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.

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 my blog]. Commercial radio’s audience 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.

When UK radio listening figures are this good, why does RAJAR need to fib?

It is good to know that radio is still an extremely popular medium in the UK, something borne out by the latest radio audience metrics published by industry body RAJAR for Q1 2011. However, in its determination to make every quarter’s results newsworthy, RAJAR has a track record of bending the truth to achieve press headlines [see my blog May 2010]. This latest quarter was no exception.

According to the RAJAR headline:
• “Total radio listening hours reach 1,058 million per week – new record.”^

RAJAR explained:
• “The total number of radio listening hours broke all previous records to reach 1,058 hours per week …”^

Fantastic news! Except that this is not at all true. RAJAR’s own historical data tell a different story:
• 1,088 million hours per week in Q2 2001
• 1,092 million hours per week in Q3 2001
• 1,092 million hours per week in Q4 2001
• 1,090 million hours per week in Q1 2002
• 1,072 million hours per week in Q4 2002
• 1,094 million hours per week in Q1 2003
• 1,066 million hours per week in Q3 2003
• 1,076 million hours per week in Q4 2003
• 1,086 million hours per week in Q1 2004
• 1,072 million hours per week in Q2 2004
• 1,068 million hours per week in Q3 2004
• 1,059 million hours per week in Q1 2005
• 1,068 million hours per week in Q2 2005
• 1,072 million hours per week in Q3 2005
• 1,060 million hours per week in Q4 2005
• 1,063 million hours per week in Q3 2006

During sixteen quarters between 2001 and 2006, total hours listened to radio were greater than they were last quarter. “New record?” No. “Broke all records”? Er, no.

The reality is that total radio listening has not yet returned to the level it had achieved in 2001. Except that, ten years ago, the UK adult population was 48.1 million, whereas now it is 51.6 million. So the population has increased by 7% over the last decade. Yet total UK radio listening is still less than it was then.

Most statisticians I know would refer to that as a like-for-like 7%+ decline in total hours listened to radio. However, to RAJAR, it is evidently a “new record” that “broke all previous records.”

Why does any of this matter? Because radio broadcasters have been progressively losing usage over most of the last decade. Initially, it was 15 to 24 year olds that were spending less time with radio. Increasingly, it is also 25 to 34 year olds. For a decade, the UK radio industry has desperately needed a coherent strategy to reverse this loss of listening. The decline in young adult listening to broadcast radio does not merely impact the NOW. If these consumers do not find anything in their youth worth listening to on the radio, they will grow old without the radio habit. Their radio listening patterns NOW are likely to influence radio listening for the next half-century.

This is why RAJAR’s continuing efforts to achieve yet another headline in the Daily Mail proclaiming “Radio listening at an all time high” are ultimately redundant. Those headlines do not impact the reality of the data collected from tens of thousands of radio listeners every month. Those data show incontrovertibly that listening is in significant long-term decline amongst younger demographics. And radio will be in mortal danger if it does not re-invent itself for the next generation.

You only have to listen to any pirate radio station in London to understand that the gulf between what young people are actually listening to and what the old fogies who run UK radio are giving them has never been wider. Chris Moyles is as passé as Dave Lee Travis was twenty years ago.

So, yes, RAJAR’s fibs and the resulting Daily Mail headline will be another opportunity for champagne corks to pop in radio boardrooms across the land. But if radio doesn’t start making itself exciting and relevant to young people, broadcast radio’s future role will be relegated to a soundtrack in old people’s homes. Complacency such as that propagated by RAJAR will only make many radio businesses redundant in the long run.

^ in a footnote this small, the RAJAR press release admits the caveat “since new methodology was introduced in Q2, 2007.”

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]

DAB radio: a national platform that no one wanted

In 1998, the Radio Authority advertised a licence for the “first and only national commercial digital [DAB] multiplex licence.” There was no stampede of applicants. By June 1998, the regulator had to issue a press release with the headline “Radio Authority receives one application ….” The sole applicant was ‘Digital One’, 57% of which was owned by commercial radio’s GWR Group plc, whose chief executive Ralph Bernard later admitted:

“GWR was encouraged to apply for the national [DAB multiplex] licence and was under some pressure to invest in the opportunities for a national licence from the then regulator. Had we not done it, there would be no national DAB platform now. Not only that, [the regulator] did not know what they would have done on the question of national radio stations with regard to the opportunities given by the then government to renew their national licences for a further period of time if they were to commit to going digital. But how can you [do that] if there are no opportunities to go digital because there is no national multiplex? When I put that question to the Radio Authority, I was told that the answer was: ‘We don’t know what would happen – there is no Plan B’. It was just an assumption that someone would go for [the national multiplex].”

Bernard had a hard time convincing his own board that the DAB licence was a worthwhile investment for a radio group that, until then, had owned radio stations rather than transmission infrastructure:

“When we were seduced into believing that this was going to be the only [national DAB] licence, we realised that there would be substantial losses, but the payback would be when you have the opportunity to be the only player in the national market for DAB. When it’s the Radio Authority, an agency of government, you tend to believe what you are told. On that basis, the investment was justified and, at the time, getting it through my Board was not easy. Persuading shareholders, particularly the larger ones, was not easy.”

Now, twelve years later, GWR Group no longer exists, Ralph Bernard is out of the commercial radio business, but the ‘Digital One’ national DAB platform is still there. Nobody really wanted it in 1998, and nobody really seems to want it now. Its ownership has changed hands like pass-the-parcel, GWR Group plc having merged into GCap Media plc, which was then sold to Global Radio which, in 2009, sold its majority stake in Digital One to transmission provider Arqiva. How many millions were thrown at Digital One over the years by GWR, GCap and Global Radio will probably never be known.

The only thing cheap about Digital One was the cost of its initial 12-year licence, a mere £10,000 per annum paid to the regulator for the radio spectrum it uses. The business model was that Digital One would lease space on the DAB platform to radio stations that would pay it rent (about £1m per year, dependent upon audio quality). Since opening for business in 1999, many digital-only stations have tried using the platform but, to date, almost none have stuck around. No digital radio station has yet made a profit.

The latest additions to the lengthening list of stations that have failed to make the national DAB platform work for them are NME Radio and Panjab Radio, both of which quit Digital One in June 2010 (see shaded area of table). The reason? Almost no one was listening. Add together the digital-only stations broadcasting on the platform last quarter (and that are measured by RAJAR) and, in total, they accounted for less than 1% of total radio listening.

Yet the radio industry, the receiver manufacturers and their lobby groups are still spending money on campaigns to convince the public that DAB radio is a raging success. Digital One says its radio platform reaches “more than 90%” of the [UK] population,” equivalent to 46 million adults. RAJAR tells us that 35% of those adults have a DAB radio. Yet only 226,000 adults per week listened to NME Radio, after nearly two years on-air. If you were in any way persuaded to believe the hype surrounding DAB, your business plan to start a digital radio station might look dangerously over-optimistic.

When NME Radio launched in June 2008, it had forecast that its audience would reach 396,000 adults per week by its second year. For most of its life, the station was broadcast on local DAB multiplexes (and online). Then, from 21 December 2009, NME Radio was made available nationally on DAB for an eight-month trial. Broadcasting to a much bigger potential audience, there should have been a positive uplift to the station’s performance in Q1 2010. However, there was no noticeable impact upon adult reach (226,000) or hours listened.

In its forecasts, NME Radio had projected that DAB would be “53%” by 2010. Maybe this referred to Ofcom’s forecast that, by year-end 2010, digital platforms (not DAB alone) would account for 50% of all radio listening. In fact, in Q1 2010, only 15% of listening to all radio was via DAB, and 24% was via all digital platforms (worse for commercial radio at 12% and 23% respectively). Ofcom’s forecast of how digital radio usage would grow was disastrously inaccurate. NME Radio did not stand a chance of commercial success using DAB.

The other digital radio station that quit the national DAB platform in June 2010 was Panjab Radio. Like NME Radio, it had broadcast via local DAB multiplexes (and online), but was then made available nationally on DAB for a six-month trial from 1 December 2009.

There was no lift to Panjab Radio’s audience in Q4 2009, but the following quarter saw a noticeable increase to 172,000 adult reach and 913,000 hours listened per week. This was almost twice the amount of listening that NME Radio recorded on the national DAB platform, a real achievement for an ethnic radio station.

The day Panjab Radio had joined the national DAB platform, Digital One operations director Glyn Jones said:

“Like Premier Christian Radio and UCB UK, Panjab Radio relied on a fund-raising appeal to pay for the launch of the station. It’s interesting to see the growth of listener-supported stations, and the way they’re extending the range and choice of stations on air via digital radio. These are stations that neither a traditional commercial model nor the BBC have chosen to provide, but which listeners value so much that they’re prepared to help pay for them out of their own pockets.”

The sub-text was that the Digital One national DAB platform cannot support a commercial digital-only radio station because the financial returns are simply insufficient to cover the expense for it to lease space on the platform. If Panjab Radio had managed to sell advertising at the average commercial radio sector rate, it should have generated £1m per annum of revenue. However, an industry study in 2009 found that the average digital radio station generated only £130,000 revenue per annum (and Panjab Radio attracted less listening than others).

When Panjab Radio quit the national DAB platform in June 2010, Digital One’s Glyn Jones issued a press release that seemed over-eager to deflect the blame:

“Panjab Radio’s revenues come from a mix of traditional radio advertising plus fund raising among Britain’s Panjabi and Sikh communities. Following a strategic and financial review the station opted to end its national transmissions but to continue to broadcast on DAB digital radio in three parts of the country with significant concentrations of the target audience – the West Midlands, West Yorkshire and London.”

As the table above demonstrates, the national DAB platform’s history is littered with commercial digital radio stations that failed to make it work for them. Most of the stations currently on the national DAB platform are non-commercial and so do not need to meet their costs from advertising revenues. But religious stations, army radio and unsigned artists do not come close to the mass market purpose for which the platform was originally envisaged. Did GWR Group make its substantial investment in national DAB in the expectation that, after a decade, the platform would be filled with subsidised radio stations attracting tiny audiences?

Two years ago, I had written:

“This sudden flowering of ethnic, religious and publicly-funded radio stations on the DAB platform echoes the fate of the ‘AM’ waveband in the 1990s … The ‘DAB’ platform of 2008, particularly in London, is already starting to resemble the ‘AM’ platform of 1998, suggesting that ‘DAB’ might have already been written off by the sector as a means to reach the ‘mass market’ audiences that national advertisers desire from the medium.”

Since then, this desperate filling of DAB multiplex capacity with non-commercial stations has spread from London to the national platform. Bizarrely, given the overwhelming empirical evidence that this “first and only national commercial” DAB platform is not working, even after a decade of operation, Ofcom is keen to create a second quasi-national DAB platform. Its rationale is that:

“This could help to facilitate the creation of national commercial radio stations to create a consumer proposition analogous to that of Freeview: a wide range of popular and niche services, delivered digitally” because “we believe DAB still offers the best solution for the future growth of radio in the UK.”

This nonsense was written in an Ofcom report less than a year ago, when the writing on the wall could not have been larger that the national DAB platform’s future for commercial radio was doomed. Surely, a regulator that refuses to deal with the reality of the here and now could be a regulator that will eventually find it has no future. For years, Ofcom (and its predecessor) have led the commercial radio sector a merry dance down a DAB blind alley that has proven almost fatal to the industry’s economic health.

If Ofcom publishes one more policy document proclaiming (as if it were still 1998) that ‘the future of radio’ is DAB, rather than it working to bang industry heads together to find a practical route out of the present mess, all it will succeed in doing is writing its own epitaph.

What is RAJAR’s function? Cheerleader or research bureau?

This week’s publication of the latest UK radio listening figures begs the question as to what RAJAR’s function is:

* Is RAJAR a cheerleader for radio, to convince Licence Fee payers and advertisers how successful radio is? Or,
* Is RAJAR a serious research agency providing objective data to advertisers and advertising agencies about radio audiences?

I ask because this week’s media coverage of the latest RAJAR results seemed to result entirely from the cheerleader role, while the objective data role was nowhere to be seen.

The Guardian headline said: “Radio’s booming”. The BBC News headline said: “Radio listening soars”. The Media Week headline said: “Radio industry buoyed by strong Q1”. The Drum headline said: “All time radio high”.

So the radio sector is apparently performing better than ever? Well, if you believe the opening statements of the RAJAR press release:
* “Radio listening reaches an all time high as 46.5 million adults tune in to radio”;
* “Radio listening in the UK has reached an all time high as 46.5 million adults, or 90.6% of the UK population (15+), tuned in to their favourite radio station each week”.

The question is: who is this press release for? Certainly, it is not for the people who use RAJAR data for their work – buyers in advertising agencies and advertisers – who know from their daily examination of the detailed numbers that “radio listening” is certainly not at all at an all-time high. Rather, the volume of radio listening has been in decline since 2003, a long-term trend that shows no sign of abating.

The RAJAR press release is deliberately misleading in its use of wording. This is by no means the first time. Previous RAJAR press releases have claimed that radio listening has hit some kind of high. In RAJAR-land, every day seems to be a sunny day. This is the kind of PR puff we come to expect from commercial companies. But RAJAR is not selling anything. It is meant to be providing objective radio listening data to the media sector. It is funded jointly by the BBC Licence Fee and commercial radio.

In fact, the “all time high” assertion in the RAJAR press release derives solely from the fact that more people are listening to radio than ever before. This is good news, but the number of people listening to radio is at an “all time high” for the same reason that hospitals have more patients than ever, schools have more children than ever, and public transport has more users than ever. The adult population of the UK is increasing by around 1% per annum. More people = more people using things.

So from where does the RAJAR assertion “radio listening reaches an all time high” derive? It is nothing more than hot air. If, in using the phrase “radio listening”, RAJAR had meant to imply “the volume of radio listening”, then it is a plain lie.

More people are listening to the radio, but they are listening for less and less time. The volume of radio listening, the total number of hours that all UK adults spend listening to the radio, has been declining since 2003. Here is a graph of RAJAR’s own data that shows it.

The average amount of time adult radio listeners spend listening to the radio has been declining dramatically over the same period. Here is a graph of RAJAR’s own data that shows it.

Are either of these facts, from the same research, mentioned in the latest RAJAR press release? Of course not. Why? Because RAJAR’s cheerleader role seems to require it to publicise a metric for radio listening that shows an increase: the absolute number of people listening, in this press release.

Here is a graph that shows the increase in the UK adult population and the number of people listening to radio. When the estimated population goes up, the estimated number of radio listeners goes up!

The airtime buyers in advertising agencies who have to use RAJAR data on a day-to-day basis probably chuckle at the preposterousness of the RAJAR press releases, laugh at how gullible the media are to simply reprint their headlines, and then go back to their work.

For some people (like me, having analysed radio audience data for 30 years), it creates market confusion. Clients are understandably puzzled and baffled when they see a presentation that clearly shows radio listening is in decline in the UK. They inevitably ask with suspicion: “But didn’t RAJAR just say that radio listening is at an all-time high?”

So why is RAJAR hell bent on this policy of trying to pull the wool over people’s eyes? Why does it need to be a public cheerleader for radio when we already have RadioCentre, the Radio Advertising Bureau and the BBC Press Office, each issuing their own PR puff on the RAJAR results? The RAJAR press releases might convince journalists, but they certainly don’t fool the media industry players. Instead, the opposite effect is probably the case.

How can the radio industry expect to be treated seriously within the wider media sector when its industry ratings body, charged with publishing objective listening data, insists upon grabbing headlines with misleading facts about radio audiences?

Digital radio stations: listeners abandon ship

The latest RAJAR radio audience data demonstrated one thing clearly: the UK radio industry’s strategy for its digital stations is in tatters. Audiences for digital radio fell off a cliff during the last quarter of 2009. This did not appear to be the result of any specific strategy shift (no station closures, only one minor format change) but more the result of increasing public malaise about the whole DAB platform and the radio content that is presently being offered on it (plus a little Q4 seasonality) . The figures speak for themselves.

Total listening to digital radio stations is back down to the level it achieved in 2007, following a period of sustained growth between 2000 and 2007. Far from moving towards some kind of exponential growth spurt as the industry had expected, total listening now seems to have plateau-ed. It appears that market saturation has already been reached for much of the content presently available on digital radio platforms, considerably earlier than had been anticipated, and at a level of listening that cannot justify these stations’ existences for their commercial or BBC owners.

In the commercial sector, only Planet Rock has maintained its momentum, probably a reflection of its commitment to offering its listeners genuinely unique content. Elsewhere, the jukebox music stations have suffered massive falls in listening, possibly a result of their ease of substitution by online offerings such as Spotify and Last.fm, and of owner Bauer’s policy to curb investment in digital radio broadcast platforms and content.

Commercial radio has talked the digital talk for years about striving to make DAB a successful platform, vaguely promising new digital radio ‘content’ that it has still not delivered. Instead, it has spent the last few years cutting costs, consolidating, lobbying the government, complaining about the BBC, closing its digital stations and contracting out its DAB capacity to marginalised broadcasters (religious, ethnic, government-funded and listener-supported stations) that will never attract mainstream audiences to the platform (and whose listening is not even measured in the RAJAR audience survey).

From the listener’s perspective, the only thing that has happened to the DAB platform in recent years is the disappearance of commercial digital stations such as OneWord, TheJazz, Core, Capital Life and Virgin Radio Groove. For the average consumer, the arrival of Traffic Radio, Premier Christian Radio or British Forces Broadcasting Service are hardly replacements.

A report commissioned by RadioCentre from Ingenious Consulting in January 2009 concluded:

“Commercial radio is now at a crossroads with respect to DAB. It needs either to accept that the commercial challenges of DAB are insuperable and retreat from it – such a retreat, because of contractual and regulatory commitments, would be slow and painful; or strongly drive to digital.”

In the year since this report was prepared, commercial radio has done neither. Instead, it has spent a small fortune on parliamentary lobbying, not one iota of which has had a direct impact on 10 million increasingly baffled DAB radio receiver owners. These latest RAJAR data convey their clear message that content is their only concern.

For the BBC, the problem is somewhat similar. With the exception of Radio 7, listening to its digital radio stations remains unimpressive, despite them benefiting from massive BBC cross-promotion over many years. Some stations are outright disasters – Asian Network is listened to less now than it was almost seven years ago, when only 158,000 DAB radios had been sold. Some stations are simply not suited to the DAB platform – 1Xtra targets a youth audience who listen to a lot of radio online and via digital TV, but who have little interest in DAB (particularly as DAB is not available in mobile phones). Some stations will become redundant in an increasingly on-demand world – Radio 7 would eventually be little more than a shopfront for the huge pick’n’mix BBC radio archive to be made available to consumers online.

For the BBC, it is becoming increasingly hard to justify spending, for example, £12.1m per annum on the Asian Network when its peak audience nationally is only 31,000 adults. Broadcast platforms such as FM attract huge audiences for a fixed cost, making them the most efficient distribution system for mass market live content. As a result, Radio 1 costs us only 0.6p per listener hour. By comparison, the Asian Network is costing 6.9p per listener hour, probably making it more expensive to ‘broadcast’ than to send each listener a weekly e-mail attaching the five hours of Asian Network shows they enjoy.

The BBC should still be congratulated for creating new digital radio services in 2002 that attempted to fill very specific gaps in the market which commercial radio was unlikely to ever find commercially attractive. This is precisely why we value a public broadcaster in the UK. However, the BBC digital radio strategy over the last decade has suffered from:
*   The BBC’s evident inability to successfully execute the launch of genuinely creative, innovative radio channels that connect with listeners (GLR, the ‘new’ Radio 1, the original Radio 5); and
*   The BBC pre-occupation with constantly creating new ‘broadcast channels’ when most niche content is more suited to narrowcasting and delivery to its audience via IP (live, on-demand or downloaded).

For the UK radio industry, its digital ‘moment of truth’ has belatedly arrived. A new strategy now has to be adopted which does not continue to raise the DAB platform to the level of a ‘god’ that has to be worshipped above all others. The future of radio is inevitably multiple-platform and the industry’s focus has to be returned to producing content, rather than trying to control the platforms on which that content is carried.

I suspect that Tim Davie, director of BBC Audio & Music, will eventually lead these winds of change, following in the wake of director general Mark Thompson’s pronouncements at the end of this month as to where the internal financial axe will fall. Where the BBC leads, commercial radio will inevitably (have to) follow.

The future digital radio strategy is likely to be ‘horses for courses’. Rather than all radio content being delivered via all available platforms, it will in future be delivered only where, how and when it is most demanded by listeners. Our economic times make this mandatory. The DAB platform’s mass market failure will make it necessary.

Kiss FM: it’s the same old songs

London dance music radio station Kiss FM has re-scheduled its specialist shows to slots after midnight, according to The Guardian, and has cut their duration from two hours to one hour. Almost nobody listens to radio on a weekday after midnight, RAJAR audience data show, so the policy change condemns these shows to a radio graveyard that is very close to extinction.

According to Kiss FM specialist DJ Logan Sama: “The shift of focus away from upfront specialist music to more playlisted hours is one which the management feel will enable the station to compete with the likes of Capital and Galaxy FM. All of the genre-specific late-night shows took the brunt of the hit.”

When Kiss FM was launched in 1990, its specialist music shows started at 7.30pm on weekdays, and the preceding half-hour magazine show ‘The Word’ created a watershed between the daytime mainstream playlist and the more radical evening shows. There was a specific commitment in the station’s licence to broadcast these shows so that Kiss FM would give airplay to music unheard anywhere else on the radio in London.

In the intervening years, through attrition, Kiss FM’s owner (EMAP then, Bauer now) has succeeded in ‘persuading’ the regulator to loosen these licence requirements for the station to broadcast specialist music shows. To its discredit, the regulator has seemed happy to go along with such proposals, permitting Kiss FM to be turned into a much more mainstream hit-orientated station than it was ever intended to be.

What the regulator and some radio owners seem to fail to grasp is that, in a crowded radio market such as London, one station can attract a significant (and loyal) audience by doing something deliberately different, both from its competitors and from its own daytime mass-market output. This works both commercially and altruistically. In the case of Kiss FM, advertisers can reach a niche audience that daytime shows do not deliver (if I organise a reggae concert, the best place to advertise it is in a reggae radio show); citizens are offered a genuine extension to the ‘listener choice’ that the regulator loves to cite.

This is not just a theory – there is plenty of empirical evidence to demonstrate how it works. Look at Helen Mayhew’s evening ‘Dinner Jazz’ show on the original London Jazz FM, which was almost the only show on the station that delivered 100% jazz music, but also had higher ratings than any of the daytime playlisted output.

Kiss FM itself provides a good example of what can be achieved. In the graph above, the red line shows the current audience of Kiss FM London (RAJAR, Q3 2009) peaking at 147,000 adults at breakfast between 8 and 8.30am, then falling to a minimum of 1,000 adults by the early hours of the next morning. This is the normal pattern of listening for a mainstream music radio station in the UK.

The blue line shows the Kiss FM London audience a decade earlier in 1999 when specialist music shows still occupied the weekday evening hours. Note that, in the evening, during most of the hours from 7pm to midnight, the audience was bigger a decade ago than it is now. Has the subsequent replacement of specialist music shows with mainstream music in the evening improved Kiss FM’s audience at those times? Apparently not.

After the station launched in 1990, the daytime audience was lower than it is now, but the evening specialist music programmes generated huge audiences. Some of the Kiss FM evening shows attracted more listeners than any other London station in these evening timeslots, ranking them #1 in that daypart.

This was not an accident. Kiss FM’s original schedule was deliberately designed to attract significant audiences to each of a wide range of specialist music shows broadcast on weekday evenings. Listeners loved them – individual shows were promoted heavily on-air and in specialist music magazines. Advertisers loved them – the rates were cheaper than daytime and the spots regularly sold out.

Doing something different on-air can reap rewards, if you satisfy genuine listener demand and promote the hell out of it, so that people know the programmes are there. But, if you simply do the same in the evening that you are doing during daytime, your station is going to have much the same declining listening pattern as any other radio station.

If you compare Kiss FM’s current listening pattern to that of its competitors, you can see from the graph above that it delivers much the same weekday shape – a continuous decline from a peak at breakfast. The exception amongst the London commercial stations is Magic’s unusual peak between 10 and 11pm. Why? Because it schedules ‘The Mellow Ten At Ten’ each weekday evening from 10pm, a one-hour feature that breaks from its playlist.

Also noteworthy in the graph is the unusually high evening audiences achieved by Choice, with more listeners than the station attracts during the afternoon. Why? Because Choice schedules specialist music shows during weekday evenings (mixes, reggae, hip hop). Again, being different can pay off for both audiences and advertisers.

This concept – that individual radio stations often struggle to sound the same, even though ‘daring to be different’ pays dividends – has been understood since the earliest days of media theory. American economist Peter Steiner wrote:

“…. the existence of [different] program types and [different] audiences therefor is assumed by the broadcasting industry and forms the basis for [station] program decisions. In this case, it is the assumed size and distribution of listeners’ preferences that is decisive in determining the amount of [programme] duplication that will result. If, as is often suspected, broadcasters exaggerate the homogeneity of audiences and their preferences for certain program stereotypes, the tendencies towards [programme] duplication will be increased.”

Writing in 1951, Steiner already recognised that radio station owners will tend to duplicate each others’ formats and programme scheduling, rather than offering their audiences something different or unique. He wrote:

“The problem, of course, is that a series of competing firms, each striving to maximize its number of listeners, will fail to achieve either the industry or the social good. Here, then, competition is providing a less than desirable result.”

In the UK, our government created a broadcast regulator to intervene in the market to ensure that commercial radio station formats maximise the ‘social good’, as Steiner refers to it. The UK is in a very different situation from the US, where the regulator (FCC) does not interfere in the formats of radio stations. But the UK system will only work if the regulator understands the economic and social imperatives for market intervention and exercises those powers appropriately.

The increasing marginalisation over the years of Kiss FM’s specialist music programmes demonstrates that the regulator is oblivious to the economic and social imperatives to regulate. Instead, it is simply conspiring to deny both listeners and advertisers the programme diversity they should be entitled to. The fact is that ‘light touch’ radio regulation is not regulation at all, any more than driving a car with no hands on the steering wheel would be considered by a court to be ‘driving’.

A regulator that simply allows market forces, in Steiner’s words, to produce “a less than desirable result” is not regulating. The Independent was quick to blame Kiss FM’s owner:

“Once the king of pirate radio, the legendary station Kiss is being dragged into the mainstream by owners Bauer Media, which will today cut back a number of the Kiss specialist music shows and axe several presenters in order to reposition the network to take on Global Radio operations such as Galaxy. Shame.”

However, the blame should fall squarely on the regulator for allowing a station owner to pursue an objective that further restricts consumer and advertiser choice. There is no ‘free market’ for radio in London – the gap in the market created by Kiss FM’s marginalisation of specialist music genres and DJs will not be filled by another licensed radio station …… only by London pirate stations.

Pirate radio stations seem to be the only ones that implicitly understand Steiner’s competition theories perfectly, and they risk the consequences for putting them into action. Pirate radio’s popularity is no accident – it is a direct outcome of the failure of the regulator to regulate.

Internet radio: denigrate it, ignore it, marginalise it … consumers will still listen

It was a surprise to find that the entire front page of the most recent issue of the World DMB Forum’s global newsletter (‘Eureka!’) was filled with an article that did not extol the virtues of the DAB/DMB platform, but instead tackled the online radio platform and drew the conclusion that the internet “will NOT replace traditional broadcasting”. The article, entitled “The Future Of Radio”, sought to debunk the assertion that “the internet is the future of radio”.

It stated that the BBC iPlayer “allows the UK public to access almost all of its radio and TV programmes broadcast during the previous seven days”. This is inaccurate. The iPlayer offers nothing like “almost all” the BBC’s radio and TV output. Indeed, for some of the BBC’s radio and TV networks, the selection of content remains remarkably thin (mostly due to rights issues).

The article continued: “Given the outstanding success of the BBC’s iPlayer, it is surprising to learn from RAJAR’s latest audience figures that ‘radio via the Internet’ (in all its forms: live streaming; on-demand services and podcasting) accounts for only 2.2% of radio listening in the UK.

This is untrue. The RAJAR 2.2% share figure ONLY includes simulcast live streams of the BBC and UK commercial broadcasters. It does not include on-demand services; it does not include podcasts; it does not include listening to online radio services such as Last.fm, Spotify and Rhapsody; and it does not include listening to audio from overseas broadcasters. There is a detailed section on the RAJAR web site that explains these facts. RAJAR has never claimed that its data for ‘internet’ listening includes anything other than simulcast live streams of BBC and UK commercial radio stations.

The article then drew the conclusion: “Taking these differences in penetration into account shows that DAB listening in the UK is 10 times more popular than listening via digital TV or via the internet.” However, it is unclear what the phrase “10 times more popular” is trying to imply. Is that ‘10 times more listening’? Or maybe ‘10 times more reach’?

Interestingly, exploring the latter metric, RAJAR’s own research (as part of its MIDAS survey, rather than the main diary survey) found in December 2008 that the weekly reach of all internet-delivered radio content in the UK was 14%, compared to the DAB platform’s weekly reach of 17.8% during the same quarter (see graph below). Ten times more popular? The platforms were almost neck-and-neck in the ‘reach’ metric. I wrote about this research a year ago. It is the closest we have for now to a like-for-like comparison that includes all forms of audio delivered by the internet.

The most recent reach data for the internet platform in the above graph derives from Q3 2008 because RAJAR has not publicly released comparative data derived from its two subsequent MIDAS surveys (which are now only available on subscription).

RAJAR was keen to stress in its press release accompanying this week’s latest MIDAS 5 survey that:

74% of those Listen Again listeners said the service has no impact on the amount of live radio to which they listen, while half said they are now listening to radio programmes to which they did not listen previously”.

Somehow, the Daily Mail managed to mangle this factual statement into something that, yet again, portrayed the internet platform as an aggressor against DAB:

Rajar says the figures do not mean people are abandoning traditional or DAB radio sets but that more Britons are trying and using online stations as well.”

The problem the radio industry faces with the RAJAR audience metric is that it cannot have its cake and eat it. Either it chooses:

* to restrict RAJAR to measuring ‘traditional’, live radio and accepts that, as a result, the data will inevitably show that listening to ‘traditional’ radio is in continuing decline (which is RAJAR today, see graph above); or

* to expand the RAJAR metric to measure ‘audio’ consumption that includes on-demand and podcast content, as well as non-traditional radio such as Spotify and Last.fm, thus demonstrating that total listening is not at all in decline but, on the contrary, has been enhanced by audio content increasingly consumed via non-broadcast platforms and ‘on the go’.

For the BBC, Director of Audio & Music Tim Davie hinted at the last RadioCentre conference that he would be interested to see RAJAR extended to encompass time-shifted and downloaded audio, both of which account for an increasing proportion of BBC radio listening.

For its part, commercial radio has shown no interest in advocating such a re-definition of the RAJAR metric. Not only do its offerings of time-shifted and downloadable audio remain miniscule compared to the BBC, but it is locked into a strategy to maintain its ‘walled garden’. Understandably, it has no desire to demonstrate to the world that it is losing listening to competitors’ time-shifted audio and online ‘radio’. UK commercial radio has enjoyed a nice little over-the-air duopoly from 1973 until recently – best just to pretend that it remains one of only two games in town.

The paradox here is that commercial radio is busy presenting advertising agencies and potential advertisers with RAJAR data that only tell part of the story of how and what audio people are listening to in 2009. However, once their meetings with commercial radio people are over, those same advertisers and agencies will inevitably be busy booking advertising with all sorts of online media, including Last.fm and Spotify. They know precisely what opportunities are out there in the wide world beyond traditional broadcasting.

Simply ignoring new businesses that are competing for your listeners’ attentions is not going to make them go away. Sticking your head in the sand can only have the effect of devaluing RAJAR as a useful and accurate metric in the long term.

Remember King Canute.

BBC radio: endangering commercial radio’s ‘heartland audience’

Dear David Liddiment

I was interested to see your article in The Guardian, on behalf of the BBC Trust, defending Radio Two from accusations made by the commercial radio sector that the station has deliberately sought a younger audience. You say:

“What about the challenge that Radio 2 is getting younger? We found that Radio 2’s under-35 audience did grow significantly between 1999/00 and 2004/5 (albeit from a low base). However, over the past five years, the age profile of the station has remained stable and there’s been no increase in reach to under-35s.”

Your analysis here focuses on two specific metrics – under 35’s and Radio 2’s ‘reach’ – whereas the important issues raised by commercial radio rightly concentrate on:
• Commercial radio’s ‘heartland audience’ of 15 to 44 year olds, which it has pursued for many years as a result of advertiser demand to reach this segment of the population;
• ‘Share of listening’ as the appropriate metric because there is a direct correlation between this figure (how many hours are listened to commercial radio) and how much revenue the sector generates.

The graph below, taken from RAJAR data, shows the ‘share of listening’ attracted by BBC radio stations amongst 15-44 year olds since 1999.

It is evident that the listening share of most BBC stations has remained relatively static over this period. The exception is Radio Two, whose share of listening amongst 15-44 year olds has more than doubled from 4.9% to 10.5% over the last decade. It is true that this growth has started to level out in recent years, as your article asserts, but there is no denying that the damage has already been done.

The graph shows clearly that this significant increase in listening has not been achieved by migration from competing BBC radio services to Radio 2. On the contrary, the BBC’s overall share of listening amongst 15-44 year olds has increased from 36.5% to 44.7% during the last decade and, most importantly for commercial radio, is continuing to grow year-on-year.

The graph below demonstrates clearly that it is commercial radio which has lost listening share, from both its local and national stations, that has migrated to the BBC. As a result, commercial radio’s listening share amongst 15-44 year olds has fallen from 61.7% to 52.1% over the last decade.

 
The danger for the commercial radio sector is that, if its market share falls below 50%, potential advertisers might no longer consider radio to be the ‘powerhouse’ delivery platform amongst 15-44 year olds that it used to be. The impact will not simply be a proportional loss in advertising revenues, but a significant loss of confidence in radio as an advertising medium to reach 15-44 year olds.

This is why, inside the BBC and Radio Two, a change in strategic policy might look as if it only results in an increase in BBC market share of a percentage point or two. For the commercial sector, not only does that single percentage point lead directly to a proportional loss of revenue but, sustained in the longer term, it can potentially undermine the medium’s ability to convince advertisers to use radio rather than, say, digital TV or the internet.

This is why the promise you make that “Radio 2 listeners won’t get any younger” is little comfort to a sector that has already been damaged by BBC strategic policies and which is continuing to lose market share year-on-year amongst its ‘heartland audience’ to BBC radio as a whole.

Of course, some of this listening loss can be attributed to commercial radio’s own competitive (in)ability to compete with the BBC – I would be first in line to argue that case – but unless its downward spiral of diminishing listening and diminishing revenues can be reversed, commercial radio could be decimated to the point where it can no longer be a financially viable business.

I write to you not to criticise Radio Two, which is a remarkable station, nor to apologise for the commercial radio sector, which has to shoulder considerable blame for losing touch with its audience. I write to illustrate that the industry’s own data clearly shows the BBC continuing to eat away at commercial radio’s ‘heartland audience’, and I write so that the BBC Trust might understand the consequences if the migration of radio listening to the BBC continues at its current rate.

Yours,
Grant Goddard

30 November 2009

Digital platforms: commercial radio losing share to BBC

Today’s RAJAR data demonstrates that a gulf is opening up between BBC radio and commercial radio in their ability to attract listening to digital platforms. Over the last year, the BBC is accelerating away from commercial radio in its audience’s usage of DAB, digital television and the internet to listen to live radio programmes. The significance of this growing gulf is reinforced when one remembers that the main RAJAR survey, from which the data below is taken, only measures ‘live’ radio listening and does not incorporate listening to either time-shifted, on-demand radio (‘listen again’) or to downloaded podcasts, both forms in which the BBC offers a much greater volume of content than UK commercial radio.

The danger here is that the BBC is poised to dominate listening on digital radio platforms in the long term, exactly as it already dominates listening on analogue radio platforms. One of the main reasons that the commercial radio sector invested so heavily in digital platforms during the last decade was the opportunity it offered to compete more effectively with the BBC for audiences. In the analogue world, the commercial sector has always argued that the BBC (having been there first) was allocated more and better spectrum for its radio stations. ‘Digital’, particularly DAB, seemed to offer the commercial sector a chance to ‘even the score’ with the BBC. The RAJAR data show that this ambition is not succeeding.

Across all digital platforms aggregated, commercial radio is losing ground, with the latest quarter (Q3 2009) reducing its share of listening to 41%, versus the BBC’s 56% share.

Taking each digital platform in turn, commercial radio’s share of listening on the DAB platform fell to 33% in Q3 2009, compared to the BBC’s 65%. This is not surprising because the age profile of DAB purchasers tends to be older listeners who are statistically more likely to listen to BBC stations. However, it does pose a grave question as to the return that commercial radio can expect from its substantial investment to date in DAB infrastructure, if listening on that platform is dominated so much by the BBC.

The digital TV platform is one that commercial radio has long dominated because of the large amount of spectrum it leased in the early days of Freeview. However, the increasing popularity of digital terrestrial television has already substantially increased the cost of spectrum on Freeview for the radio industry when its contracts come up for renewal. Furthermore, the forthcoming re-ordering of the multiplexes to accommodate HD television and new compression codecs is likely to squeeze commercial radio’s access to Freeview spectrum even more so. Before long, it is likely that the BBC will dominate the digital TV platform, just as it already does on DAB. Presently, the BBC has a 45% share, compared to commercial radio’s 51%.

As might be expected, the BBC’s strong online presence has already put it in the commanding position in terms of its share of listening via the internet platform. The integration of BBC radio into the iPlayer has no doubt helped as well, whereas commercial radio’s offerings are relatively more fractured and less heavily marketed, despite the excellent innovation of the RadioCentre Player. The BBC has a 50% share of listening on the internet platform, compared to commercial radio’s 37%.

The significance of commercial radio’s diminishing share of these three digital platforms is demonstrated when we look at the two sectors’ listening shares achieved on the analogue platform alone. Once one removes the digital platforms from the picture, it is evident that the shares of both the BBC and commercial radio have remained relatively stable in recent years. In other words, it is commercial radio’s declining share of listening on digital platforms that is effectively pulling the sector’s total share of listening (analogue + digital) down, particularly as digital platforms are growing as a proportion of total radio listening (21.1% in Q3 2009).

There is a paradox here. The commercial sector invested heavily in the DAB platform, believing that the new technologies would help it INCREASE its overall share of radio listening versus the BBC. In fact, that investment has recently helped to DIMINISH commercial radio’s overall share of listening. Digital television remains the only platform in which commercial radio dominates, and yet this is the very platform where commercial radio will be forced to cede spectrum and face, once more, losing out to the BBC whose spectrum for radio is guaranteed.

It is important to emphasise that these graphs show only the SHARE of listening on these platforms. The volumes of listening on each of these platforms have demonstrated absolute growth for both commercial radio and for the BBC over the same time period. But, more than any other digital platform, it is significant that the DAB platform is dominated by the BBC which now accounts for almost two-thirds of its usage. Such data is important when making decisions about the potential returns on further investments in DAB infrastructure. Will further investment simply maintain the existing imbalance, or will it really improve commercial radio’s share? Does investment in infrastructure also require parallel investment in new content that will appeal directly to the older age groups who own DAB radios?

Some possible reasons for commercial radio’s diminishing share of listening on digital platforms include:

• Commercial radio’s tendency to invest in DAB infrastructure more significantly than in original digital-only content
• Recent closures of many digital-only radio stations in the commercial sector
• The BBC’s relatively stable resource base, at a time when commercial radio revenues are falling precipitously
• The BBC’s long-held policy to invest simultaneously in multiple platforms, whereas commercial radio has focused on DAB and, to a lesser extent, Freeview
• The BBC’s focus on creating exclusive digital-only content unavailable on the analogue platform
• The BBC’s 360-degree music royalty agreements which allow it to use diverse platforms, whereas commercial radio requires separate (and more restrictive) agreements for time-shifted content and podcasts
• The BBC’s long-term, consistent promotion of content and digital platforms across TV, radio and the internet whereas commercial radio is less willing to cross-promote content or digital platforms that migrate listeners away from its core analogue offerings
• Frequent management changes and ownership changes in some parts of commercial radio, where substantial consolidation has often translated into short-term ‘slash and burn’ rather than ‘invest and build’ policies.

Whatever the reasons, we are not where we were meant to be – that is, we are not where it had been anticipated more than a decade ago commercial radio would be when investment in digital platforms, notably DAB, was expected to produce a beneficial outcome for commercial radio audiences versus the BBC. To put it plainly, the strategy conceived in the 1990’s has not worked. Commercial radio offerings do not dominate digital platforms (yes, they are more numerous, but they do not attract more hours listened than the BBC). DAB has become a largely BBC platform.

So, what can be done? Some of the issues noted above require a more level playing field to be established between commercial radio and the BBC. One such example of a practical solution is the Radio Council plan for a new UK Radio Player that will offer BBC and commercial radio content from a single aggregated access point. Other issues remain mostly in the lap of the gods (revenues, for example). Some issues require the BBC to be less predatory (or more regulated) and for the commercial sector to be more focused on strategic, long-term objectives (such as an online strategy that is more than simulcasting).

There is no single answer to this complex problem, though the commercial radio sector is hobbled by both its present lack of profitability and the regulatory strings that are attached to the majority of its analogue radio licences. What is desperately needed in these difficult times is not minor regulatory tinkering (such as adjusting how many hours of local content a local station is required to broadcast) but a wholesale change in strategy to maintain a commercial radio sector that can thrive in the digital marketplace we now inhabit. Will the imminent Digital Economy Bill prove sufficiently forward-thinking in its radio policy proposals?

[Statistical note: The graphs above to do not sum to 100% because the minimal amount of platform data released by RAJAR is ‘rounded’ (hours listened to 1,000,000; listening shares to 0.1%) and the listening apportioned to the BBC and commercial radio sometimes does not add up to the total for a platform. Some of this shortfall may be accounted for by ‘other’ listening (neither the BBC nor commercial radio) which is not itemised by platform. Data for individual quarters are therefore somewhat inconsistent, though the trend over several quarters is likely to be indicative. Additionally, there is an element of radio listening unattributed to any platform, 12.8% of the total in Q3 2009, but which is roughly equally applicable to BBC radio and commercial radio.]

UK Commercial Radio In Numbers: Q1 2009

Click here for my latest presentation containing data for the UK commercial radio industry’s key performance metrics in Q1 2009 for revenues, audiences and radio receiver hardware.

Revenues

Q1 2009 radio revenues were down 19.5% year-on-year, eclipsing the previous quarter’s 14.5% decline (although Q1 2008 had been an exceptionally strong quarter). National advertising continues to weaken, the last four quarters having declined by 15.9%, 12.2%, 21.2% and 28.8% respectively year-on-year. By comparison, local revenues have proven more resilient, down 6.4% in Q1 2009 year-on-year.

The gravity of the downturn is demonstrated by the fact that Q1 2009 was the lowest quarter for revenues since 1999 (at face value – if inflation were factored, the situation would be worse). The size of the industry is likely to continue to contract throughout 2009 and it will have to make further, significant cuts to overheads simply to ensure its survival. Public and parliamentary debate to date has focused upon the economic plight of local newspapers, but local commercial radio is just as endangered.

John Myers’ local radio report for Digital Britain suggested a number of regulatory and legislative changes that would potentially ease the financial burden on the commercial radio sector, but these still remain proposals at present. Until the government’s Digital Britain final report and Ofcom’s consultation exercises potentially turn these recommendations into action, the worsening economic pressures on commercial radio are likely to continue to produce further casualties.

Although some voices are already talking up a future bounce back of revenues after the recession (whenever that might be), it is important to recognise that the recent advertising downturn has only exacerbated a downward trend in radio revenues that was already established. In real terms (removing the impact of inflation), radio revenues peaked in 2000 and had already declined by 25% between 2000 and 2008. The current economic cycle is merely aggravating the structural decline that was already evident.

Audiences

At the root of commercial radio’s structural problem is the public’s declining consumption of its output – hours listened during the last four quarters were down 2.3% year-on-year. Radio as a medium continues to attract significant amounts of listening (22.4 hours per week per listener) and reaches 90% of the population weekly. Within those impressive totals, commercial radio is maintaining most of its reach but is losing listener hours. In Q1 2009, the average commercial radio listener consumed 13.5 hours per week, compared with 15.6 hours per week five years earlier.

It would be easy to lay the blame for this loss of listening at the door of increasingly promiscuous 15-24 year olds spending increasing amounts of time using mobile phone applications, social networking websites and streamed video. Whilst it is true that 15-24 year olds’ average time spent with commercial radio has fallen to 12.4 hours per week in Q1 2009 from 15.2 hours per week eight years ago, blame must also be shouldered by the other constituent demographics within commercial radio’s ‘heartland’ 15-44 year old audience.

Reductions in time spent listening to commercial radio have been almost as substantial amongst 25-34 year olds (12.7 hours per week in Q1 2009, down from 15.5 hours eight years earlier) and 35-44 year olds (14.2 hours per week in Q1 2009, down from 16.6 hours eight years ago). Commercial radio’s share of listening amongst both these demographics fell to 49% in Q1 2009, so that BBC radio listening now dominates all age groups except for 15-24 year olds, in which commercial radio still has a 59% share. Only two quarters ago, commercial radio’s share had been above 50% in all three constituent demographics of its 15-44 ‘heartland’ audience whilst, back in 1999, it had been above 60% in all three. These changes represent the crux of commercial radio’s long-term problem.

Additionally, people under the age of 40 are evidently listening to more ‘audio’ then ever before, assisted by the take-up of portable audio players and the blossoming integration of audio applications into mobile phones. However, listening on these new platforms is not being reflected in the audience data quoted above because the RAJAR radio ratings metric continues to define ‘radio’ listening in the traditional linear way, excluding time-shifted consumption (listen again, podcasts) and non-broadcasters (Last.fm, Spotify). Sooner or later, the industry will have to decide whether RAJAR is to remain merely a marketing tool to demonstrate the two traditional broadcasters’ (BBC and commercial radio) continuing dominance of the shrinking market for linear radio; or whether it is more important for RAJAR to demonstrate that ‘audio’ is a growing consumer medium now shared amongst a widening group of content providers. Comments made recently by the BBC’s Tim Davie at the RadioCentre conference offer encouragement in this respect.

Transactions, Openings & Closures

In May 2009, Global Radio finally sold its eight Midlands stations (an OFT requirement of its acquisition of GCap Media) to former Chrysalis Radio chief executive Phil Riley in a deal reported to be worth £30m and backed by Lloyds TSB. Global’s rival Bauer Radio was long anticipated to be the successful buyer, causing some to comment that the transaction has the hallmarks of a ‘warehousing’ deal that would satisfy current competition issues until media ownership rules are amended by legislation to allow further radio consolidation and cross-ownership.

In May 2009, UKRD succeeded in its acquisition of The Local Radio Company [TLRC] in a deal that valued the latter at £2.88m. UKRD owned six local stations, having closed one and sold three stations during the last year. TLRC owned 20 stations, having sold eight during the last year. Since the acquisition, two further TLRC stations have been sold – Bournemouth’s Fire FM to Westward Broadcasting for £40,001, and Macclesfield’s Silk FM to neighbouring Dee 106.3 for a nominal amount. In the seven months to April 2009, Fire’s operating loss was £129k on revenues of £216k, implying an annual cost base of almost £600k, considerable for a station with a weekly reach of 28,000 adults.

In April 2009, TLRC also sold digital station Jazz FM for £1 to former TLRC chief executive Richard Wheatly and former finance director Alistair Mackenzie, the station having lost £733k in the six months to March 2009. In May 2009, the new owners announced a £500k national poster campaign for the station which broadcasts on Sky, Freesat and regional DAB multiplexes. To date, no digital radio station has generated an operating profit.

Forward Media finally exited the radio business by selling its last remaining stations, Connect FM in Kettering and Lite FM in Peterborough, to Adventure Radio (which owns Chelmsford Radio, Herts Mercury and Southend Radio) for undisclosed amounts.

In March 2009, Midwest Radio sold its two stations, MidWest Shaftesbury and MidWest Yeovil, to South West Radio Ltd, the company that had purchased five stations in the West Country from the administrators last year, following the failure of Laser Broadcasting. Another former Laser station, Fresh Radio in Skipton, was sold in March 2009 by administrators to Utopia Broadcasting which includes some station management.

In April 2009, CN Radio sold Touch FM in Banbury to a management buyout team for an undisclosed amount and the station was relaunched as Banbury Sound. In November 2008, CN had said it would close its Touch FM stations in both Banbury and Coventry if it did not find buyers.

April and May 2009 saw the closure of seven local analogue commercial stations, a greater number than in the previous three years. Ofcom revoked the licence of KCR FM in Knowsley from owner Polaris Media, following failure to comply with its format. Sunrise Radio closed two London stations, Time 106.8 in Thamesmead and South London Radio in Lewisham, which had been up for sale since last year. Pennine FM, purchased by John Harding from TLRC last year, closed in Huddersfield. UTV closed Valleys Radio in South Wales after Ofcom had rejected a co-location request. Jason Bryant closed Radio Hampshire in Southampton and Winchester, stations which he had acquired from Southampton Football Club in 2007 and from Tindle Radio in 2008 respectively.

However, Pennine FM has since been acquired from administration by former station staff Adam Smith and Steve Buck and relaunched in May 2009. Similarly, internet broadcaster Play Radio has expressed interest in acquiring the two Radio Hampshire stations from administration, and a creditors’ meeting is due on 24 June.

On digital platforms, local Stafford station Focal Radio closed in May 2009 with the loss of 23 jobs after local businessman Mo Chaudry, who had invested £80,000 to ‘save’ the station, withdrew his support after being arrested on corruption charges involving Stoke City Council. London DAB station Zee Radio (simulcast on Spectrum AM) closed in April 2009 after a year on-air.

The national DAB multiplex Digital One has three new additions, two temporary. On 20 April 2009, forces radio station BFBS launched a simulcast on the platform, following its earlier trial. On 1 June 2009, Amazing Radio launched a six-month trial service showcasing unsigned UK bands as an extension of its Amazing Tunes website. From 27 June 2009, Folder Media’s Fun Kids station will be simulcasting a 14-week trial, extending its present availability on DAB in London.

In London, black talk/music station Colourful Radio launched on DAB on 2 March 2009, and music station NME Radio added DAB on 13 May 2009.

In the coming months, UKRD/TLRC is likely to divest further local stations from its portfolio. At the top end of the commercial radio business, consolidation has created huge groups of large local stations whilst, at the bottom end of the market, an increasing number of small local stations are now being divested from groups to local owners (or closed down). In a small way, this is returning local commercial radio to its 1970s roots, when it was expected that each station would be owned by local entrepreneurs. It will be instructive to see how each of these divergent strategies succeeds in such tough economic times.