Tag: BBC

Paying for Digital Britain's 'Digital Radio Upgrade': who, me?

The Digital Britain Final Report published in June 2009 proposed that the UK radio industry embark on a ‘Digital Radio Upgrade’ which would seem to involve (take a deep breath):

· Providing greater choice and functionality for listeners (para.15)
· Listeners who can currently access radio can still do so after Upgrade (para.15)
· Building a DAB infrastructure which meets the needs of broadcasters, multiplex owners and listeners (para.21)
· Redrawing the regional DAB multiplex map (para.21)
· The BBC beginning “an aggressive rollout” of its national DAB multiplex to ensure its coverage achieves that of existing FM by 2014 (para.23)
· Commercial radio to extend the coverage of its national DAB multiplex and to improve indoor reception (para.21)
· Investment to ensure that local DAB multiplexes compare with existing FM coverage (para.24)
· The extension and improvement of local DAB coverage (para.25)
· Measures to address the existing failings of the existing DAB multiplex framework (para.26)
· The merger of adjoining local DAB multiplexes and the extension of existing multiplexes into currently unserved areas (para.26)
· The existing regional multiplexes to consolidate and extend to form a second national commercial radio multiplex (para.26)
· Convincing listeners that DAB offers significant benefits over analogue radio (para.28)
· DAB to deliver “new niche [radio] services” and to gain better value from existing content (para.29)
· DAB to offer more services other than new stations (para.30)
· DAB to offer greater functionality and interactivity (para.31)
· Implementation of digitally delivered in-car traffic and travel information (para.31)
· DAB radio receivers to be priced at below £20 within two years (para.32)
· Introduction of add-on hardware (similar to Freeview boxes) to enable consumers to upgrade their analogue receivers (para.32)
· Energy consumption of DAB radio receivers to be reduced (para.33)
· New cars to be sold with digital radios by 2013 (p.99 box)
· A common logo to identify and label DAB radios (p.99 box)
· Development of portable digital radio converters (p.99 box)
· Integration of DAB radio into other vehicle devices such as ‘SatNav’ (p.99 box)
· Work with European partners to develop a common approach to digital radio (p.99 box)

A lengthy list. And who is going to pay for all this? Digital Britain stated that “the investment needed to achieve the Digital Radio Upgrade timetable will on the whole be made by the existing radio companies” (para.44). This means the BBC and the commercial radio sector. And what exactly do these radio broadcasters think about having to pay for all these proposals without the aid of specific government funding? A seminar organised by the Westminster Media Forum this morning gave us an opportunity to find out. Here’s what was said about the Digital Radio Upgrade issue (speech excerpts):

Caroline Thomson, Chief Operating Officer, BBC [‘CT’]:
“The [Digital Britain] report is clear that there is an ambitious target for analogue switch-off in 2015. It is an ambitious target. Radio switch-off is a very different issue from television switchover, but we are supportive of this ambition and we will work with partners in the industry towards delivering it. And we have already made a lot of progress working with commercial radio to develop the policies on this. But, at the heart of it, we must remember that we must put listeners first and be careful not to damage the ability of listeners to tune in to the content they love. Working with commercial radio to secure the digital future in a way that will work for all our listeners is a crucial part of this. As my colleague Tim Davie, Director of [BBC] Audio & Music, said recently: ‘unless we huddle together for scale, we are going to be in trouble’. The BBC is drawing up our digital rollout plans in radio to see where and when it is possible to extend DAB coverage, and how much it would cost. We are willing partners, and DAB is a good example of an area of the Digital Britain report where we are helping to meet the charge.”

Andrew Harrison, Chief Executive, RadioCentre [‘AH’]:
“The real choice, which Digital Britain identifies, is which broadcast platform do we want – FM or DAB. And here, the genie is out of the bottle. DAB now exists on 10m sets, the BBC will not withdraw 6Music and BBC7 or the Asian Network or Five Live Extra – it never withdraws services – and commercial services will not fold DAB-only stations like Planet Rock or Jazz FM. Digital Britain has been clear in its aspiration – national, regional and larger local stations will have a clear pathway to upgrade to DAB and switch off FM. Smaller players will have a clear opportunity to remain on FM without an obligation to move across to DAB. Strategically, that’s a simple resolution – both will co-exist. So, next we need a plan to work out how we might achieve the migration criteria – on transmitter coverage, set sales and in-car penetration. The devil inevitably will be in the detail. But we need two strong interventions from government – on coverage and on cars – before any migration plan will be taken seriously. On cars, Digital Britain falls short of mandating manufacturers, unlike in France, to put digital radio in all cars from 2013. Encouragingly, Ford and Vauxhall have both confirmed their intent to upgrade in line with the timeline for 2013, but we need government to force the pace. On coverage, Lord Carter has ducked the funding issue. The commercial sector has already built out its national and local multiplexes as far as is commercially viable. So I’m delighted to hear Caroline emphasise that the BBC is supportive of the direction and ambition for digital radio and are willing partners helping to fund the change. It’s now time for the BBC and government to stop their wider dance around the BBC’s future role and theoretical possible future uses of the Licence Fee which have never been paid for before, and [to] instead consider how to broker a coverage plan for digital radio that will make it happen.”

Carolyn McCall, Chief Executive, Guardian Media Group [‘CM’]:
“It’s hard to escape the feeling that what the Digital Britain report has done is just gone: ‘we recognise the issue, big issue DAB’. They said something like that, which is pretty important, but they have just gone: ‘Ofcom, deal with it’. That’s how it strikes me. It just seems that so much of this on radio is being left to Ofcom to deal with. And if what I read is true, David Cameron doesn’t want an Ofcom anyway. So that is quite a serious issue for us as an industry. The most worrying aspect of the report in relation to radio is the assertion that investment needed to achieve the Digital Radio Upgrade will be made by existing radio companies. Effectively, the promise of deregulation is being made conditional on commercial radio funding digital [upgrade], stumping up more money that the commercial industry simply cannot afford. We’ve always had too much regulation for a small industry struggling in an unregulated digital world. While we back DAB, I don’t think any commercial broadcaster is going to feel comfortable about paying for those developments. The final point on radio is that, at a time when that industry in particular needed some clarity, the report does not give us any clarity. What new powers will Ofcom have, what role will they be expected to play, what is the position on the vital issue of Format change, what is meant by greater flexibility in relation to co-location, and mini-regions? The list goes on. I would say to Stephen [Carter], or Ben [Bradshaw], or indeed Jeremy Hunt, we need urgent clarifications on these issues and quickly.”

Q&A session [excerpts]:

[Is analogue radio switch-off going to include the [BBC] Radio 4 Long Wave signal?]

CT: That is the government policy. The policy is to switch off all analogue radios.

[Existing DAB coverage is not good enough?]

AH: Right now, self-evidently, DAB coverage is not good enough for anyone to consider switchover. There is a bill to be paid to deliver that public policy imperative. As long as that bill is met and covered, I think the BBC and the commercial sector would confidently switch over knowing the coverage is better ….

[Unless you start spending money now, and if you are, where is it going to come from, it’s not going to happen, is it?]

CT: First of all, we will not do the analogue switch-off unless it is the case that there are very big thresholds that have already been passed, particularly about car radios. And the challenges of getting to those thresholds by 2013, which is what we’ve said, are enormous, even if we build out the transmission. So let me just be clear. It is not the BBC’s policy to switch off FM or Long Wave until we are secure and clear – that is why I made the reference to listeners in my speech – that that is the policy which will work for listeners. On the money, for now we don’t have the money to build out beyond 90% – that is our current build-out – and the final 10% costs much more per percentage than the previous 90%, but we will look forward to a discussion with the government about it. We would like to be able to do it because, in the long term, as for commercial radio, running dual illumination [FM/DAB simulcasting] costs a lot of money so a switchover in 2020 costs us more than a switchover in 2015. But we won’t do the switchover in 2015 unless we believe particularly that car radios are up …..


CM: This point about digital radio [switchover]. There are no funds. I am not really convinced […noise…] and margins are slim because everyone has been hit by the recession quite badly. I don’t know where the money is going to come from for digital switchover of radio.

AH: I remain confident that where we are now with Digital Britain from the radio perspective is into the negotiation now – who pays for this? Frankly that is a negotiation that is far more likely to be concluded positively in the next few months between the BBC and a Labour government than under a Conservative government, so I remain optimistic that both sides will be brought to the table. In terms of who pays and who can afford this, the reality is that the BBC Licence Fee is £3.5bn, that’s seven times the total income of commercial radio. The cost of DAB coverage build-out is about £5m a year – that’s less than Jonathon Ross’ salary or Michael Lyons’ pension fund – so it’s purely a question of priorities for the BBC. I would have thought that it is quite within the limit of the BBC’s talented management to come up with a solution that can meet the public purposes set out for DAB and still deliver all the wonderful content that we enjoy.

DAB radio switchover: BBC listener opinions offer exit strategy

The BBC is in a tight corner over DAB. It played a significant role in developing the technology in the 1980s, in experimenting with the earliest DAB transmissions in the UK in the 1990s, and in launching a portfolio of exclusively digital radio stations in the 2000s. During that long period, management teams within the Corporation have come and gone, yet the commitment to DAB as a future technology to replace FM/AM analogue radio has remained resolute. Until now.

Realism eventually rears its ugly head, even in the BBC. And a changing of the guard at the top of the BBC radio division offers a timely opportunity to re-evaluate a strategy for DAB that must have been first decided almost two decades earlier. Across the meeting room conference table, the question is eventually asked by the newcomer – exactly why did we decide to commit so much time and so much money to DAB in the first place? The answers are many and various and have inevitably become muddled over time. The one thing that is certain is that nobody in the BBC could have believed back in the 1980s that we would still be arguing in 2009 as to whether implementation of DAB radio technology is worth the effort. Back then, the bright digital radio future looked attainable within a matter of years, rather than decades. How wrong they were.

The longer you have peddled away, the harder it is to stop and get off the bicycle. Having thrown decades of resources at DAB technology, it would be almost impossible for the BBC to say ‘whoops, it didn’t quite work out so we’ll stop now’. The ire from DAB radio receiver purchasers, the backlash from Licence Fee payers, and the possibility of an incoming Tory government potentially using it as a stick with which to beat the Corporation for wasting money are all too horrible to consider.

So it was interesting to hear Tim Davie, Director of BBC Audio & Music since September 2008, on BBC Radio 4’s ‘Feedback’ programme, ingeniously beavering away at building a potential DAB exit strategy by invoking the will of the listener. As everyone working in BBC radio understands, its listeners are extremely resistant to change – almost however minor it is – and are not afraid to voice their opinions in the media at the slightest inconvenience. It was therefore appropriate that the ‘Feedback’ programme itself should be used to suggest that, if BBC listeners did not want to change over completely to DAB radio, then the BBC might decide it should not happen. Tim Davie said:

“We support the idea of switchover to digital. In terms of the switchover date, our position has always been that 2015 is ambitious. We think that the listeners need to be reassured that coverage levels, quality levels are at a point where switchover is realistic. So we are totally focused on delivering a position where we have hit certain thresholds, we know that we are in a place where switchover can happen without widespread disruption.”

[Are you going to make that judgement yourself or are you going to consult your listeners, many of whom dispute claims that are made by BBC spokesmen about the quality of reception and other things. Have you any plans to consult the audience about whether the time has come when switchover is possible?]

“Absolutely. We are talking to government now about how consultation should take place. 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.”

[But consultation implies the possibility of changing policy, and a lot of our listeners are sceptical ….]

“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. We do believe that, if radio doesn’t have a digital broadcast platform, it will be disadvantaged. I’m pretty convinced of that logic. What I’m not saying is that we have to move at 2015 if we haven’t delivered the thresholds – the right levels of listening to digital radio and to DAB. I don’t think we are on a course that is unstoppable to 2015 although we are pretty committed to a DAB switchover over time.” [emphasis added]

[Do you accept, at the moment, that DAB is often inferior to the existing [FM] sound?]

“DAB doesn’t have the coverage of FM at this point, and it’s really straightforward that the quality of your audio is related to how close you are to a transmitter. So, DAB currently has less transmitters. So those people who are further away from a transmitter aren’t getting as good sound. One of the things I’ve been very clear on in my position is – we will not even entertain a switchover unless the level of quality coverage is at 98%, which is in line with FM. So we, as the BBC have said, without the extra 600 transmitters that we would need to put in place, DAB switchover will not be a reality.”

In terms of BBC public pronouncements, these viewpoints on DAB are revolutionary. Under Tim’s predecessor, Jenny Abramsky, public dissention about the DAB future was simply not permitted. Last year, after I had been interviewed for an item on Radio 4’s ‘Today’ programme about the problems facing switchover to DAB, I never again heard a similar item about DAB on the show. Asked about the BBC’s commitment to DAB at conferences, BBC staffers would look sheepish and admit they had been told to make no comments.

What a difference a year makes. The last ten days have witnessed a blizzard of managed dissent on BBC radio. The ‘Today’ programme yesterday morning ran a substantial piece in the important pre-0830 slot that was very critical about the pitfalls of DAB reception in cars. This week’s ‘Media Show’ on Radio 4 devoted considerable time to the DAB issue. Last week’s ‘You & Yours’ on Radio 4 discussed listeners’ issues with DAB in gory detail. And the weekend’s ‘Feedback’ has opened up the possibility of BBC listener revolt on DAB translating into a policy change.

It feels almost as if a subtle marketing campaign is now going on from within the BBC as a response to the radio proposals in the Digital Britain report, softening up the outside world for the BBC to be able to downgrade/dump DAB at some future time. Of course, Tim is a clever marketer from the real world (Pepsi, P&G), whereas his predecessor was a (very successful) career BBC apparatchik. What we might be seeing is the opening salvo of an action folder marked ‘Possible DAB Downgrade/Exit Strategy’. The nuclear button might never have to be pressed, but it’s always useful to know where the exit doors are and how you are going to reach them, however little you might want to think about the DAB plane going down in flames.

Funding DAB radio improvements: who pays?

At the Radio Festival in Nottingham, the final session on Wednesday 1 July 2009 @ 1215 was a discussion about the future of UK radio that was broadcast live on BBC Radio 4’s Media Show and hosted by Steve Hewlett. Part of the discussion was about DAB in the UK following the publication last month of the Digital Britain report.

Amongst its range of proposals, Digital Britain had recommended:
· “at a national level, we will look to the BBC to begin an aggressive roll-out of its [DAB] national multiplex to ensure its national digital radio services achieve coverage comparable to FM by the end of 2014”
· “where possible, the BBC and national commercial multiplex operator should work together to ensure that any new transmitters benefit both BBC and commercial multiplexes”
· “further investment is required if local DAB is ever to compare with existing local FM coverage”

How will this improved DAB infrastructure be paid for? Digital Britain had suggested:
· in some geographical areas, “the BBC will need to bear a significant portion of the costs”
· “however, the full cost cannot be left to the BBC alone”
· “some [commercial radio] cost-savings must support future [DAB] transmitter investment by the local multiplex providers”
· “the investment needed to achieve the Digital Radio Upgrade timetable will on the whole be made by the existing radio companies”

Interviewed about these issues for the Media Show were:
Tim Davie, Director of Audio & Music, BBC [TD]
Phil Riley, former Chief Executive, Chrysalis Radio [PR]

[Tim, where is this money coming from?]

TD: The truth is that I can’t say I can find it. What I have been saying very clearly is that I can make a case for it. And, where the money comes, or could come, from I think is pretty well articulated in public debate, which is… We have been spending money against broader digital distribution projects – the digital television switchover – and where we spend the Licence Fee beyond content, it’s this thing called the ring fenced fund where we’ve been investing in digital television switchover. Now, as the radio guy, it’s saying ‘we have a case for this medium’. We love radio. We think there’s a really good case for it being there as an investment ….

[This investment has got to happen pretty quickly to stand any chance of getting us to the 2015 date which the government have set us as their target for switching from analogue to DAB. That means quite a lot of things have got to happen by 2013. That’s into the next Licence Fee settlement. So you need to find £100m for your 600 extra [DAB] transmitters, or whatever it is, in this settlement. Have you got it?]

TD: Well, we have said that we don’t think – and we’re yet to see what that looks like because we haven’t done TV switchover that ….

[Have you got the money? You have to start spending now, you can’t leave it because [otherwise] you’re never going to get there, are you?]

TD: We’ve said that as part of Digital Britain – it’s all in the report – it says that in the course of the next 12 months, even if we wanted to spend money at this point, we don’t quite know what we are spending it on. Without getting too technical, if you look at the ….

[On ‘Feedback’, you’ve said 600 transmitters are needed to get to an equivalent coverage of FM and you said the BBC wouldn’t go there unless coverage was roughly equivalent to FM.]

TD: Specifically, the minority of money is those 600 transmitters that gets you on the national multiplex, which is what the big stations like Radio 4 go on, that gets you to 98% cover. The bigger money is in sorting out the regional and local stations which are a bit of a patchwork and that investment – the numbers are loose because we are going to be doing some detailed planning with the commercial sector on ….

[Very briefly, a one-word answer. Do you have any money set aside now to spend on this purpose?]

TD: No.

[Splendid.]

………………………..

[Does commercial radio have any money to spend on this proposal?]

PR: If you read the Digital Britain report in its totality, there are a number of proposals for changing the way commercial radio operates, in terms of co-location and regional licences becoming national networks. Now, bringing all of that together as a piece, will that free up sufficient additional funds for the commercial sector to be able to roll out more digital? I don’t know. You’ll have to ask the other commercial players.

[What’s your guess?]

PR: ‘No’ is the answer at the moment.

[Because one of the issues with DAB surely is that the commercial side of the equation has already, in commercial terms, failed. Increased costs, but no increased revenues. Not even Channel 4 was able to galvanise it to make it change. Is there a commercial model in DAB at all, do you think?]

PR: I think DAB is a terrific platform. The die has been cast. 9 million sets, 20% of all listening. DAB is here to stay. So, we can’t go back to not having DAB so actually we’ve got to go forward and we’ve got to go forward with as sufficient a pace as we can. My concern would be trying to go forward too fast and falling over ourselves.

[The government has said they want to do this in 2015. They have said that by 2013 they won’t press the button to switch off [FM] until …. They will give 2 years’ notice. So, by 2013, I think they want 50% of listening to be on DAB, and 90%+ coverage of DAB across the country. Is that timetable in any way realistic? The BBC say they have no money set aside just now. You say that you don’t. How’s it going to happen?]

PR: I think Tim famously used the euphemism ‘ambitious’ yesterday and I think ‘ambitious’ is the right word for it. Personally, I can’t see us getting to 2013 although, to be fair to the Digital Britain report, it says it will test it every year from 2013 and when we get there, then we will move on to Phase Two.

[Tim, lots and lots of listeners have contacted this programme and other programmes whenever they have been asked and are very very worried about this. They think they might have 3, 4, 5, 10 – 15 in one case – analogue radio sets and they have been asked to go through all the rigmarole of changing them and ‘what for?’ is the question they ask. ‘Why are you asking me to do this? It’s not broke, don’t fix it’.]

TD: If you look at the industry as a whole, you could argue that we are not ready for the future. Actually, although we have some fantastic services on-air now, we have just talked about commercial radio – their financial model looks pretty broken at this point.

[Isn’t the key question ‘content’?]

TD: I think the case to the listener is really clear, which is – digital radio can present a much wider range of national stations, it can offer functional benefits. We’ve seen what that can bring in something like television. There is a real challenge for the industry to step up to the plate and deliver that content, and that has to happen. And, to be very clear, I am very worried, like the listeners, that if you have all these old [analogue radio] sets and there is no benefit, we should not be moving. What’s happened in the last few weeks though, and months, is that the radio industry as a whole has said ‘we’re going to go for DAB and we’re going to try the transition to digital’. We haven’t said that it is actually happening until we’ve earnt that, which will be at a threshold level.

Digital radio stations: one step forward, two steps backward

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

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

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

This graph illustrates just how sharp was the decline in listening to digital-only radio stations during Q4 2008:

  • total digital-only radio station hours listened are down 14% quarter-on-quarter, and down 5% year-on-year to 34m hours/wk, to their lowest level since Q1 2007
  • hours listened to commercial digital-only stations are down 12% quarter-on-quarter, and down 11% year-on-year to 20m hours/wk, to their lowest level since Q1 2007
  • hours listened to BBC digital-only station are down 17% quarter-on-quarter to 14m hours/wk, their lowest level since Q4 2007.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

DAB v internet: the tortoise and the hare

On Wednesday 10 December, Lord Carter told the Parliamentary Culture, Media & Sport Committee:

“Radio can be received on mobile phones and through the television. Could you have digital radio without DAB? Yes, you probably could. If we do want DAB, we need to push it along a bit or technology will drive it out”.

“Push it along a bit” probably means state intervention and/or state subsidy.

“Technology will drive it out” probably means technologies such as IP-delivered radio via the internet, Wi-Fi, Wi-Max, 3G and 4G, as well as broadcast radio delivered via Freeview, Freesat, Sky and cable.

The same day, evidence was published that demonstrates how one of these platforms – internet-delivered radio – is already poised to eclipse DAB radio. “With broadband internet access rising from 51% of UK households in 2007 to 56% in 2008 and the high profile launch of the BBC iPlayer, listening to the radio online has never been easier or more popular”, said the new RAJAR internet radio listening report. Its definition of internet listening is:

  • listening live via the internet
  • listening again via the internet
  • personalised online radio
  • podcasts.

The most informative graph in the RAJAR report was the one that wasn’t there….. the one that compares the weekly adult (15+) reach of the DAB platform with the internet platform:


Unfortunately, usage data for the DAB platform is not available on a comparable basis prior to Q2 2007. Suffice to say that commercial radio launched its national Digital One DAB multiplex on 15 November 1999, which could be considered “Year Zero” for DAB (although it was some time before DAB receivers filtered into shops). What is startling is that the reach of internet radio is so close behind that of DAB. If you were to add up the market value of all the marketing spots promoting the DAB platform that have run on BBC TV and radio and commercial radio over the last decade, their total would run into £m. Add the cost of the sterling efforts of the Digital Radio Development Bureau, jointly funded by the BBC and commercial radio, since 2001 to convince us of the value of DAB radio.

Now compare this with the marketing cost to date spent persuading us to listen to radio via the internet (lots of mentions within BBC radio programmes, but fewer on commercial radio), and it pales by comparison. And yet, listening via the internet is way up there, just behind DAB, driven largely by consumer demand rather than by public intervention.

The other interesting statistic in the RAJAR report was the glaring difference between the online impact of the BBC and the commercial radio sector. Of those who listen to radio via the internet,

  • 71% listen via a BBC radio website
  • 25% listen via a UK commercial radio website
  • 13% listen via a non-BBC, non-UK commercial radio website

This merely confirms something that was evident already – in the 1990s, the biggest players in the UK commercial radio industry decided to put all their ‘future of radio’ eggs in the ‘DAB’ basket and, as a result, neglected to make a comparable investment in the online platform. The BBC has been much more careful (and, admittedly, has the immense resources available) to develop content across a number of platforms simultaneously, and is now reaping the return. Commercial radio could have developed its own ‘last.fm’ but chose instead to invest huge sums in the DAB platform infrastructure, rather than content, and is now paying the price.

Lord Carter will have to make a difficult (and potentially expensive) political recommendation between now and January 2009 about the future of the DAB platform:

OPTION 1 – Massive state financial intervention to prop up the expensive DAB transmission infrastructure. Who benefits? UK industry. The end result is a closed, almost UK-exclusive system (just like right-hand drive cars). UK radio set manufacturers sell lots of DAB radios in the UK because it is not worthwhile for the global consumer electronics groups to manufacture DAB radios for such a small addressable market. The large UK commercial radio groups and the BBC benefit because they already own both the entire DAB multiplex infrastructure and most of the content broadcast on it, ensuring that most radio listening in the UK remains under their control. Who loses? The consumer. They get a marginally increased choice of radio content that, so far, has failed to propel the DAB platform to mass take-up.

OPTION 2 – No state intervention to support the DAB platform. Who loses? UK industry. DAB remains economically unviable (just as it has been for a decade), forcing commercial radio groups to withdraw from the platform (with substantial balance sheet write-downs). DAB becomes the province of the BBC to offer minority interest services. UK radio set manufacturers lose most of their promised UK market for DAB radios. 7m DAB radio owners complain to Ofcom that all they can receive now on DAB are BBC stations. End result. The UK joins the rest of the world in accepting that IP-delivered radio is an emerging global platform from which the UK benefits from economies of scale (cheap receivers, evolution and innovation). The UK has to admit that DAB seemed like a promising technology in the pre-broadband late 1980s, but its slow implementation was overtaken by technological developments elsewhere and the globalisation of content.

As recently as 2004, The Guardian reported:

“The DTI hopes digital radio will become a rare British industry success story; Ofcom thinks it could get some juicy spectrum to sell off; manufacturers and retailers see rich pickings (“the flat-screen TV of tomorrow”, as the man from Dixons told me). Everyone, that is, except the British consumer, who is showing worrying signs of being dazzled by the new technology. According to Stephen Carter, Ofcom chief executive and digital radio owner, most Britons would be on my wife’s side – pretty sure that DAB is a good thing, but not quite sure what it is. Last Thursday, in a drum-beating speech to the Social Market Foundation, Carter described the radio industry’s foray into digital platforms as at a tipping point between a Sky-style digital success story and an industry-wide egg-on-face scenario.”

Four years later, are we any more certain about DAB? There may be a lesson to be learnt from Taiwan:

“The development of DAB in Taiwan passed through three stages: planning, preparation and a final stage characterized by setbacks. It now looks like it may disappear altogether…… After two years of trials, DAB experienced problems, partly because of a lack of promotion, inadequate public knowledge of the technology and high-priced DAB radios that few were willing to purchase. As a result there were too few consumers to keep DAB up and running. In July this year, Taiwan Mobile announced that Tai Yi would be dissolved, and the outlook for other DAB providers is not very bright. The biggest problem for Taiwan’s DAB industry was a lack of forward-looking policies……”