Having DAB cake and eating it: temper tantrums in the Global Radio playpen

Most of us mere mortals spend our lives trying to persuade people to give us what we want. We have to persuade our parents to buy us a new toy, persuade a potential employer to offer us a job, persuade the bank manager to give us a business loan. To make these things happen, we are taught to always be careful what we say – “Mind your P’s and Q’s”, our parents told us.

For the wealthy, there is little need for self-control over what comes out of their mouths. Whereas our only power derives from what is in our head, the power of the wealthy derives from what is in their offshore bank accounts. “P’s and Q’s” are barely a necessity when a platinum credit card can be flashed. Money obviates the need for persuasion. So the wealthy can pretty much say what they like, knowing that ‘money talks’ on their behalf, and it certainly seems to talk more loudly than any persuasion that the rest of us can muster.

This week we saw an outburst in The Guardian that would have done any rich, spoilt brat proud. But no, this was the founder and CEO of Global Group, Ashley Tabor, which owns Global Radio, the UK’s largest commercial radio group, demanding that the BBC “put their money where their mouth is” and invest more in DAB radio:

“Tabor said his company, which owns Heart, Classic FM, Capital and LBC, would not invest in new digital services until the DAB signal was sufficiently strong and widespread to match that currently provided by FM. He said the cost of the rollout of DAB and the strengthening of the signal in areas which can already receive it – estimated at between £150m and £200m – was the sole responsibility of the BBC. […]

‘Global has stepped up and said we are absolutely doing it, we have great new ideas of things we could do on digital but we are not going to bloody do it until our listeners can hear it in decent quality and that is something that we have been clear from the start the Beeb will need to do,’ said Tabor, the Global Group founder and chief executive. ‘They have always said yes [and] now is the time to do it. A lot of pressure is building on them to now actually put their money where their mouth is. It’s not actually a lot of money because it’s amortised over 10-12 years. I think it will happen’” [The Guardian removed he word ‘bloody’ from later editions].

Was I the only one baffled by Ashley’s line of argument? Although commercial interests own the lion’s share of DAB in the UK, the largest commercial radio group is insisting here that the cost of fixing DAB to make it work properly is the “sole responsibility” of the publicly funded BBC. Furthermore, Global Radio will only launch new commercial digital radio stations, from which it must expect to make a profit, once the BBC has underwritten the huge cost of making the DAB system fit for purpose using public funds. I remain baffled.

This was by no means the first time, and will probably not be last, that Global Radio has talked rubbish publicly about DAB radio. In its PR, Global paints itself as a driving force behind digital radio and is constantly demanding that DAB switchover be implemented as quickly as possibly. However, in practice, Global has shown no interest in developing DAB as a replacement for FM, having sold off the majority of its DAB licences. This hypocrisy has been documented on previous occasions in this blog, during which time Global’s attitude towards the BBC has shifted from ‘carrot’ to ‘stick’. History speaks volumes.

In October 2007, Global Radio cancelled the contract with Sky inherited from its acquisition of Chrysalis Radio that would have created a national Sky News Radio station on DAB. A Global spokesperson said then that “Global was not prepared to make the necessary investment in this project.”

In December 2007, Global Radio dropped live presenters from the digital radio station The Arrow which it had also acquired from Chrysalis Radio. The Arrow was removed from DAB in London in May 2008, removed from DAB in Scotland in February 2009, removed from satellite and cable TV in June 2009, and removed from DAB in the West Country in February 2010. It is now available over-the-air on only 5 local DAB multiplexes.

In January 2008, Global Radio dropped dedicated shows from the digital version of its Galaxy Radio brand, replacing them with simulcasts of local FM output.

On 31 March 2008, the day after Global Radio’s offer to acquire GCap Media had been accepted, the latter’s two remaining national DAB radio stations Capital Life and TheJazz were closed. GCap had already closed another national DAB station, Core, in January 2008.

In March 2009, Global Radio dropped digital-only station Chill from DAB multiplexes in Leicester, Nottingham and West Wiltshire. Chill was then removed from further local DAB multiplexes in July 2009, and from cable TV in July 2010. It is now available over-the-air on DAB only in London and Birmingham.

However, in April 2009, Ashley said that he appreciated that the BBC had the capacity to make a significant contribution to facilitate Digital Britain from a radio perspective, and that Global Radio was prepared to play a leading role. Confusingly, this was the same month it was announced that Global Radio had agreed terms to sell the majority of its DAB multiplex licenses.

In May 2009, in an interview bizarrely headlined ‘Global evangelist for digital radio: Ashley Tabor has a clear vision for his group…’, he said:

“I am really confident now that all the right things are happening that will get us to where we need to go. We are in favour of [analogue radio] switch-off, so can we do it quickly please?”

That same month, Ashley’s right-hand man at Global Radio, Stephen Miron, told a radio conference:

* “The future of our sector is intrinsically linked to the successful implementation of the government’s digital strategy and to the successful migration to DAB”;
* “We need more of this in the coming weeks and months. Not just words, but action”;
* “We need to get our act together to make the best possible case for consumers to switch to digital”;
* “Global is up for the challenge and, as the largest commercial player, we are prepared to lead this charge.”

In July 2009, Global announced the completion of the sale of its DAB licences, the largest ever transaction of its type, which drastically shifted the dominant ownership of the UK’s commercial radio DAB system from the commercial radio sector itself to transmission specialist Arqiva.

Global Radio sold:
* its 63% shareholding in Digital One, the sole national DAB multiplex for commercial radio;
* its 100% shareholding in Now Digital Ltd and Now Digital (Southern) Ltd, its local DAB multiplexes;
* 12% of MXR Holdings Ltd.

These transactions left Global Radio with a 51% shareholding in MXR, owner of five regional DAB multiplexes, a half-stake in 3 CE Digital local multiplexes and a minority stake in Digital Radio Group, owner of one London multiplex. At a stroke, Global’s role in DAB had been reduced from the dominant player to an also-ran. However, this did not prevent Ashley from stating in the press release announcing these disposals:

“As a company we are leading the commercial radio industry in its drive to digital.”

Neither this press release, nor the Annual Accounts, revealed how much Global Radio commanded for its sale of these assets. All we know is that the last, shortlived chief executive at GCap Media, Fru Hazlitt, was so disenamoured of DAB that she had planned to sell the company’s controlling stake in the DAB national multiplex licence for £1 in January 2008 (the transaction was halted by Global’s offer for GCap).

None of these closures and disposals seemed to change Global Radio’s public enthusiasm for DAB radio. In July 2010, a government press release on digital radio included a quote from Ashley saying:

“We look forward to working with the government and other partners to bring the benefits of digital radio to a growing group of listeners.”

So what precipitated the change of heart in Ashley’s previously collaborative noises to the BBC from a ‘carrot’ into the ‘stick’ evident in his interview this week? Well, less than 24 hours earlier, the government had published a report on DAB radio switchover that was critical of many radio sector stakeholders for the lack of progress that had been made during the last decade. Those criticised included commercial radio, its trade body RadioCentre, the Digital Radio Development Bureau and its successor, Digital Radio UK. Some people can take measured criticisms like this in their stride. But others cannot.

Not only does Global Radio account for 38% of UK commercial radio listening, but the group funds a substantial portion of RadioCentre (£2.8m in subscriptions between September 2007 and March 2009) and of the Digital Radio Development Bureau and Digital Radio UK. Even so, why did this new government report exercise Ashley so much? Because:
* Global Radio needs DAB switchover to succeed for the company to hang on to its valuable analogue radio licences;
* The responsibility for making DAB switchover happen now lies elsewhere, so Ashley has decided to pin the tail on the BBC.

Maybe Ashley is a graduate of the Malcolm McLaren and Stevo school of negotiation. This is the strategy where you make the most outrageous demands and the other person caves in for fear of not being invited to your party. This might work in the unregulated music business, where excess is viewed as a virtue, but in the radio industry there are laws and rules governing large parts of the business.

What would be the response of record companies if a radio owner were to march in and tell them that they should pay radio stations for playing their music, rather than the other way around? Or if you were to tell record companies that your radio stations would no longer play ‘hit’ records that line their coffers but, instead, would deliberately play unpopular songs that they did not want on the radio. Record company bosses would probably laugh in your face and ask their legal department to show you a filing cabinet full of royalty agreements with commercial radio dating back to 1973.

Getting your own way, all the time, only works when you have been given absolute power over your fag. Ashley phoning a journalist, stomping his feet at the BBC and demanding that it do this or that will have no effect whatsoever. His demands about DAB must have had BBC radio managers laughing their socks off on Wednesday morning. As Scott Taunton, the straight-talking managing director of UTV Radio, said of Ashley in 2009:

“He is a guy who is used to getting his own way. He isn’t from the same school of business, the same school of negotiation, that I am.”

So why exactly does Global Radio need DAB switchover to happen? Because:
* Global Radio was created by Ashley’s millionaire father for a son who is a radio obsessive (“I would literally have a radio in my [school] bag and the second I was allowed to put it on I would actually phone [presenter] Pat Sharp in the studio at whatever time, 10.30, 11.30, just to say hello and develop a relationship with him. He thought I was nuts,” said Ashley);
* Global Radio overpaid to acquire GCap Media in June 2008 for £375m, a mis-managed company whose performance was dropping like a stone, and whose market capitalisation had fallen from £711m in 2005 to £200m by year-end 2007;
* Global Radio has already had to write down its assets by £194m in March 2009, reducing the group’s net book value to £351m from the total £545m it had paid for Chrysalis and GCap in 2007 and 2008 respectively;
* Global Radio “is primarily funded by debt”, its accounts state, and external bank debt was £110m in October 2009, an amount that must be repaid in quarterly instalments by October 2012;
* Global Radio has been hit hard in 2010 by the new government’s sudden 50% cut to its advertising spend (“The COI change has been larger than expected, very abrupt. It’s been pretty severe, more than 50%,” said Ashley)
* Ofcom is presently re-evaluating the price of Global Radio’s Classic FM licence, the most profitable in commercial radio and, if DAB switchover is abolished, the cost of that licence could be increased from its current £50,000 per annum to nearer £1m per annum from 2011 to 2018;
* The Digital Economy Act 2010 renewed commercial radio licences for a further seven years only on the basis that DAB switchover will happen. If switchover does not happen, the government has the power to terminate all renewed licences by 2015 (or by two years’ notice, if later). However, in its accounts, Global decided to write off the ‘goodwill’ of its GCap acquisitions over twenty years.

For Global Radio, which owns more analogue licences than any other commercial radio group, this means that the value of its business could be reduced drastically if DAB switchover does not happen. Its one national licence would become a lot more expensive and then might have to be publicly auctioned, while its dozens of local licences could be terminated earlier than anticipated. Global needs DAB switchover to happen at all costs.

However, at every opportunity, Global decided to forgo investment in the DAB platform and, instead, to dispose of the majority of its DAB assets. This has left it with almost no remaining leverage to ensure that DAB switchover will ever happen. Furthermore, Ashley has alienated commercial radio competitors such as UTV, precipitating its resignation from the trade body RadioCentre in 2009. UTV’s Scott Taunton described Ashley as a “rich man’s son” and explained:

“For us it came down to Global, as the largest funder of the RadioCentre, making sure that the policies of the RadioCentre were in the interests of Global Radio. At times, for me, that meant the [trade body] was pursuing an agenda that wasn’t necessarily in the interests of all its members.”

So, Global Radio needs DAB switchover to happen in order to maintain the value of its analogue radio business. But it can do little itself directly, its biggest competitor Bauer is unlikely to help, and its smaller competitors have been alienated. Global had succeeded in wrangling a very beneficial deal from Lord Carter in the Digital Economy Act, but Carter exited quickly and the whole government has changed since then. The sting in the tail was that parliament included a get-out clause (if DAB switchover does not happen …) and now that clause looks more likely than ever to be invoked.

The pheasants look as if they might be coming home to roost at the Tabor estate. And what does a young man do when the train set his father made for him is not working the way he wants? He stomps his feet. He shouts. He issues demands. This week, the BBC has been on the receiving end. It should feel honoured. Ashley has demonstrated his belief that the BBC can do more to fix the DAB disaster than the whole of the commercial radio sector and its trade and marketing agencies added together. But, remind me, why should part of my BBC Licence Fee go to fix his plaything?

And what might Ashley think of doing next if the BBC does not bow to exactly what he wants? Will he be demanding that BBC director general Mark Thompson stands on his head in the corridor during short break, or runs around the perimeter of White City in his underwear fifty times in the pouring rain, or sits in the BBC library after work copying out chapters of ‘Paradise Lost’ by hand?

Are any of these shenanigans a strategy for the future of radio? All they demonstrate to the world is that large parts of the UK commercial radio sector seem to have completely lost the plot.

[declaration of interest: I was paid to advise DMGT on the offer made for GCap Media by Global Radio in 2008]

The exit strategy for DAB radio switchover: the Consumer Expert Group addresses Vaizey’s “big if”

When you are looking for an exit route from a product you have been developing for nearly two decades, and which has consumed hundreds of millions of pounds, you need to find a damn good reason that will deflect the blame elsewhere. You need a report, an organisation or some bona fide research that screams out ‘no’ at the highest volume. Then your response can be: “I would be a fool to ignore the warning signs voiced by X” when what you are really saying is: “Blame them, not me! It’s them that made me do it.”

DAB radio and digital radio switchover presently seem to be at this point. But there is a big problem for a radio industry that is belatedly trying to find a way ‘out’. Almost all previous reports produced by the government, the regulator, the radio industry, the electronics industry, the working groups, Digital Britain and the car manufacturers have been overwhelmingly positive about DAB and have painted an amazingly rosy future. There has been almost nothing published about DAB by agencies of the state that has said plainly: “Stop this crazy plan.”

So whose fault can it be that DAB radio and digital switchover has not worked? Given the sheer number of agencies that have been so gung-ho for so long about DAB, the fickle finger of fate naturally had to point elsewhere and so it landed upon ‘the consumer’. It becomes much easier to decide that the general public is the reason for a masterplan’s lack of success when everybody sat around the government’s conference table is feeling a little guilty about their shared role in a wasted £1bn investment.

A change of regime is always a useful point at which to invoke such a change. In July 2009, less than a year into his first radio job, the BBC’s top radio manager Tim Davie explained that digital radio switchover would be determined by listeners, not by the BBC:

“From a BBC perspective, whether it be ‘Feedback’ or our constant audience research, the idea that we would move to formally engaging switchover without talking to listeners, getting listener satisfaction numbers, all the various things we do, would be not our plan in any way. We would be – we are – in dialogue now for the next six years. … I think we are pretty committed to digital. Having said that, since I have arrived at the BBC, I certainly haven’t seen it as inevitable that we move to DAB.”

The following month, BBC Trust chairman Sir Michael Lyons reinforced this notion:

“Who comes first in this? Audiences and the people who pay the Licence Fee. It is an extraordinarily ambitious suggestion, as colleagues have referred to, that by 2015 we will all be ready for this. So you can’t move faster than the British public want you to move on any issue.”

The change of government then provided an opportunity for the Department for Culture, Media & Sport [DCMS] to similarly invoke the will of the people in determining digital radio switchover. In July 2010, culture minister Ed Vaizey said:

“If, and it is a big if, the consumer is ready, we will support a 2015 switchover date. But, as I have already said, it is the consumer, through their listening habits and purchasing decisions, who will ultimately determine the case for switchover.” [emphasis added]

For both the BBC and the government, the problem with belatedly putting the consumer at the centre of digital radio switchover is that almost no organisation, over the course of a decade of DAB, has done any significant consumer research about DAB. Why? Because the implementation of DAB radio in the UK had always been a top-down policy initiative by civil servants, regulators, trade organisations and commercial opportunists, without ‘the man on the Clapham omnibus’ having ever been consulted.

There was one notable exception. When the government’s Digital Radio Working Group considered the issue of DAB radio switchover during 2007/8, a sub-committee named the Consumer Impact Group had prepared a report. However, this report was not made public until almost a year after the Working Group had been wound up. The report had been highly critical that consumers’ viewpoints were not being considered:

“The group is concerned that the case for digital [radio] migration has not been made clearly enough from the point of view of the consumer. While it is clear what the rationale is for the radio industry, the group would like to see a compelling argument as to why digital migration is desirable for consumers and what its benefits would be for consumers.”

But that was then, this is now. Then, digital radio was considered by the previous government to be a real possibility, and that is why dissent from consumer groups was buried. Now, that same consumer dissent could provide the perfect nail on which to hang any number of DAB exit strategies. A new report outlining the massive consumer challenge of digital radio switchover would be a perfect ‘get out of jail free’ card for many long-term DAB stakeholders.

So today, a new report has been published by the government’s Consumer Expert Group [CEG] which asks the pertinent question ‘Digital radio switchover: what is in it for consumers?’ Moreover, rather than it being embarrassedly added to the depths of the DCMS web site a year later, today’s report was circulated to the press and stakeholders in advance of publication. Its introduction states:

“This report was not requested by Government but the CEG have taken the initiative to attain a thorough understanding of the consumer issues surrounding digital radio and bring them to the Government’s attention as preliminary policy decisions are made.”

In other words, this new report just happens to directly address the “big if” cited in the culture minister’s speech about digital radio switchover nine weeks earlier. If its publication were not startling enough, its conclusions are damning in almost every respect about the lack of progress made to date with digital radio switchover. But, before that, the report is quick to invoke the role of consumers in what it admits is “new” government policy:

“Setting a date, or a firm commitment to a date, would have had the effect of scaring consumers to switch. Clearly this would not be compatible with Government policy to support a switchover when enough listeners voluntarily adopt digital radio. Government’s new emphasis on consumers should provide the focus to ensure consumer concerns and needs regarding digital radio are addressed, thereby reducing the barriers to voluntary take-up.”

However, if these “consumer concerns and needs” were to prove simply too onerous and costly for the government to address in the current economic climate, the choice is now there to opt out of pursuing the DAB switchover policy altogether. The Film Council … the Audit Commission … DAB radio switchover. Chop chop chop. The first two might have seemed a bit arbitrary to voters. Now, at least this one has a consumer report to back it up.

So this new report reiterates and elaborates the same arguments made in the previous consumer report to the Digital Radio Working Group two years earlier, and adds some more. Its recommendations are worth quoting in full:

“The consumer costs and consumer benefits of digital radio:
* A full cost benefit analysis from a user perspective must be carried out as a matter of urgency;
* Consumer benefits need to be clear and demonstrable before an announcement for a digital switchover is made;
* A workable system for the disposing and recycling analogue radios, which consumers are likely to implement must be introduced;
* Emphasis should not be placed on driving down costs unless the sound quality and functionality of cheaper DAB sets are at least equal to analogue;
* There must be more emphasis on improving the basic usability, rather than the advanced functionality, of digital radio to encourage take-up;
* Both the BBC and the commercial sector need to offer new and compelling digital content to convince consumers to adopt digital radio;
* Research into consumers’ willingness to pay and into their concerns and needs relating to digital radio needs to be carried out as a matter of urgency.

Take-up:
* The take-up criterion should compare like-for-like listening platforms and measure DAB listening only;
* A digital switchover date should only be announced when no more than 30 per cent of listening remains on analogue;
* The target date for a digital switchover should be revised upwards as 2015 is realistically far too early for the necessary preparations to be put in place for consumers. Any target date set should be looked upon as secondary to consumer issues such as willingness to adopt the technology, voluntary take-up and digital radio reception as an instigator for switchover;
* Measures need to be taken to introduce a more inclusive methodology for measuring take-up.

Coverage:
* The fair allocation of coverage build-out costs between the BBC and the commercial sector must be made once build-out plans are agreed;
* The coverage criterion should be measured by signal strength, not just population, so that indoor and mobile reception are considered;
* The coverage criterion must be geographically weighted to ensure rural communities are not left behind;
* The switchover roadmap must include plans for DAB+;
* DAB+ compatible chips must be installed as standard to “future-proof” receivers as a matter of urgency;
* The reception time delay between receivers should be standardised.

Vehicles:
* A Digital Radio Switchover date cannot be announced until DAB radios have been standard in vehicles for a minimum of 2 years, in other words by 2015 at the earliest;
* An affordable in-vehicle converter needs to be developed urgently which works with a vehicle’s external aerial, is safe, easy to fit and aesthetically pleasing;
* A switchover date cannot be announced until there is a solution to in-vehicle conversions, providing the majority of motorists with the opportunity to have a digital radio in their vehicle;
* A solution for the continuation of traffic and travel services on FM for a transitional period following digital switchover needs to be agreed;
* An accreditation scheme for dealers and other installers of retrofit digital devices must be developed.

Accessibility:
* Digital switchover should not go ahead without suitable equipment being available for all listeners including older and disabled people;
* Digital radios which incorporate voice output technology must be available for blind and partially-sighted people preferably via the mainstream market or, if that is not feasible, through a channel made affordable by Government intervention, such as a help scheme;
* Appropriate information and support on the enhanced features of accessible digital radios should be available from retailers;
• Appropriate usability requirements should be included in minimum receiver specifications and a kitemarking scheme;
* The proposed integrated station guide must be consumer tested before any decision on its inclusion in devices is made.

Consumer information:
* A clear and balanced public information campaign needs to be implemented through a trusted body, independent of the industry;
* Once a switchover date is announced, sales of analogue-only radio must stop;
* A post-announcement information campaign to target vulnerable groups should be developed;
* The digital tick should be adopted for digital radio and adapted as necessary;
* A ‘scorecard’ should be displayed on all products to convey more information about the available features at the point of sale;
* A digital radio pre-purchase checklist should be widely available and at point of sale;
* An effective training and “accredited adviser” scheme needs to be developed for retailers;
* The CEG must be involved in the minimum specification for digital radio;
* The CEG must be involved in the design and development of any public information campaigns.

Consumer support and a help scheme:
* Any Digital Radio Switchover must be accompanied by a help scheme to assist those who would find it disproportionately difficult to switch;
* The eligibility criteria of a help scheme should include people registered blind or partially sighted, those on low incomes, the over 65s and those with learning disabilities and other cognitive difficulties such as Alzheimer patients;
* A help scheme for digital radio should provide appropriate accessible equipment and include as many instructional home visits as necessary;
* A help scheme should be publicised early on in the information process on a national level and the publicity should coincide with the start of the national information campaign for a switchover;
* The CEG must be consulted in the preparation of printed material and publicity on the help and support available;
* The engagement of the voluntary sector in providing assistance with a digital radio switchover should be properly supported and funded;
* Government should ensure that charities, such as Wireless for the Blind Fund and W4B, are not undermined financially or strategically by a help scheme or any of its components, as these charities will be left with providing the ongoing of support, assistance and help people need once a help scheme has finished.” [End of quote.]

These recommendations seem to divide into: those that would require considerable time to implement, those that would require considerable money to implement, those that would require both time and money, and those that would be almost impossible to implement. Such recommendations should have been considered and acted upon before DAB transmitters even started to be built-out in the 1990s. Their presence in 2010 only serves to highlight the ineptitude of the 1990s ‘plan’.

No organisation escapes unscathed from the critique of the Consumer Expert Group (some are not named): BBC radio, commercial radio, Ofcom, RadioCentre, receiver manufacturers, the Digital Radio Development Bureau, Digital Radio UK, etc. By spreading the criticism so widely, no single stakeholder gets to feel singled out or isolated for DAB’s failure.

Now it is left to the government to decide to pull down the shutters on DAB radio switchover. That will not require the immediate death of DAB. But it will provide the BBC with something that it can sacrifice down the line to budget cuts in the assault on its Licence Fee. For commercial radio, it will provide relief from expensive dual transmission costs, once a settlement has allowed it to keep its coveted licence renewals invoked by this year’s Digital Economy Act. For consumers, it will offer certainty that FM radios will continue to work. There will be sighs of relief all around.

I started writing about DAB radio as a news editor in 1992 and today’s report is the first government distributed document I have seen that sensibly articulates the multitude of barriers and obstacles to digital radio switchover happening in the UK. The very first words of the report summarise the current situation perfectly:

“Despite the introduction of digital radio in the UK in 1998, analogue radio is still a key feature in many households.”

Now we await the fat lady.

Without local commercial radio, switchover to DAB will not happen

I am often asked why I believe that digital radio switchover will never happen in the UK. My answer is always this – the available statistics and data on consumer take-up of DAB radio fail to demonstrate that it will grow sufficiently to become the mass medium for radio broadcasting. I can see nothing in more than a decade of figures to offer an inkling that DAB radio will ever become anything more than a minority interest, compared to FM/AM.

Audience data published by Ofcom in its latest Communications Market report (page 219, Figure 3.34) help us to understand the current roadblock with DAB consumer take-up. Ofcom divulged the proportion of listening to individual stations by platform, data that has not been made public by RAJAR (see graph below).

The information demonstrates that a few stations, notably AM broadcasters BBC Five Live and Absolute Radio, are making significant headway with attracting audiences on digital platforms. However, in order to put these data in a market perspective, it is necessary to understand the relative importance of each of these stations.

The above graph helps put the planned transition from analogue to digital in a proper market perspective. For example, Absolute Radio has made much of the fact that more than 50% of its listening is already attributed to digital platforms. However, in the context of digital radio switchover, its audience is so small that it has little overall impact. The volume of listening to some local London stations is greater than to national Absolute Radio.

The government has stated that it will not consider ‘switchover’ until at least 50% of radio listening is via digital platforms. Digital listening to the ten stations and station types shown in the above graph add up to only 20%, even after ten years of DAB (digital-only stations bring the total to 24%). There is a reason that it will prove an impossible challenge to get this up to the 50% government target.

Around 300 local commercial radio stations account for 31% of all radio listening. Their success in convincing audiences to migrate to digital platforms will be a vitally important part of the aim to achieve the 50% criterion. However, only 15% of local commercial radio listening is attributed to digital platforms, the lowest proportion (along with BBC local radio) of the ten stations/types in the graph. The task to improve this performance from 15% to the 24% national average is likely to prove impossible, let alone to grow it to the 50% criterion.

This is because many stations in the local commercial radio sector cannot and will not ever be available on DAB because:
* The economics of DAB transmission make it too costly;
* The unavailability of any local DAB multiplex in some areas;
* The unavailability of space for stations on some local DAB multiplexes;
* The industry grand plan to amalgamate existing local multiplexes into regional multiplexes makes DAB transmission, for small local radio stations, more irrelevant and more costly.

These issues had been identified by the government in its Digital Britain consultation in June 2009:
* “merging [DAB] multiplexes will reduce the overall capacity available for DAB services, therefore reducing the potential for new services”;
* “reduced capacity on local multiplexes might result in some services losing their current carriage on DAB.”

The government’s decision to ignore these outcomes is now coming back to bite it on the bum. Not having a plan to ensure that all local commercial radio stations can be made available on DAB will only ensure that the government’s 50% criterion can never be met.

At the same time, the determination of the largest players in the commercial radio sector to forge ahead with DAB, regardless of these unresolved issues, has created a serious schism between them and the smaller local radio groups and independent local stations who have no digital future. These issues were raised in parliamentary debate of the Digital Economy Act but were ignored and trivialised by the DAB lobbyists.

Some local commercial radio owners are seriously alienated by the way their predicaments have been ignored by large radio groups and their trade organisations – RadioCentre, Digital Radio Development Bureau and Digital Radio UK. One such group owner, UKRD, has taken direct action by running a campaign on-air and on its stations’ websites against the government’s proposed switchover to DAB.

A page entitled ‘Love FM’ on the Wessex FM website says:

“As you probably know Wessex FM proudly broadcasts to this area on the FM frequencies 96 & 97.2, and had been hoping to for many years to come. However, recent developments mean that we may not be able to broadcast in this way for much longer. In fact, the current plan from parliament is to switch off the use of FM for many stations in 2015. That means, soon, you may not be able to listen to us on FM.”

William Rogers, UKRD Group chief executive officer explained:

“We are not prepared to encourage any of our listeners to go and replace their perfectly satisfactory analogue radio set with a DAB one which may not be able to pick up a DAB signal at all and if it can, it may be a signal which may be wholly inadequate. Even worse, the very station that the listener may have heard the [DAB marketing] advertisement on may not be on DAB or even have a DAB future.”

Pam Lawton, managing director of another UKRD-owned station, KL.FM in King’s Lynn, said:

“We are not on DAB at the moment and currently most of the DAB digital platforms have been snapped up. As things stand, West Norfolk does not have a digital platform because there are limitations about how many there can be and there will only be one station that will serve Norfolk. That station will probably be based in Norwich so once the government decides to turn off FM, we will have to switch off for good.”

The paradox is that the radio sector stakeholders who have been pushed aside and ignored by the DAB movers and shakers are some of the very ones who hold the key to enabling digital radio switchover to happen. Unless the huge audience for local commercial radio can be persuaded to migrate its listening to DAB, the 50% criterion cannot be achieved.

At the same time, some stakeholders who are making the most noise about DAB switchover matter the least in the scheme of things. Absolute Radio can trumpet its individual success with digital listening, but it is contributing less than 1% to the 50% criterion that has to be reached, despite being a national station. It is the hundreds of local commercial radio stations that, collectively, matter the most. Yet, many of these have been denied any seat at the DAB table.

As politicians have learnt through the ages, unless you can convince the little guys (the local radio station owners) and the ‘man in the street’ (the radio listener) to endorse your grand scheme, a scheme is all it will remain. Fancy words in boardrooms, lengthy documents from corporate consultants and detailed project management timelines will inevitably come to nothing, without involving and bringing on board the people who really matter.

It is the radio industry data, particularly for local radio, that tell the real story of DAB and why it can never become the mass radio medium for UK consumers. That is why digital radio switchover will not happen.

[Note: all RAJAR data are Q1 2010, as used by Ofcom]

Digital Economy Act 2010: a smokescreen for backroom radio ‘deal’

On 8 April 2010 at 1732, the Digital Economy Act was given Royal Assent by Parliament. Who exactly will benefit from the radio clauses in the Act? Certainly not the consumer.

“The passing of the Digital Economy Bill into law is great news for receiver manufacturers,” said Frontier Silicon CEO Anthony Sethill. As explained by Electronics Weekly: “Much of the world DAB industry revolves around decoder chips and modules from UK companies, in particular Frontier Silicon. These firms can expect a bonanza as consumers replace FM radios with DAB receivers.” Frontier Silicon says it supplies semi-conductors and modules for 70% of the global DAB receiver market.

Sadly, the Bill/Act was not really about digital radio at all. For the radio sector lobbyists, it was all about securing an automatic licence extension for Global Radio’s Classic FM, the most profitable station in commercial radio, so as to avoid its valuable FM slot being auctioned to allcomers. The payback on this valuable asset alone easily justified spending £100,000s on parliamentary smooching. It was interesting to see one Labour MP acknowledge the true purpose for all this parliamentary lobbying in the House of Commons debate when he congratulated “[Classic FM managing director] Darren Henley for making a cause of the issue.”

The clauses in the Digital Economy Bill on the planned expansion of DAB radio and digital radio switchover were simply promises that Lord Carter had insisted upon as the radio industry’s quid pro quo for government assistance to Global Radio’s most profitable asset. The existence of this ‘deal’ between Lord Carter and Global Radio was confirmed by Digital Radio Working Group chairman Barry Cox in his evidence to the House of Lords:

“Lord Carter did not like to do [the deal] immediately. As I understand, he wanted to get something more back from the radio industry. I think there is a deal in place on renewing these licences, yes.”

However, the quid pro quo promise to develop DAB radio will never come to fruition. Now that Global Radio has got what it wanted, over the coming months, the radio industry’s commitment to continue with DAB will inevitably be rolled back. Every excuse under the sun will be wheeled out – the economy, the expense, the lack of industry profitability (having spent nearly £1billion on DAB to date), consumer resistance, the regulator, the Licence Fee, the government (old and new), the car industry, the French, the mobile phone manufacturers, whatever …….

The reasons that digital radio migration/switchover will never happen are no different now than they were before the Digital Economy Bill was passed into law. For the consumer, who seems increasingly unconvinced about the merits of DAB radio, this legislation changes nothing at all. Those reasons, as itemised in my written submission to the House of Lords in January 2010, are:

* The characteristics of radio make the logistics of switchover a very different proposition to the television medium;
* The robustness of the existing analogue FM radio broadcasting system;
* Shortcomings of the digital broadcast system, ‘Digital Audio Broadcasting’ [DAB], that is intended to replace analogue radio broadcasting in the UK.

More specifically:

1. Existing FM radio coverage is robust with close to universal coverage:
* 50 years’ development and investment has resulted in FM providing robust radio coverage to 98.5% of the UK population.

2. No alternative usage is proposed for FM or AM radio spectrum:
* Ofcom has proposed no alternate purpose for vacated spectrum;
* There is no proposed spectrum auction to benefit the Treasury.

3. FM/AM radio already provides substantial consumer choice:
* Unlike analogue television, consumers are already offered a wide choice of content on analogue radio;
* 14 analogue radio stations are available to the average UK consumer (29 stations in London), according to Ofcom research.

4. FM is a cheaper transmission system for small, local radio stations:
* FM is a cheaper, more efficient broadcast technology for small, local radio stations than DAB;
* A single FM transmitter can serve a coverage area of 10 to 30 miles radius.

5. Consumers are very satisfied with their existing choice of radio:
* 91% of UK consumers are satisfied with the choice of radio stations in their area, according to Ofcom research;
* 69% of UK consumers only listen to one or two different radio stations in an average week, according to Ofcom research.

6. Sales of radio receivers are in overall decline in the UK:
* Consumer sales of traditional radio receivers are in long-term decline in the UK, according to GfK research;
* Consumers are increasingly purchasing integrated media devices (mp3 players, mobile phones, SatNav) that include radio reception.

7. ‘FM’ is the global standard for radio in mobile devices:
* FM radio is the standard broadcast receiver in the global mobile phone market;
* Not one mobile phone is on sale in the UK that incorporates DAB radio.

8. The large volume of analogue radio receivers in UK households will not be quickly replaced:
* Most households have one analogue television to replace, whereas the average household has more than 5 analogue radios;
* The natural replacement cycle for a radio receiver is more than ten years.

9. Lack of consumer awareness of DAB radio:
* Ofcom said the results of its market research “highlights the continued lack of awareness among consumers of ways of accessing digital radio”.

10. Low consumer interest in purchasing DAB radio receivers:
* Only 16% of consumers intend to purchase a DAB radio in the next 12 months, according to Ofcom research;
* 78% of radio receivers purchased by consumers in the UK (8 million units per annum) are analogue (FM/AM) and do not include DAB, according to GfK data.

11. Sales volumes of DAB radio receivers are in decline:
* UK sales volumes of DAB radios have declined year-on-year in three consecutive quarters in 2008/9, according to GfK data.

12. DAB radio offers poorer quality reception than FM radio:
* The DAB transmission network was optimised to be received in-car, rather than in-buildings;
* Consumer DAB reception remains poor in urban areas, in offices, in houses and in basements, compared to FM.

13. No common geographical coverage delivered by DAB multiplexes:
* Consumers may receive only some DAB radio stations, because geographical coverage varies by multiplex owner.

14. Increased content choice for consumers is largely illusory:
* The majority of content available on DAB radio duplicates stations already available on analogue radio.

15. Digital radio content is not proving attractive to consumers:
* Only 5% of commercial radio listening is to digital-only radio stations, according to RAJAR research;
* 74% of commercial radio listening on digital platforms is to existing analogue radio stations, according to RAJAR research.

16. Consumer choice of exclusive digital radio content is shrinking:
* The majority of national commercial digital radio stations have closed due to lack of listening and low revenues;
* After ten years of DAB in the UK, no digital radio station yet generates an operating profit.

17. Minimal DAB radio listening out-of-home:
* Most DAB radio listening is in-home, and DAB is not impacting the 37% of radio listening out-of-home;
* Less than 1% of cars have DAB radios fitted, according to DRWG data.

18. DAB radio has limited appeal to young people:
* Only 18% of DAB radio receiver owners are under the age of 35, according to DRDB data;
* DAB take-up in the youth market is essential to foster usage and loyalty.

19. DAB multiplex roll-out timetable has been delayed:
* New DAB local multiplexes licensed by Ofcom between 2007 and 2009 have yet to launch;
* DAB launch delays undermine consumer confidence.

20. Legacy DAB receivers cannot be upgraded:
* Almost none of the 10 million DAB radio receivers sold in the UK can be upgraded to the newer DAB+ transmission standard;
* Neither can UK receivers be used to receive the digital radio systems implemented in other European countries (notably France).

21. DAB/FM combination radio receivers have become the norm:
* 95% of DAB radio receivers on sale in the UK also incorporate FM radio;
* 9 million FM radios are added annually to the UK consumer stock (plus millions of FM radios in mobile devices), compared to 2 million DAB radios, according to GfK data.

22. DAB carriage costs are too high:
* Carriage costs of the DAB platform remain too costly for content owners to offer new, commercially viable radio services, compared to FM;
* Unused capacity exists on DAB multiplexes, narrowing consumer choice.

23. DAB investment is proving too costly for the radio industry:
* The UK radio industry is estimated to have spent more than £700m on DAB transmission costs and content in the last ten years;
* The UK commercial radio sector is no longer profitable, partly as a result of having diverted its operating profits to DAB.

24. DAB is not a globally implemented standard:
* DAB is not the digital radio transmission standard used in the most commercially significant global markets (notably the United States).

These factors make it unlikely that a complete switchover to DAB digital terrestrial transmission will happen for radio in the UK.

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

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

Additionally, it has taken far too long to bring DAB radio to the consumer market, and its window of opportunity for mass take-up has probably passed. Technological development of DAB was started in 1981, but the system was not demonstrated publicly in the UK until 1993 and not implemented for the consumer market until 1999. In the meantime, the internet has expanded to offer UK consumers a much wider choice of radio content than is available from DAB.

In this sense, DAB radio can be viewed as an ‘interim’ technology (similar to the VHS videocassette) offering consumers a bridge between a low-tech past and a relatively high-tech future. If DAB radio had been rolled out in the early 1990s, it might have gained sufficient momentum by now to replace FM radio in the UK. However, in the consumer’s eyes, the appeal of DAB now represents a very marginal ‘upgrade’ to FM radio. Whereas, the wealth of radio content that is now available online is proving far more exciting.

The strategic mistake of the UK radio industry in deciding to invest heavily in DAB radio was its inherent belief in the mantra ‘build it and they will come.’ Because the radio industry has habitually offered content delivered to the consumer ‘free’ at the point of consumption, it failed to understand that, to motivate consumers sufficiently to purchase relatively expensive DAB radio hardware would necessitate a high-profile, integrated marketing campaign. Worse, the commercial radio sector believed that compelling digital content could be added ‘later’ to DAB radio, once sufficient listeners had bought the hardware, rather than content being the cornerstone of the sector’s digital offerings from the outset.

In my opinion, the likely outcome is that FM radio (supplemented in the UK by AM and Long Wave) will continue to be the dominant radio broadcast technology. For those consumers who seek more specialised content or time-shifted programmes, the internet will offer them what they require, delivered to a growing range of listening opportunities integrated into all sorts of communication devices. In this way, the future will continue to be FM radio for everyday consumer purposes, with personal consumer choice extended significantly by the internet.

Marketing DAB radio: misleading listeners only damages the medium

The radio medium’s loyalty amongst consumers derives substantially from the trust engendered between the on-air presenter and the listener. Research has demonstrated that radio is trusted more than any other medium, and that its audience feels a much greater affinity than it does with less intimate media such as television and newspapers.

In view of the importance of this ‘trust’ between radio and its audience, it seems a remarkable own-goal for radio to be promoting itself in a misleading way in advertisements carried on its own medium – radio. If listeners cannot trust radio people to be truthful about radio on the radio, then does it not undermine the bond that exists between a radio station and its listenership?

A recent radio advertisement placed on commercial radio stations by the Digital Radio Development Bureau, the agency tasked with persuading the public to buy and use DAB radios, stated:

“This is an advert for DAB digital radio. If you were listening to me on a conventional analogue …” [the sound of radio interference interrupted the speaker momentarily. The voice-over then continued:] “… radio you might very well hear strange noises …” [further sounds of radio interference followed. The voice-over continued:] “… which would ruin your enjoyment of your favourite programme …” [more interference sounds were audible. The voice-over continued:] “… meaning you might miss out on the crucial …” [radio interference sounds could be heard once more] “… but, with a DAB radio, you can enjoy crisp, clear digital sound. To find out more and discover loads more stations, visit getdigitalradio.com. Prices start from £24.99. Digital radio, get more from your radio”.

Listeners complained to the Advertising Standards Authority [ASA] that this advertisement was misleading because, when the DAB radio signal is inadequate, the audible broadcast signal is interrupted.

The Digital Radio Development Bureau responded that:
* because DAB is a digital technology which is either ‘on’ or ‘off’, the signal is always the same right up to the coverage limit;
* DAB uses single-frequency networks technology where the same programme is transmitted from a number of sites, and DAB receivers add the signals from all the transmitters together, reducing gaps whereas, in an analogue radio network, gaps between transmitters cause the signal to fade in and out as the listener moves around;
* a digital radio receiver is not subject to the background hiss and interference that might be audible with an analogue radio, and it is only when the listener is not in a digital station’s coverage area that the signal drops out;
* electrical interference from fridges, thermostats, motors or light switches can cause crackle on analogue radio, whereas digital radio is not susceptible to this;
* the other interference referred to in the advert is intrusion of pirate radio broadcasters that listeners might hear on analogue radio. Because there is no low-grade, cheap equipment available for DAB, pirates are not able to broadcast on digital radio;
• the advert sought to promote the fact that DAB radio was hiss- and crackle-free, which the Bureau believed was reasonable and responsible.

The ASA believed otherwise. It said it understood that “if listening to digital radio whilst travelling, the digital signal could drop out when entering a built-up area or walking between tall buildings,” whereas the adverts “gave the misleading impression that listeners would never experience any interruption to a DAB signal, when that was not the case.” The ASA banned future use of the advert.

This was not the first occasion on which advertisements promoting DAB radio have been found to be misleading. In 2005, the ASA had similarly banned a radio advert which had stated:

“If you’re someone who thinks an iPod is something you might keep your contact lenses in you probably haven’t heard about DAB digital radio. With a new digital radio costing from as little as £49.99, not only can you hear all your current favourites in crystal clear sound, you can switch on to a dial-full of digital-only stations specialising in everything from classic rock to books that talk. The future is here today with distortion free DAB digital radio: taking the hiss out of the way you listen to the radio. Message provided by TWG EMAP Digital.”

On this occasion, the ASA decided that “not all DAB digital radio listeners would receive ‘distortion free’ and ‘crystal clear’ sound and concluded that the claims were misleading,” it having “received no evidence to show that DAB digital radio was superior to analogue radio in terms of audio quality.”

On another occasion, in 2004, Ofcom banned an advertisement broadcast on London station Jazz FM which had claimed falsely that DAB radio offers consumers “CD-quality sound”. Ofcom concluded that “some listeners, in particular listening circumstances, would perceive a difference in sound quality between services using lower bit rates or broadcasting in mono compared to the quality attainable on CDs.”

There is a recurring theme here of DAB radio marketing campaigns repeatedly being found to be misleading listeners. Their response: just try and try and try again. Perhaps there should be a ‘three strikes, then you’re out’ policy. Do not pass go. Do not advertise DAB radio misleadingly on the radio. Do not continue to abuse the trust between the radio medium and its listenership.

When is an FM radio not a radio? When it’s in a portable media player, says digital switchover group

Digital Radio UK is the new organisation funded by the BBC and commercial radio “to ensure that the UK is ready for digital radio upgrade”. In February 2010, Digital Radio UK submitted written evidence to the House of Lords Communications Committee informing it of the latest data for UK retail sales of radio receivers. Amongst other things, the data showed that:

• Sales of digital radios in 2009 were under 2 million units, their lowest annual volume since 2006
• Sales of analogue radios seemed to have dropped dramatically to 5.2 million in 2009 from between 7 and 8 million during 2008
• As a proportion of the total volume of radios sold, digital radios had apparently leapt to 28% in 2009 from 21% only a year earlier.

I was puzzled. Why had sales of analogue radios fallen so dramatically by year-end 2009 (see graph below)? There seemed to be almost no substitution effect by DAB radios, whose volume sales were also down, though not by as much as analogue radios. It appeared as if many consumers had just suddenly decided to stop purchasing radios. I wrote to [*****], the company that [***********************************************] Digital Radio UK, asking why the data had suddenly ‘jumped’ in Q4 2009.

The written response from [*****] was:

“The q4 2009 drop is more about the basket of products included as areas previously included such as set top boxes and portable media players were excluded from the data at that time.”

[*****] defines a ‘portable media player’ as any device that plays music and has a 3.5mm headphone jack: MP3 players, iPods, portable cassette players, portable CD players, etc. From Q4 2009 onwards, when any of these devices are sold in the UK and also include a radio, they are no longer counted as ‘a radio’. Now, every MP3 player sold that includes a radio is simply excluded from these statistics. This is why the number of radios sold appeared to drop so significantly (by around 2m units per annum) in the latest Digital Radio UK data.

Why was this change in definition made? It is hard to understand the logic because a radio within an MP3 player is still used as a radio and has no other purpose. It is a real radio, not a fake radio, but to [*****] it is no longer a radio.

The answer seems to be that a huge number of MP3 players are sold in the UK (value £666m in 2009) but almost none of them incorporate a DAB radio. When an MP3 player does include a radio, it is inevitably an FM radio. MP3 players are manufactured and sold globally by multinational electronics manufacturers who understand that FM remains the universal standard for listening to broadcast radio, while DAB is still confined to no more than a handful of countries. Global manufacturers are reluctant to mass produce an MP3 player incorporating a DAB radio because the sales market would be limited to a few, small territories.

I checked the Argos retail website this week and found it offered 82 models of MP3/MP4 player. None incorporated DAB radio, whereas there were 16 that included an FM radio and 66 that had no radio.

It seems that the last resort for Digital Radio UK to be able to demonstrate to a sceptical public (and increasingly sceptical members of the House of Lords) that DAB radio is ‘taking off’ with consumers is to fix the figures to make it look that way. If you cannot convince the public to stop buying analogue radios, you can ‘bend’ the figures to magically make it appear that the public is buying fewer analogue radios.

Earlier this month, I documented how Digital Radio UK had similarly fixed the same dataset from [*****] to declare in its publicity that “when buying a radio, more than 75% of people choose a digital radio”. This was not at all true. The real fact was that, in December 2009 alone (December always being the peak month for DAB radio sales), 76% of people who bought a kitchen radio bought a digital kitchen radio. That was an attempt to brazenly redefine ‘a radio’ as only ‘a kitchen radio’ so as to exclude clock radios, tuners, in-car radios, boomboxes, etc.

I can only repeat what I said then. However desperate you might be to try and make DAB radio a success, how is it justifiable to deliberately mis-state data so outrageously in print? And to Parliament?

DAB radio receiver sales: never let facts get in the way of a big number

A newsletter arrived in my in-box today from Digital Radio UK, the new organisation charged with making DAB radio a success. It told me some startling news:

“By the end of 2009, when buying a radio, more than three quarters of people chose a digital one.”

And, just in case I did not believe this fact, immediately beneath, it told me the same thing again:

“New sales figures reveal that, when buying a radio, more than 75% of people choose a digital one.”

I did not believe it. All the previous data from the radio industry had shown that DAB radios are around 22% of total radio sales, as demonstrated in the graph below.

A year ago, the government’s Digital Radio Working Group had set an ‘aspirational’ target for DAB radios to be 50% of total radios sold by the beginning of 2011. As this graph clearly shows, the odds of successfully coming anywhere close to that target are zero.

Maybe something revolutionary had happened in the consumer market for the proportion of DAB radios sold to have suddenly surged from 22% in Q1 of 2009 to 75% by year-end. It was extremely puzzling.

Then I read an extraordinary letter that Ford Ennals, chief executive of Digital Radio UK, had written to the House of Lords Select Committee on Communications on 15 February 2010. It said in part:

“I thought […] that it might be useful if I wrote with the very latest radio sales data. Encouragingly, it shows that, during 2009, consumers increasingly chose digital sets over analogue ones.

I thought it clearest to present the data in a simple table, which is attached, but it may be useful if I explain a couple of the terms used. Where the data refers to ‘kitchen radios’ it means the kind of sets that you and I would call ‘a radio’ i.e. a set whose sole function is to listen to the radio.

Where it refers to ‘all radios’, these figures include those pieces of electrical equipment which happen to have a radio chip in them (e.g. a hi-fi where the main reason for purchase may be to listen to CDs or an MP3 player where listening to downloaded music is the primary function).

As you can see, by Christmas 2009, 76% of people buying ‘a radio’ chose a digital one…… [emphasis added]”

Aha! Now I think I understand. The only way in which it is possible to contrive that more than three quarters of radios sold are digital radios is to arbitrarily create a completely new definition of ‘radio’. In this brave new world, only a ‘kitchen radio’ will now be called a ‘radio’. (The truth is: 76% of people who purchased a kitchen radio during December 2009 bought a digital radio, though the proportion for the whole of 2009 was 63%.) Every other type of radio is no longer defined as a radio. This new definition of ‘radio’ would completely exclude:
     • Micro systems
     • Clock radios
     • Tuner separates
     • Handhelds
     • Boomboxes
     • In-car radios
     • Audiovisual systems
     • Home cinemas
     • Docking stations
     • Dect phones [?]
     • Mobile phones
     • LCD TVs
     • Record players

This seems like a long list of products which, if they also happen to include a radio, will no longer be defined as having a ‘radio’. How can a ‘clock radio’ not be a radio? How can a ‘tuner’ not be a radio? I know this long list to be a comprehensive definition of ‘radio’ because it was the very definition of ‘radio’ used by the Digital Radio Development Bureau, the forerunner to Digital Radio UK, in its published data. Of course, that was last year. In 2010, ‘radio’ seems now to have a whole new definition.

What can I say? However desperate you might be to try and make DAB radio a success, how is it justifiable to deliberately mis-state data so outrageously in print? And to Parliament?

Criteria and a date for digital radio switchover: where’d they go?

When will the UK government’s proposed ‘digital radio switchover’ happen? For a long time, we had always been told that the pre-requisites were:
* market criteria that had to be reached before switchover could be announced;
* a fixed, single date for switchover to happen.

So both of these must be in the Digital Economy Bill somewhere, surely? Well, it seems that everything (except the Bill itself) points to 2015 as the switchover date. But as for the criteria?

The government’s press release of 20 November 2009 announcing the Digital Economy Bill stated:
* “Digital radio: update the regulatory framework to prepare for moves to digital switchover for radio by 2015”.

The government’s accompanying Factsheet of 20 November 2009 stated:
* “At the centre of our ambition is the delivery of a Digital Radio Upgrade programme by the end of 2015.”

The government’s accompanying Impact Assessments of 20 November 2009 referred to:
* “a switchover to digital radio by 2015”;
* “a switchover to digital only radio by 2015”;
* “a Digital Radio Upgrade programme, which should be completed by the end of 2015”.

However, the government’s Explanatory Notes to the Digital Economy Bill said:
* nothing about criteria that have to be met;
* nothing explicitly about a switchover date.

Published on 20 November 2009, the Digital Economy Bill itself contained nothing about:
* criteria that have to be met;
* an explicit date for digital radio switchover.

What? Is this not strange? Somewhere along the way, it seems as if the agreed criteria and the switchover date just vanished into thin air. So what happened? Let’s go back and follow the timeline of how we got to where we are now.

JUNE 2008
The Interim Report of the government’s Digital Radio Working Group recommended:
* “Government should agree a set of criteria and timetable for the migration to digital.
* These criteria should include an assessment of:
      * The percentage of listening to DAB enabled devices;
      * Current and planned coverage of DAB and FM; and
* In considering the case for migration we expect the Government will also want to consider the take-up of digital radio in cars, affordability, functionality, and an environmental impact plan.”

DECEMBER 2008
The Final Report of the Digital Radio Working Group recommended:
* “Three broad criteria that must be met in order to trigger the digital migration process:
     * That at least 50% of total radio listening is to digital platforms;
     * That national multiplex coverage will be comparable to FM coverage by time of digital migration;
     * That local multiplexes will cover at least 90% of the population and, where practical, all major roads ….”
* “Government should announce a date for digital migration, ideally two years after the criteria have been met”.

JANUARY 2009
The Interim Report of the government’s Digital Britain recommended:
* “We will create a plan for digital migration of radio, which the Government intends to put in place once the following criteria have been met:
     * When 50% of radio listening is digital;
     * When national DAB coverage is comparable to FM coverage, and local DAB reaches 90% of population and all major roads.”

JUNE 2009
The Final Report of Digital Britain recommended:
* “The delivery of a Digital Radio Upgrade programme by 2015”
* “Included within the Digital Radio Upgrade timetable is our intention that the criteria should be met by the end of 2013”:
     * “When 50% of listening is to digital; and
     * When national DAB coverage is comparable to FM coverage, and local DAB reaches 90% of the population and all major roads.”

This Report also included a critically important graph (see below) which, it said, “shows the projected digital share of listening under two scenarios: organic growth and with a concerted drive to digital”.

Shockingly, the historical data in this graph had been ‘doctored’ to make it look as if the faster growth path advocated by Digital Britain was easily achievable [confusingly, the key on this graph labels the lines round the wrong way]. When I queried the source of this false data, the government told me it had been supplied by another party, which I later found to be a report produced by the Digital Radio Development Bureau, but not made public.

Digital Britain’s graph sought to demonstrate that continuation of the current growth trend in digital listening would lead to the 50% criterion being achieved in early 2015, whereas the actual data (from RAJAR) in my graph shows the 50% criterion not being reached until the end of 2018 [the trend line here is automatically generated by Microsoft Excel from all available quarterly data].

Digital Britain proposed policies to accelerate DAB take-up which, it said, would ensure that the 50% criterion would be achieved by year-end 2013, a gain of a little over one year from its natural trend. However, in my graph that uses RAJAR data, the acceleration necessary is shown to be five years, not one year, which would prove an almost impossible task to achieve [I wrote about the false data in June 2009].

JUNE TO DECEMBER 2009
Between the publication of the Digital Britain final report in June 2009 and today, it has slowly dawned on some of radio’s stakeholders that the agreed criteria necessary for digital radio switchover stand zero chance of being achieved by 2013. Neither do they stand a chance of being achieved by 2014 or 2015, nor probably by 2016. It always was pie in the sky, wishful thinking, fiction rather than fact. The manipulation of key data in a significant government report only demonstrates the duplicity.

So, what to do about it now? Admit you were wrong? Admit your culpability? Best to simply pretend that the criteria and the proposed switchover date never really mattered. Botched data – ignore it. Unrealistic targets – lose them. Perhaps nobody will notice the whole, sorry deception.

In the here and now, Digital Radio UK (the new organisation responsible for implementing DAB) explains the current thinking:
* “The [Digital Economy] Bill does not set a definite date for digital radio switchover …”
* “The Government has stated that switchover will not happen until the majority of radio listening is to digital, and until anyone who can currently receive FM is able to receive digital radio” [but fails to address why these criteria are not included in the Bill].

In the here and now, RadioCentre (the commercial radio trade body) explains:
* “[Digital Economy Bill Clause 30] allows the Secretary of State to set a [digital switchover] date, but does not require one to be set, or indicate when the date might be”.
* “The objective that switchover should not occur until certain thresholds have been reached for listening … appears sensible on first reading. However, RadioCentre does not believe it is appropriate for the industry to be tied to any figures in primary legislation. This is a very inflexible mechanism against which to manage our industry going forwards”.

Figures. Numbers. Dates. Criteria. This kind of factual evidence or hard data might obstruct a future decision to force consumers to switch to DAB radio.

So to answer the original question – the criteria and the switchover date that had been agreed upon by stakeholders, over two years of deliberations, have now quietly been relegated to oblivion.

When would digital radio switchover have happened if the agreed criteria had been implemented in law? Probably never.

When will digital radio switchover happen now? Whenever those in power want it to.

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.

DAB radio UK sales: 10m in 10 years is “an incredible achievement”?

The Digital Radio Development Bureau [DRDB] published a press release yesterday trumpeting the “incredible achievement” that 10 million DAB receivers had been sold to date in the UK which, it said, “proves that digital radio is here to stay”. The press release was notable not for what it said, but for what it omitted.

Ten million radios sounds like a big number until you realise that this has been achieved over more than a decade of DAB product sales in the UK. There are 51.3 million adults (aged 15+) in the UK. So, averaged over the decade, roughly one out of every fifty adults bought a DAB radio each year. Not so impressive.

Revisit the DRDB’s own forecasts for DAB receiver sales. In 2004, it forecast 13.15 million DAB radios would be sold by year-end 2008 (the reality was 8.53 million). In 2005, it forecast 19.96 million to be sold by year-end 2009. In 2006, it forecast 17.2 million sold by year-end 2009. In 2007, it was too embarrassed to revise its year-end 2009 forecast (but even its year-end 2008 forecast of 9.16 million was overstated, as the reality was 8.53 million). In 2008 and 2009, understandably, the DRDB did not publish its forecasts. The DRDB forecasts of the very consumer market in which it is specialising have consistently been shown to be wildly inaccurate.

The DRDB press release also claimed that “for the past three years, sales of digital radio sets have remained solid”. ‘Solid’ is an interesting choice of word to describe the present situation of declining sales. Sales in Q2 2009 were the lowest in two years and were down 6% year-on-year. Sales in the previous two quarters, Q1 2009 and Q4 2008, were also down 1% and 10% respectively year-on-year. Three consecutive quarters of negative sales growth can hardly be described as ‘solid’.

As the graph above shows, the rot set in at the end of 2005, when year-on-year DAB radio sales growth fell from triple to double digit figures. Both 2006 and 2007 included quarters of single digit growth. Now, in 2009, growth has been negative all the way. This is no temporary blip caused by the recession. The writing was already on the wall by 2006 – the DAB party is over. Now we are merely waiting for the last few guests to leave.

The other remarkable statement in the DRDB press release is its satisfaction that sales of “all categories of analogue radio showed significant decline”. As I have pointed out previously (see graph below), sales of radio receivers generally are in long-term decline in the UK. Is this a fact that a stakeholder within the radio broadcast industry should be crowing about? It’s like two passengers on the Titanic fighting over which has the bigger cabin – does it really matter if the whole ship is slowly going down?

It should be pointed out that the DRDB data excludes sales of mobile phones, despite the fact that the majority of current models sold in the UK include FM radios, whilst not one model includes a DAB radio. More than 30 million mobile phones were sold in the UK in 2008, which puts the 2 million DAB radios sold in stark perspective (see recent blog entry).

Also, it should be pointed out that the vast majority of what the DRDB calls ‘DAB radios’ on sale in the UK also incorporate analogue FM. It is increasingly difficult to find a DAB-only radio to purchase in UK shops. This renders the DRDB’s proclaimed digital versus analogue victory completely hollow. For every ‘DAB radio’ sold that the DRDB hopes will automatically lead us to some kind of digital heaven, in probably 90% plus of purchases, yet another FM radio is also being added to the millions already in UK households (see recent blog entry).

Finally, recall that 8 million analogue radios (without DAB) are still being sold annually in the UK. Now add to that the 30 million mobile phones purchased, most of which include FM radio. Then compare it with the “incredible achievement” of 2 million DAB radios sold per year, most of which include analogue radio anyway. The future of radio is looking less and less like a DAB world. Rather, analogue radios are probably multiplying faster in the UK marketplace than they have ever done, thanks to mobile phone manufacturers. This is good news for radio, bad news for investors in DAB.

These facts might not conveniently fit the DRDB ‘story’. But they are the facts.