GERMANY: DAB “is not financially viable”, internet radio on the rise

“DAB or DAB+, in its current form, is not financially viable for commercial radio stations,” said Stefan Schmitt, managing director of RTL’s Berlin radio stations, in Promedia magazine. He pointed out that user numbers were increasing steadily for the internet, wireless via PC, laptops and smartphones. “Under these circumstances, I do not know where exactly the added value is for DAB,” he said.

Schmitt argued that the whole radio business model is still based on FM broadcasting and will remain so “for the foreseeable future.” He believes that the best alternative to broadcasting is currently ‘online radio’: “We are achieving market penetration [with online] much more rapidly than with DAB, which is not market driven.”

In Germany, a dispute continues to rage over the funding of DAB radio. The CDU party’s media expert Thomas Jarzombek has argued that “more than €200m of public funds were wasted on DAB” and that “these resources should be used for technologies that are well received by the public.”

Negotiations have been proceeding for months over a further €42m of public funds earmarked to be released to re-launch DAB radio nationally using the DAB+ codec, following the failure of the earlier launch using the older DAB codec. Initially, the contracts between transmission provider Media Broadcast and the station owners were meant to have been signed on 22 July 2010. Then, the subsequent 22 September 2010 deadline for negotiations passed without agreement, as a result of commercial radio’s unwillingness to commit financially to broadcasting on DAB+. This deadline has been extended again to 15 December, which experts in Germany
now suspect is “the last chance for DAB+.”

At its annual conference on 12 November 2010, the German association of commercial broadcasters, VPRT, reiterated its opposition to the government forcing the introduction of DAB+ radio upon the German market. Outgoing VPRT vice president Hans-Dieter Hillmoth
said: “The current draft of the new Federal Telecommunications Act ignores the existing interests of commercial radio in the functioning infrastructure, whose core business is FM radio.”

New
research in Germany by the Frankfurt Link Market & Social Research Institute has demonstrated the increasing popularity of listening to radio via the internet platform. Consumers’ preference for radio delivered to a PC or laptop increased 84% year-on-year, and is now exceeded only by traditional radio hardware – car radios, kitchen radios and stereo systems. Amongst 14-29 year olds, radio via a PC/laptop scored second only to the car radio.

The question put to respondents was: “Radio can now be received on many different types of appliances. Please indicate which appliances you particularly appreciate, regardless of duration of usage.”