DAB is concerned, continues to do all the wrong things for all the wrong reasons.

Unfortunately, the barriers to Planet Rock’s commercial success are the outcomes of the sad history of the DAB platform:
· The commercial radio sector initially invested in DAB to control the platform, not to create successful digital radio stations
· The BBC decided to launch minority interest digital radio stations that would not cannibalise its existing national analogue networks
· The commercial DAB multiplex owners (aka the largest commercial radio groups) did not want upstart independents creating successful digital radio stations on their DAB platform
· The industry’s ‘build it and they will come’ strategy for DAB failed because consumers are driven by content, not by platforms
· If you wanted to persuade consumers to buy relatively expensive DAB radios, you should have inspired them with new content rather than have threatened them with FM switch-off
· Radio listeners are loyal and do not like losing access to content they once enjoyed (the closure of digital radio stations)
· DAB radio reception, for many, is still not as robust as FM or AM

The best solution for Planet Rock would be a national analogue licence. Or, at least, a London FM licence. However, the radio regulatory system we have in the UK militates against that possibility. Why? Because politicians, civil servants and regulators have ensured that those who already own (what were once) commercial radio ‘licences to print money’ get to keep them, seemingly in perpetuity.

It is the existing radio industry itself which is limiting Planet Rock’s opportunities for greater success. We do not enjoy an openly competitive radio market that allows new entrants such as Bluemel to shake up our stagnant radio industry with new, exciting ideas. Instead, ‘outsiders’ have to stand around on the sidelines while the owners of stations such as Absolute Radio, Xfm and Choice FM continue to run them into the ground. So why don’t they just sell them?

Sell their stations? Of course not! When you are part of a commercial radio oligopoly, why would you want to encourage an insurgent, who might actually understand how to create a successful radio station, to camp right on your analogue doorstep? Not only might he show you up, but he might even steal listeners from your other stations. Instead, the current philosophy is to let ‘outsiders’ bleed to death financially on the DAB platform, while the incumbents continue to divide up (what is left of) the spoils of FM/AM radio between them.

So we listeners get the (analogue) mediocrity they think we deserve.


[blog
headline adapted from Andy Haylett's of IPSOS]

Tuesday, 15 February 2011

Rubbish DAB radio reception: why is Ofcom working hard NOT to fix the problem?

“Ofcom’s primary concern in radio is to look after the interests of the listeners.”
Peter Davies, Ofcom, January 2007.

When something is broken, you have to fix it. Thinking about fixing it, planning to fix it, talking about fixing it, convening meetings about fixing it – none of these will actually fix it. You just have to fix it.

DAB radio reception has been broken since the broadcast platform was introduced in the 1990s. Transmitter powers are inadequate and there are insufficient transmitters, particularly in urban areas. These issues have still not been fixed.

For most of the last decade, the radio industry and the regulator were in denial that DAB reception was rubbish. Initially, it proved easy to blame the consumer. The advice to early DAB adopters was that they should install a DAB aerial on their roof and attach it to their new DAB radio because their home might be constructed of the wrong type of materials (bricks?). What? All this just to listen to Radio 7 in the bath?

Eventually, sufficient people had bought DAB radios that they started to compare experiences. People in the same street, the same family, the same house all found that they had similar problems with DAB reception.

In 2004, a technical
paper entitled ‘Indoor Reception Of DAB’ by Simon Mason of NTL concluded that “a field strength of 71 dbμV/m is required in order to provide good indoor DAB reception to handheld devices.” Mason found that, in London, “the worse [sic] reception areas were, in every case, on the ground and first floors” of large buildings.

In 2006, at the TechCon conference, Ofcom’s Mark Thomas
explained: “The Radio Authority had no data of how [DAB] receivers performed, so it had to make some very broad-brush assumptions. More recently, now that we have a lot of receivers in the market and we can see how they behave, an industry group has been working under Ofcom’s chairmanship for the last two years to look into the issue in more detail and come up with some modus operandi for new transmitter sites.”

At the same conference, EMAP’s Grae Allen
advocated: “In the future, as I envisage it, we will see a need to put more and more [DAB transmitter] sites inside the cities in areas where we actually need significant power where people are living and working.”

Did any of these ‘fixes’ happen? Only in London, and only for one of the four DAB multiplexes that serve the capital. Did Ofcom fix this? No. Did the radio industry pay for it? No. It was BT that paid for new DAB transmitters in London to improve the reception of its new mobile television service, Movio, which soon failed commercially. The DAB improvements were left in place.

As Mark Thomas had explained, it was the regulator (the Radio Authority, now Ofcom) that had set the technical criteria for DAB transmitters in the UK. So you might imagine that it would naturally be the regulator that would take responsibility to fix inadequate DAB reception. You would be wrong.

In 2010, Ofcom launched a consultation about the terms of its contract renewals for DAB multiplex licences. You might think that this would be the ideal opportunity for Ofcom to insist that licensees must improve the coverage of DAB transmitters so that consumers would receive satisfactory reception. You would be wrong.

Ofcom indirectly acknowledged that the current quality of DAB reception was the result of inadequate criteria having been implemented. It stated:

“Digital One’s [national DAB] network and all other existing DAB networks have been planned to a signal strength of 58 dBμV/m. This is what we currently call ‘outdoor’, or mobile, coverage.”

“A signal strength of 65 dBμV/m is what we currently call ‘indoor’, or portable, coverage. The network of 30 additional transmitters that Digital One implemented in order to facilitate the now-defunct BT Movio mobile television service were planned in order to deliver coverage in certain areas at a much higher signal strength of 82 dBμV/m.”

Evidently, BT had understood that you cannot hope to persuade consumers to spend their money on new equipment if they find that reception is not good enough to use it. Unfortunately, nobody in the radio sector took the hint. So what did Ofcom
decide to do about this sorry state of affairs that has ruined so many listeners’ usage of DAB since 1999? Nothing at all. It said:

“In general, the coverage which applicants for radio multiplex licences propose to deliver has been seen as a commercial decision for the licensees, with neither Ofcom nor its predecessor regulator the Radio Authority seeking to impose a minimum coverage obligation that an applicant's proposals must meet …” [emphasis added]

This decision was made, despite Ofcom having already convened meetings of an “ad-hoc working group” that had included the BBC, the government and the DAB multiplex licensees. The
outcome was:

“This group came to a provisional agreement that the field strengths currently used for determining coverage are no longer appropriate given operators’ experience after several years of operation. The group provisionally agreed that a revised set of appropriate field strengths should be used from now on …”

This group’s new recommended signal strengths for adequate DAB reception were:
· 58 dBμV/m for outdoor reception
· 69 dBμV/m for indoor reception
· 77 dBμV/m for indoor reception in dense urban areas.

So it would make perfect sense for Ofcom to insist upon these agreed new field strengths in the new contracts for DAB multiplexes that will run for a further 12 years. But to Ofcom, it did not. Ofcom simply said to multiplex owners: just carry on as if nothing is at all wrong with DAB reception. In Ofcom’s
words:

“We are not proposing to set any additional coverage obligations that Digital One must meet as part of the [national DAB multiplex] licence renewal process” and “we will not set any additional coverage obligations for local [DAB] radio multiplex licensees as part of the process of licence renewal …”

Perhaps Ofcom should explain precisely how its policy on DAB reception quality is working “to look after the interests of listeners.” The story to date seems to look like this:
· When DAB was introduced, the regulator got its technical sums wrong
· Poor quality reception dogged DAB from the beginning
· The regulator ignored the problem
· The radio industry knew this was a problem
· The regulator still ignored the problem
· Belatedly, the industry came up with better DAB technical parameters
· Implementing those new parameters would cost it lots of money
· Belatedly, the regulator acknowledged the problem
· The regulator refused to accept responsibility for having created the problem
· The regulator refused to take responsibility for fixing the problem
· The regulator said it was a “commercial decision for the licensees” to fix the problem
· The regulator renewed existing DAB multiplex licences to prolong the problem for a further 12 years.

Maybe Peter Davies’ earlier quote should be amended to:

“Ofcom’s primary concern in DAB radio is to stick two fingers up to all those radio listeners who, since 1999, have spent money buying a DAB radio, taken it home, and found that reception is too poor to use it.”

Wednesday, 9 February 2011

DAB radio numbers: why do they keep making them up?

I’m a numbers man. I can tolerate a little numerical exaggeration, a few rounding ups, or even the odd ‘nearly x million’. But when people invent numbers and stick them in their press releases, I reach for my calculator. Not for the first time, today Digital Radio UK advanced the concept of ‘mind over mathematics’ to a new level.

In its press release of 21 December 2010, Digital Radio UK estimated “that due to strong Christmas sales, over two million digital radios will be sold in 2010.” I questioned how this could be true in my blog. Turns out that it wasn’t.

In today’s update, Digital Radio UK admitted that the “increase in digital radio sales” it had heralded in December was, in fact, a decrease because “2010 was slightly down in digital radio sales volumes (-2.3%) compared to 2009.”

In plain English, 1.94m digital radios were sold in 2010, compared to 1.99m in 2009 and 2.08m in 2008. Increase? No. Growth? No. Over 2m in 2010? No. Were these sales figures in the Digital Radio UK update? No.

In another numerical nonsense, today’s Digital Radio UK update said:

“If this annual growth rate [in digital radio listening] is sustained, then the Government criterion of 50% of digital listening will be achieved in 2014.”

This is mumbo jumbo rubbish from people who like to use numbers to baffle the public and to obscure the truth. The 50% threshold is no more likely to be reached in 2014 than it is in 2013, which had been the original government target. A trendline* through six years of quarterly data (see graph above) shows that the 50% criterion will not be reached until year-end 2018.

So what happened to the original 2013 target for 50% that had been set by the government’s 2009 Digital Britain report? It now seems to have been completely forgotten. No explanation, no apology – just ignored (in June 2009, I had
predicted that the 2013 target would prove “impossible”).

So how confident is Digital Radio UK that its new 2014 target is attainable? Enter stage left its CEO, standing next to a PowerPoint chart last week:

“This next chart is the most risky one I have in the pack. I hesitate showing you, particularly given the most recent conversations. But, I think, rather than just looking at a moment in time, there is a value in extrapolating. And all sorts of health warnings around this, you know, you’ve got government economists, you’ve got analysts in the stock market, you know, you can’t ever predict these things correctly. But, just taking the trends of the last three years and of the last year and running them forward – and life won’t be that simple but – just to understand from a mathematical calculation, where would that take you? Well, if we took the three-year compound growth rate, of the last three years, it would run us through to achieving 50% by the end of 2015, if we take the three-year curve. If we took the one-year curve that we’ve seen in 2010, it would take us to the end of 2014. To get to the end of 2013, which was an aspiration of Digital Britain, would require the compound growth rate to rise to 26%. So it needs to take a step change. You could put an argument forward that there are step changes coming, in content, in coverage, in cars, in communications and in consumer electronics. But I think it would be a brave man, or a brave woman, to say that, you know, you are definitely going to hit that grey line, and I wouldn’t say that. What I would say is that, on current trends over the last three or four years, we are likely to hit 50%, you know, in the next five years, I would say.”

So, February 2011 plus five years equals 2016. Well, this does not match the forecast in the ‘real world’ graph above of 50% being attained by year-end 2018. But neither does it match the 2014 date in today’s Digital Radio UK update.

Exactly where that leaves us is unclear. Is it 2014? 2016? Another year? Any old year?

DAB and realism and numbers seem to mix as well as oil and water and … er, more oil.

“Quite where the maths comes from to deliver 2014 is beyond me!” one senior radio executive said to me today. “Why do they put this out when it will surely mean another stick to beat them when it doesn’t happen?”


[* = there is no statistical evidence from historical data to demonstrate that the automated Microsoft Excel trendline is anything other than straight line.]

Thursday, 3 February 2011

DAB radio switchover: the view from the government bunker

The government’s second stakeholder consultation on DAB radio switchover happened this afternoon. It was held in what felt like an underground government bunker in Victoria. No windows, long corridors, and lots of seemingly identical numbered rooms hidden by massive doors that had no viewing windows. When I tried to go up a staircase to ground level, a man appeared from nowhere and told me not to.

Even if the bomb had dropped, down there, you might not have known it. The cityscape outside could have transformed into a wasteland but, down there, you can be certain that our civil servants would continue planning digital radio switchover regardless, even if the precise date had to be postponed until the contamination had receded. I imagine that the government staff working there hardly need to go out, even at lunchtime, because a little lady with a trolley probably comes around with salmon sandwiches.

In this cosseted environment, it is easier to understand how you might spend your days (or months or years) of servitude, devising schemes that have so little relevance to the real world above your bunker office. Perhaps this is why the afternoon was filled with PowerPoint presentations that all looked great, slides that had lots of action words, and monologues from grey men that were filled with the current jargon. It was a perfectly unreal world.

What the afternoon lacked was realism. Occasionally I had to pinch myself to make sure that this was not a Lemsip-induced slumber. It wasn’t. However, I did witness the Civil Service suggest that asking consumers their opinion about DAB radio switchover would be a good idea, as if it was a novel thought that had just come to them. Not withstanding that the government has been pursuing the notion of the DAB platform since the 1980s but, in all those decades, somehow omitted the ‘consumer’ (or ‘listener’) from its plans.

The following quotes came from our civil servants this very afternoon. I wrote them down. Reading them now, these lines could have been extracted from the script of a lost episode of ‘Yes Minister’ in which the cast cleverly parody government plans for digital radio switchover. Sadly, they did not. This is what stakeholders were told today (amongst many other things):

“We genuinely have seen more progress [on digital radio switchover] in the last eighteen months than we have in the last six or seven years I’ve worked on this issue. But, as far as the consumer is concerned, we’ve never certainly in any way advocated or used 2015 [switchover date] as a ‘stick.’ It’s always been the industry target. And, certainly, when this government came in, it was adamant and clear that the consumer would make the case for switchover by purchasing habits, by the percentage of listening [on digital platforms], the way it absorbs and consumes radio. Now, will I, at this point, say that there has been a cross-pollination of those two things? Has the 2015 [date], which was an industry date, started to creep into the public consensus and been used by the media as a scare tactic? Yes, of course it has. And do we, as an industry, need to look at that? Yes, I think we do. I would say that I don’t think anyone – I think very few people – in this room would welcome the government standing up tomorrow and saying that the [switchover] date is the 31st December 2015. And I don’t think we have any answers to the questions that we need to have the answers to before any such decision can be made, and whether the consumer genuinely believes that this is something they want to do.”

“I don’t think we know what listeners want. I think part of this [Digital Radio] Action Plan process is absolutely understanding the value people put on various parameters of radio – what they want, how they want to consume it. I think that part of understanding this decision is understanding the listener better. And I think, whilst we all have our own views on that, I don’t think there’s enough evidence based [data] for us to make those assumptions about what listeners want.”

“I don’t think the government has never ever said ‘digital radio switchover will happen in 2015’ but we think we need to go away and look at the messaging around the cross-pollination. The one thing I would say is: 2013 and 2015 is used by both sides of people in the debate, those who like to frighten people into the fear of losing their analogue services, and those who like to sell digital radios. For all of us who believe that certainty and clarity and the consumer is important, I think we all need to look at how we use the threat of 2013 and 2015 and have some consistency ourselves about how we talk to the consumer about it.”

Threat? Are radio listeners so malleable that they must be viewed by government like cattle to be herded to slaughter? Maybe I imagined mistakenly that government was FOR the people. Anyway, I suppose we should be grateful at all that the ‘consumer’ has suddenly been pushed centre stage in the long running DAB drama, even it is so late in the show [see 2009
blog and 2010 blog where I predict it would be ideal for bureaucrats to eventually blame DAB’s failure on the consumer rather than themselves].

Is there any difference between the government forcing the population to buy a DAB radio to listen to The Archers, and Sky persuading them to buy Sky Atlantic to watch their favourite HBO shows that used to be free? Is the government’s DAB switchover drive really a policy for public regulation, or simply capitalist radio (© LBC poster campaign 1989)?

This afternoon, while DAB was being discussed in the government bunker, could anyone have actually achieved satisfactory DAB radio reception down there? I think not. Are those government people listening to DAB in their cubicles? They can design as many PowerPoint presentations as they want but, at the end of the day, if DAB radio don’t work properly now, then it don’t work for the consumer.