Friday, 20 February 2009

Digital radio stations: one step forward, two steps backward

The RAJAR radio audience data for Q4 2008 were published on 29 January 2009. The day’s news headlines heralded the success of the digital radio platform. “Radio surges in popularity thanks to digital”, said The Independent; “Digital Enjoys RAJAR Boost”, said Radio Today; Music Week said: "the latest Rajars survey revealed that digital broadcasting is growing apace in the UK……"; and The Times said: “Digital audio broadcasting (DAB) is clearer, truer, purer. Every year its coverage widens. Every year more stations are added to its almost infinite capacity……FM has had its day.”

Bauer Radio’s managing director of national brands Mark Story
told Music Week: "The audience love [digital].”

The audience must have a strange way of showing their appreciation for digital radio. In Q4 2008, listening to digital-only radio stations fell precipitously, both for the BBC and for commercial radio.

This graph illustrates just how sharp was the decline in listening to digital-only radio stations during Q4 2008:
  • total digital-only radio station hours listened are down 14% quarter-on-quarter, and down 5% year-on-year to 34m hours/wk, to their lowest level since Q1 2007
  • hours listened to commercial digital-only stations are down 12% quarter-on-quarter, and down 11% year-on-year to 20m hours/wk, to their lowest level since Q1 2007
  • hours listened to BBC digital-only station are down 17% quarter-on-quarter to 14m hours/wk, their lowest level since Q4 2007.

For the commercial radio sector, 2008 had been the year it finally faced up to the realisation that its digital-only radio stations were not going to break even in the short- or medium-term. This resulted in the closure of digital stations Mojo Radio, Yarr Radio, TheJazz, Capital Life, Oneword Radio, Virgin Radio Groove and Core during the year. Inevitably, with fewer offerings for consumers, listening to commercial digital-only stations was likely to be impacted.

The surprise result from Q4 2008 RAJAR data is that the sector’s remaining digital radio stations have suffered terrible declines. The graph above tracks the largest digital stations, of which only Planet Rock achieves a relatively stable performance (and now becomes the sector’s most listened to digital station). Otherwise:

  • hours listened to Smash Hits Radio are down 26% quarter-on-quarter and down 17% year-on-year
  • hours listened to The Hits are down 21% quarter-on-quarter and down 20% year-on-year
  • hours listened to Q Radio are down 34% quarter-on-quarter and down 16% year-on-year
  • hours listened to Heat Radio are down 9% year-on-year

Although, as the graph shows, the data has always been ‘bumpy’, the simultaneous decline of listening to all these Bauer-owned stations is a very worrying trend. Bauer is now left carrying the torch for digital commercial radio in the UK, following rival GCap Media/Global Radio’s decision last year to close/divest almost all of its digital stations (only The Arrow and Chill remain).

Planet Rock’s owner Malcolm Bluemel said this month that his aim is to make the station profitable by Christmas. The question is: if the UK’s most listened to digital commercial radio station is still struggling to break even, what hope is there for the rest of the pack?

It is all very well for Lord Carter’s Digital Britain
Interim Report to “expect the radio industry to strengthen its consumer proposition [..] in terms of new and innovative content….” but, at present, the economics of digital-only radio stations simply do not add up. Not a single digital-only radio station has yet reached break even. How can realistic business plans for new commercial digital services be forged, when nine-year old Planet Rock has yet to make an operating profit, let alone recoup its accumulated losses?

If the commercial sector’s digital radio audiences offer cause for concern, the BBC’s comparable audiences are downright scary. With the exception of BBC7 (which remains the UK’s most listened to digital radio station), audiences for the BBC digital services are down substantially.

BBC Five Live Sports Extra can be excused because it is a part-time station whose listening fluctuates with the sporting seasons, but elsewhere:

  • hours listened to 1Xtra are down 18% quarter-on-quarter and down 3% year-on-year
  • hours listened to 6 Music are down 17% quarter-on-quarter
  • hours listened to Asian Network are down 29% quarter-on-quarter and down 23% year-on-year

Despite the BBC having launched its digital radio stations in 2002 and then having promoted them extensively on TV, radio and online, their growth of listening remains stubbornly linear. One quarter’s RAJAR results alone do not a trend make, but the worry must be that the volume of listening to these stations might have already plateau-ed. In other words, if everyone who would be interested in listening to, say 1Xtra, is already listening to the station after seven years of promotion, then there would be little headroom for further audience growth.

Planet Rock’s Malcolm Bluemel pointed out: "[The BBC] spend £7m a year on 6 Music and another £1m on marketing it. Our annual budget is £1m, plus £20,000 on marketing.” At some point in time, and sooner rather than later if the audiences of the BBC digital stations show further signs of having plateau-ed, the BBC Trust is likely to want to conduct a cost/benefit analysis to determine if its digital radio stations really offer the Licence Fee payer value for money. In Q4 2008, the peak half-hour audience of Asian Network was 29,000 adults, of 1Xtra 36,000 adults, of BBC7 68,000 adults, and of 6 Music 69,000 adults. The 2008 service budgets for these stations were £8.7m, £7.2m, £5.4m and £6.0m respectively.

Between the BBC and commercial radio, huge sums of money have been spent over the last decade on launching and running digital radio stations that have attracted relatively small audiences. In the meantime, new technologies (on-demand, downloads) have overtaken us. If the radio industry’s response to Lord Carter’s Digital Britain is simply to launch more new digital stations that will inevitably lose more money, the industry has missed the point.

We now live in an on-demand world where ‘content’, not ‘radio stations’, is what consumers increasingly demand. Perhaps we do not need more new radio stations, or even existing local commercial radio brands rolled out nationally as faux new digital brands. What we need is the ability for consumers to access engaging radio content, when, where and how they want it. The days of listener loyalty to one radio station are fading fast.

In these financially hard pressed times, it seems ridiculous to be creating more expensive, new broadcast ‘stations’, each of which are unlikely to attract significant amounts of listening, but each of which will use a huge amount of scarce radio spectrum. Today, I wanted to listen to the Northern Soul show from BBC Radio Stoke, followed by David Rodigan’s reggae show on Kiss, followed by WMPR’s breakfast show. What I need is not a new digital radio brand, but a ‘pick’n’mix’ menu system where I can easily create my own personal radio station – a bit like a Pandora or, but populated with radio programmes rather than just songs.

This will be the future………. and it will probably arrive as soon as the BBC has finished inventing it. Broadcast radio will continue to be an important medium for mass audience shows like Today, Terry Wogan and sports coverage. But, for any content that is remotely specialist, on-demand delivery will have to be the way forward, the result of economic necessity. In 2009, the idea of creating more radio stations, more radio brands, more costly 24-hour broadcast operations has to be wholly redundant. This is an issue that the BBC Trust will have to face up to much earlier than the commercial radio sector. Next quarter’s RAJAR could be that touchpaper.

In the meantime, the future of digital-only radio stations hangs in the balance. As Bauer Radio’s Mark Story had
told Media Week: “It’s going to be a long road for digital radio”. Then, twelve days after the latest RAJAR results were released, Mark announced he was leaving Bauer after eleven years’ service. He said: "To be brutally honest, it's not the most fantastic time to be in radio…..”

Thursday, 19 February 2009

DAB: there is no alternative?

The most startling suggestion in the recent report on "The Drive to Digital" commissioned by RadioCentre is the part that details the prerequisites for commercial radio to “forge ahead with DAB”:

This requires changes to terms of trade and the active support of the other principal players in radio – the government, Ofcom, the BBC and Arqiva – including commitment not to pursue alternative technologies to DAB” [emphasis added].

In other words, commercial radio considers that the way to make the DAB platform a successful technology is to force the remaining stakeholders – notably the BBC – to stop using other alternative digital delivery platforms (the internet, Freeview, Sky, FreeSat, mobile phones) to distribute radio. This would effectively force consumers who want to listen to, for example, digital station BBC7 to purchase DAB radios whereas, at present, the station can be received on the full range of digital platforms.

This sounds like an extreme solution to a challenging problem, beating consumers with a DAB ‘stick’. After almost a decade, the industry has had to reluctantly admit that its ‘carrot’ approach has failed to convince the public of the value of DAB radio. The RadioCentre report acknowledges that “[DAB] has been plagued by a damaging combination of slow take-up, poor coverage, high costs and uncompelling content” and that “there is not as much DAB-only material as hoped, and very little that’s truly compelling – there’s no ‘must have’ content as with sports & movies on Sky [TV]”.

The notion of forcing, rather than persuading, the public to use the DAB platform had been touched upon in the
Final Report of the Digital Radio Working Group published in December 2008. It noted that “many of the consumer groups believe that, once an announcement [of an AM/FM switch-off date] is made, no equipment should be sold that does not deliver both DAB and FM”.

Such a proposal would prove impossible to put into practice. Most consumer electronics hardware is made by global companies whose models benefit from ‘universality’ and not from having to manufacture a special UK-only version that would incorporate the DAB platform. Right now, there is not a single mobile phone on sale in the UK that includes the DAB platform, and that situation is unlikely to change because Nokia, Samsung, Sony, LG and Motorola understandably consider FM radio to be the universal radio platform.

A similarly unrealistic proposal for DAB surfaced in March 2008, when Channel 4 Radio commissioned an independent report that proposed:

to distribute one digital (DAB+) radio set [free of charge] to each household – approximately 26 million sets in total – to stimulate mass take up of digital radio. The sets would be provided over a period of three years, starting in 2010, with 80% distributed over the first two. The total cost of the ‘switch-on’ plan (DAB+ sets, marketing campaign and administration) would be £383m […]. Preliminary thinking is that distribution would use vouchers that would be redeemed in larger retail outlets or via promotional codes online”.

The report anticipated that such a mass consumer giveaway “could result in 60% digital listening by 2012” whereas, without it, “digital listening may not reach 60% until 2017, with analogue switch-off no earlier than 2020”. However, the hypothesis failed to consider that a household given a free DAB radio might not necessarily use it, if there were no radio content of sufficient appeal broadcast on the platform. Given that the average household has six radio receivers, a free distribution such as this might simply result in a glut of unused DAB receivers advertised on E-bay.

Such unrealistic proposals only serve to demonstrate a phenomenon highlighted by a web
site that is currently nominating DAB radio for the ‘Fiasco Award 2009’ in Spain:

“The fact that a technology is possible does not necessarily mean that people is willing to pay for it, and the fact that Institutions and Companies support it does not mean they did the necessary previous research: they were probably just thinking that they didn't want to be left behind.”

In the case of the DAB platform, its forced take-up would be the last opportunity remaining for the largest UK commercial radio owners to throw a protectionist cloak around their assets. Through their joint ownership of the DAB platform infrastructure in the UK, this handful of companies hope to limit UK citizens’ future radio listening to their content broadcast on their stations received via their DAB platform. To make this scenario work, of course it would be essential to eradicate competing digital radio platforms.

And why are radio owners so desperate? An excellent US article this week by Seeking Alpha’s
Jeff Jarvis expressed the reasons most eloquently:

“We’ve been wringing hands over newspapers and magazines, but TV and radio aren’t far behind. Broadcast is next. It’s a failure of distribution as a business model. Distribution is a scarcity business: ‘I control the tower/press/wire and you don’t and that’s what makes my business.’ Not long ago, they said that owning these channels was tantamount to owning a mint.
No more. The same was said of content. But it’s relationships (read: links) that create value today. Young [Broadcasting, filing for bankruptcy with $1bn debt] tried to build relationships, once upon a time. At WKRN in Nashville, Mike Sechrist did amazing work starting blogs, building relationships with bloggers, training the community in the skills of the TV priesthood. But he left and all that disappeared. Been there, done that, I can imagine executives saying as they try to stuff the hole in the dike with borrowed dollars. Didn’t work. The local TV and radio business, once a privilege to be part of, is next to fall. Timber.”

As if that was not enough, the credit crunch has exposed the flimsy financial arrangements of recent radio acquisition deals. This was perfectly explained by
Jerry Del Colliano’s consistently provocative US blog in an entry entitled ‘Radio: bankrupt in 6 to 12 months’:

“Consolidated radio groups are facing bankruptcy because some will not be able to restructure their massive debt -- the debt they acquired in the first place when they paid too much for overvalued radio stations. No one worried about it then. But now, it's time to pay the piper. Why else do you think radio people who know better are hunkering down for what they know is coming -- default.”

“One reader, a radio executive, claims New York money types are not just talking about the possibility of radio groups defaulting, but the probability. Some think it can happen within six months to a year. Radio groups like Cumulus, Univision, Clear Channel, Entercom -- in fact, most of them -- have structures that make it difficult to survive if debt cannot be restructured. And in case you haven't noticed, money is hard to come by these days…….”

“Radio groups are more susceptible because they are leveraged to such a high degree. That's the reason that the stock prices are so low. Shareholder equity is zero as every single penny of cash flow currently goes to servicing debt. Soon, they won't be able to service the debt and/or they will be in violation of covenants with the banks and/or equity lenders who will seek to take the stations back.”

If this sounds like cross-Atlantic doom-mongering, I assure you that there are UK banks out there already demanding their pound of flesh from more than one indebted UK radio group. 2009 will not be a pretty year. Particularly when Quarter 4 2008 UK radio revenues were down 15% year-on-year, their lowest quarter since 1999.

In these troubled times, proposing radio sector policies to preserve broadcasters’ oligopolies, or to artificially stifle the development of competing delivery platforms, is not what is needed. Sure, you might wish to be the only ship on the ocean but, if your rust bucket has a hole in its hull, you will drown anyway.

[thanks to The Guardian’s
Jack Schofield]

Tuesday, 17 February 2009

Localness: please, sir, can I have some less?

The government’s announcement that an independent review group will look at the ‘localness’ issues relating to content on commercial radio could re-ignite a war of words between the stakeholders that a year ago ended in a tense ceasefire. Last time, hostilities between the large radio owners and Ofcom became elevated to such an extent that the regulator’s chief executive Ed Richards even used the Annual Ofcom Lecture to chastise the commercial radio industry for its persistent lobbying to loosen its ‘localness’ obligations:

Some [radio owners] have called for a huge relaxation in relation to localness, some in the industry even call for a complete removal of all regulation. They believe that localness is either no longer valued or that its value is significantly outweighed by its cost. The problem is that the evidence is to the contrary. What our research tells us is that people continue to want to hear local programming. …. But we are not convinced that the market alone will deliver this if left to its own devices. We recognise very clearly the significant economic challenges faced by the radio sector, but our forthcoming proposals will not involve eliminating the obligation to deliver local programming or its reduction to a negligible level.”

Ofcom subsequently
published its policy statement on localness in February 2008 and although, on the surface, it might have looked as if a ceasefire had broken out between the two sides, behind the scenes the industry’s lobbying for further reductions of its ‘localness’ obligations continued regardless. Ofcom had estimated that its policy changes would save the radio sector £9.4m to £11.7m per annum from a cost base of around £620m. For the radio industry, these potential savings were simply not enough. Andrew Harrison, chief executive of RadioCentre, argued that “the heavy burden of the existing localness regulation and legislation [..] is holding back current profitability and future investment in the sector”. By December 2008, industry lobbying had succeeded in persuading the Digital Radio Working Group to recommend in its Final Report that:

commercial radio must be given greater freedom to shape its digital future to provide a sustainable future for local radio in a digital world through a relaxation of analogue localness requirements………”

and to
comment that:

“…. a model which focuses so heavily on where content is made may not be the best way to deliver either what listeners will most want in the future or allow the industry space to grow. We therefore recommend that the commercial radio sector, Ofcom and the government should look closely at the current localness regime in the coming months……..”

What proved interesting about last week’s government
announcement of the independent review into ‘localness’ was that it contained no mention of Ofcom whatsoever. Even though the press release noted that the review would examine “to what extent are the current requirements for a pre-determined number of hours of local content, and the locality in which content is produced, appropriate and sustainable”, as implemented by Ofcom, it did not mention the regulator by name. This omission is downright weird. The Communications Act 2003 states clearly that:

It shall be the duty of OFCOM to carry out their functions in relation to local sound broadcasting services in the manner that they consider is best calculated to secure: (a) that programmes consisting of or including local material are included in such services but, in the case of each service, only if and to the extent (if any) that OFCOM consider appropriate in that case; and (b) that, where such programmes are included in such a service, what appears to OFCOM to be a suitable proportion of them consists of locally-made programmes.”

Furthermore, the Act states that “OFCOM must: (a) draw up guidance….” and “OFCOM may revise the guidance from time to time”, but it “must consult” licence holders and stakeholders beforehand. The legislation is crystal clear as to where the responsibility resides. What we are seeing in the government announcement is an intervention at a higher level as a result of perceived dissatisfaction with the way that Ofcom has implemented its responsibilities on this “particularly contentious” issue, as Ed Richards described it

Ofcom’s 2007 consultation on ‘localness’ in radio had
elicited 43 responses and the regulator “noted the calls from the commercial radio industry for a reduction of locally-made programming….” Ofcom stated determinedly: “We believe that our proposed guidelines already represent a substantial deregulation of locally-made programming in many cases”. However, it looks as if further lobbying has undermined the Ofcom position, and the regulator is now being sidelined by direct government action on this issue, which could lead to new legislation or to new implementation of existing legislation.

So what precisely does the commercial radio industry want changed by Lord Carter in Ofcom’s localness requirements?

  • local commercial stations required to broadcast no more than 4 hours a day of locally made programming
  • regional commercial stations not required to broadcast locally made programming
  • local news broadcasts on local stations can be produced in centralised newsrooms
  • stations serving populations of less than 750,000 (i.e.: two thirds of the UK’s stations) permitted to locate their studios outside the area they serve
  • the 4 hours a day of ‘local’ programming can be simulcast across co-located stations and still count as locally made programming.

And what concessions would the commercial radio industry offer Lord Carter in return for its newly, co-located, networked content, ‘local’ stations?

  • news bulletins (not all local) 13 hours a day on local stations
  • news bulletins 24 hours a day (not all regional) on regional stations (13 hours a day on specialist music stations)
  • extended news bulletins (of unspecified length)
  • a commitment to safeguarding stations’ remaining local content (weather, traffic, what’s on, charity appeals, community information)

However, these demands and concessions position the ‘localness’ issue strictly in the context of content regulation. In fact, there is a much bigger game being played out, which concerns the further investment required in the DAB platform to try and make it a success with consumers. Essentially, the commercial radio industry is trying to put a gun to Lord Carter’s head and is demanding: ‘we won’t invest any more money in DAB to make it work, unless you stop Ofcom making us do local things we don’t want to do’.

The initial response to the commercial radio lobby was likely to be: ‘you acquired all these local radio stations, knowing that they had localness obligations. If you wanted a national radio station, why didn’t you buy one of those instead?’ It does seem a bit like Stagecoach begging the government to transform its local bus routes into a national coach service. However, Lord Carter is trying to grapple with the issues and forge a compromise whilst still insisting that “government can not, nor should it, be the main driving force for digital radio”.

The biggest danger here is that the ‘localness’ issue becomes a mere sideshow to the much more politically and commercially significant decision over the future of the DAB platform. As such, ‘localness’ risks becoming a mere pawn in a complex set of negotiations that are essentially designed to maintain the balance sheet valuations of the largest radio groups which have already made significant investments over a decade in costly DAB infrastructure.

Sadly, this is not the first time that the ‘localness’ issue has been invoked merely as a quid pro quo within a much bigger game. In the original Bill that became the Communications Act 2003, there was no ‘localness’ clause for local radio, just as there never had been in previous broadcast legislation. It was inserted at the last minute as what the then Minister for Broadcasting, Dr. Kim Howells MP, admitted was “the quid pro quo for greater liberalisation in the radio market”, allowing more concentrated ownership of local radio than the Bill had originally proposed. In the ensuing House of Commons debate, Michael Fabricant MP successfully stoked the flames of fear:

What if Clear Channel – a United States organisation for which I have a considerable respect, but which the [UK commercial radio] industry is rather concerned about – were to acquire a number of radio stations and found that it could pull in large audiences, based in the US, and not be all that local? Its presenters could be based in New York, for example, and it could put in pre-recorded local identifications. Everything could be done on a PC-based system. The stations would sound like local radio, even though they were not; and, because they had a good playlist, they might pull in a big audience. Would we not want back-stop powers in such a case?”

Six years later, neither Clear Channel nor its competitors have bothered to enter the UK radio market. Instead of the then touted prospect of US-financed global radio, we now have Irish-financed Global Radio wanting to run as much of its UK local radio empire as possible from Leicester Square. At the end of the day, for the listener, does the distinction matter whether a local radio station’s studio is in New York or New Bond Street? If I were a listener in NorthEast England, when I choose to listen to local radio, rather than national radio, if it does not fulfil my desire for ‘local’, then it offers me zero utility. If I am digging my car out of a three-foot snowdrift and the jolly ‘local’ radio presenter does not mention the inclement weather from her faraway studio, it simply isn’t local radio.

Surely, a ‘localness’ policy for radio should put the citizen/consumer/listener at the heart of its doctrine, something which Ofcom policies to date have failed to do. But neither does the commercial radio industry come out of this smelling of roses. I have yet to see one UK case study backed with evidential data which demonstrates that a decrease in local content on a local radio station has resulted in audience growth. Reduced costs? Yes. Improved profit margins? Yes. But local commercial radio stations have always been gifted scarce analogue radio spectrum for free, in return for their public service content commitments. A local radio station that is not trying to maximise its audience but, instead, aims to maximise profits by reducing costs, cutting local content and knowing full well that its audience will inevitably decline, would seem to be misusing valuable spectrum.

It remains to be seen whether this latest initiative to review radio’s localness requirements will result in new regulation that finally puts the listener at the centre of its policies, rather than simply responding to the needs of either the box-ticking regulator or the de-localising, large radio groups.

On a personal note, over several years I researched the issue of ‘localness’ and ‘localism’ in local radio, and I wrote an unpublished paper a year ago that examined the issues and suggested a way forward that would reinstate the local radio listener at the heart of localness regulatory policy. If the laws or regulatory regime do have to be changed, my only hope is that they are changed for the better, and not for the worse.

Wednesday, 11 February 2009

DAB: the medium of consumer choice?

It appears there may be a factual error in the Digital Britain Interim Report. I assume it was an accidental mistake in drafting. Obviously, a government document would not deliberately misrepresent the facts.

The Interim Report
states on page 32:
Dedicated analogue radio sets are no longer part of the retail mainstream: analogue continues to be used in bundled products (e.g. radio alarms). But, in dedicated radio, DAB has become the medium of consumer choice.”

There are two distinct assertions here:

  • dedicated analogue radio sets are no longer part of the retail mainstream
  • DAB has become the medium of consumer choice

The second assertion was made by the Interim Report strictly in the context of “dedicated” radio hardware, but the statement was quickly abstracted as a standalone fact. The Guardian wrote that the Report “said DAB had become ‘the medium of consumer choice’”. The Telegraph wrote that “the Report states that DAB digital radio has ‘become the platform of choice’ for radio listening in the UK….” and, in a separate article, said that “Ministers claimed that DAB radio is now ‘the medium of consumer choice’” though it questioned the assertion. Marketing Week wrote that the Report “says DAB has become ‘the medium of consumer choice’ in the UK….” This same assertion was repeated on web sites such as Broadcasting World and Radio-Info.

dedicated analogue radio sets are no longer part of the retail mainstream

I have sat through several Powerpoint presentations at radio conferences, both in the UK and overseas, which claimed that analogue radio receivers (AM/FM) have almost disappeared from retail outlets in the UK. The facts tell a very different story.

A survey of electronic consumer goods on sale from the web sites of three of the UK’s most prominent consumer electronics retailers reveals that the analogue radio platform is still alive and well. In fact, at Argos and Comet, electronic goods incorporating the analogue radio platform solus continue to outnumber those with digital platforms.

Interestingly, when DAB radio receivers were first introduced, most models were single-platform (such as the ‘Pure Evoke 1’). This has changed significantly, so that the vast majority of DAB radio receivers presently on sale are dual-platform (mostly DAB + FM). This change provides a significant ‘safety net’ at all levels of the value chain, should the DAB platform fail to develop into a mass medium for radio broadcasting.

For consumers, the incorporation of the FM platform into DAB radios should encourage hardware purchase, removing the perceived risk of platform failure (viz ITV Digital). However, the continued availability of the FM platform in ‘DAB radios’ is likely to impact consumer usage of the DAB platform. If a consumer buys a ‘DAB radio’, but they continue to use the FM platform incorporated within the hardware for part of their radio listening, they are contributing to the DAB platform’s struggle to gain sufficient traction that FM broadcasting can ever be switched off.

Additionally, one wonders how many RAJAR respondents use their ‘DAB radio’ to listen to stations on the incorporated FM platform, but report this listening in their diaries incorrectly as ‘digital’ rather than ‘analogue’. Surely, if I buy a ‘digital radio’ which clearly says ‘digital radio’ on its facia, then all the content I listen to using that radio must be ‘digital radio’? No wonder the marketplace is confused.

Examining the other side of the retail marketplace, in terms of consumer purchases of DAB radios, an appendix attached to the Digital Britain Interim Report
demonstrates (page 41) clearly that the vast majority of radios purchased in the UK are not DAB, according to data collected by GfK for the Digital Radio Development Bureau. The graph below updates this same data:

The data show that 79% of radio receivers purchased in the UK during the last twelve months were analogue and did not incorporate the DAB platform. The vast majority of radios sold in the UK continue to be analogue, not DAB, which is why, as demonstrated above, electronics retailers continue to stock so much hardware incorporating analogue radio. In some types of hardware, notably personal media players, the market is still almost entirely dominated by analogue radio (in those models that include radio).

In conclusion, the assertion made in the Digital Britain document that “dedicated analogue radio sets are no longer part of the retail mainstream” seems incorrect.

DAB has become the medium of consumer choice

The latest RAJAR radio audience data from Q4 2008 demonstrate that the overwhelming majority of radio listening continues to be consumed via the analogue platform, not via DAB.
In the case of commercial radio, 10% of hours listened are via the DAB platform, whereas 68% of hours listened are via analogue.
For BBC radio, 13% of hours listened are via the DAB platform, whereas 70% of hours are consumed via analogue.

In conclusion, the assertion made in some press coverage that “DAB has become the medium of consumer choice” is incorrect.


Analogue radio is alive and well in the UK because consumers continue to demand and purchase electronic goods that incorporate the analogue radio platform; and because radio listeners are consuming content predominantly delivered via the analogue platform. These are the facts.

Tuesday, 3 February 2009

Digital Britain: the devil is in the indefinite article

Commenting last week on the publication of the government’s Digital Britain report, RadioCentre Chief Executive Andrew Harrison said that “the devil will be in the detail”. Absolutely true because, sometimes, a single word can tell you more about the direction that government policy is taking than a weighty tome. In the case of DAB, the wording of the Digital Britain report raised one such question: does the government want the DAB platform to supplement FM/AM radio, or does it want DAB to supplant it?

Final Report of the Digital Radio Working Group last December had recommended:
DAB as the primary platform for national, regional and large local stations” [emphasis added].

However, last week’s
Interim Report of Digital Britain made a commitment:
to enabling DAB to be a primary distribution network for radio” [emphasis added].

This may seem like an insignificant detail but, for the radio industry, it certainly is not. If DAB is to be the primary platform, the implication is that if your radio station is not available on the DAB platform, your business will be marginalised. It implies that the FM and AM platforms will be closed down, which would be a disastrous outcome for smaller commercial radio stations who may not be able to afford the cost of DAB transmission and/or who cannot find space on their local multiplex (if that multiplex even exists) [see ‘
Committed to its listeners’].

On the other hand, if DAB is to be a primary platform, the implication is that it will be available to consumers as an adjunct to existing FM/AM radio and to IP-delivered content. In this scenario, the ideal radio receiver of the future will be one which, to the user, is ‘platform neutral’ but has capabilities to receive DAB, FM/AM and IP. The user would simply select “Radio 4: live” on the radio’s interface and the radio itself would determine which was the most reliable delivery platform in that location to serve Radio 4 live. Or, the user might select “Radio 4: The Archers” and it would deliver the most recent episode by IP.

Strangely, the subtle difference between “a” and “the” seemed to be ignored by some stakeholders:

Laurence Harrison, director of consumer electronics at Intellect,
"This commitment to DAB as the primary distribution network for radio is exactly the sort of strong and decisive leadership we wanted to see from government” [emphasis added]

Frontier Silicon, in its first
press release:
“…..welcomed the Government's commitment to DAB as the primary distribution network for future radio broadcasting in the UK” [emphasis added]

Frontier Silicon, in a second
press release:
“…..the Government’s endorsement of the digital migration of radio and commitment to DAB as the primary distribution network for future radio broadcasting” [emphasis added].

The precise wording was also reported badly by some media:

The Guardian’s Media Monkey
“….DAB radio was the ‘primary distribution network’ for radio….” [emphasis added].

The Sunday Times
“….DAB digital technology, set to become the ‘primary distribution network’ for radio….” [emphasis added].

The Daily Mail
Lord Carter, the Communications Minister, said: 'We are making a public commitment to DAB as the primary distribution medium'…” [emphasis added].

The Telegraph
The Digital Britain report…… gives a firm commitment to digital radio (DAB) as the primary way of listening to content in the future” [emphasis added].

The culture secretary said digital audio broadcasting (DAB) will become the ‘primary distribution network’…..” [emphasis added].

No wonder the public is confused. The potential implication of the Digital Britain report on areas of the UK where DAB reception is presently non-existent is just starting to be realised. “FM reception in Eden Valley may disappear” said one local Cumbria newspaper
headline yesterday. More coverage like this will inevitably follow.

How many civil servants must have scoured the precise wording of the Digital Britain report before it was published? The change of emphasis from “the” to “a” is unlikely to have been accidental. If the DAB platform were to fail (no acceleration in consumer take-up, no increased exclusive content), then the government will find it needs a ‘get out of jail free’ card. The word “a” provides it with the perfect caveat, next month, next year, whenever.