Tag: digital radio

Digital radio switchover – searching for the Credible Plan

Ed Richards, Chief Executive, Ofcom [ER]
Q&A @ Radio 3.0 conference, London (excerpt)
21 May 2009

Q: Isn’ t the big issue with DAB ‘[FM] switchoff’?….

ER: It is one big question but it definitely isn’t the only big question. And the difference with TV is very instructive. One of the profound differences with TV, of course, is that in the case of TV you couldn’t extend Freeview digital television without turning off the analogue spectrum, and that’s a profound difference. One of the other differences, of course, is that the value of the spectrum released by analogue switchoff in television is extremely high. Indeed, people are fighting each other metaphorically to get hold of it and have been ever since we mooted the idea some years ago. So there are some very big differences. The other obvious differences are that people have more radios than they do have TV’s, and so on and so forth. It is a very big question but I don’t think it’s the only one. That is why we put as much emphasis on the inherent sustainability and viability of digital [radio] services. It is always going to be asking people a lot to simply look forward, especially in the context of no switchoff date – and even if there was a switchoff date, it would be some years away – it’s always going to be asking them a lot to take losses for a long period. If only we can get to a point where DAB services are essentially at least breakeven, the better because that gives you a base from which to plan the other more challenging things, which include switchoff, and we want to work quite hard at that alongside the debate about Digital Britain.

Q: Without a date, it feels like it’s almost over the horizon. People I talk to in radio nearly all say ‘what we need is a date’. Is Digital Britain going to give us a date, do you think?

ER: That is a common theme that you hear, it is true. Before answering the thrust of that, I reiterate that I think you need to address the date and the migration issue, but you need to address the underlying economics first and immediately at the same time. And that means a frequency plan, savings in transmission, and so on and so forth, and it means continuing growth and more listeners on DAB. I hear everybody, a lot of people, say that we have to have a date. Will Digital Britain give us a date? I don’t know. There are a number of things we don’t know about Digital Britain yet.

Q: Would it be helpful if it did give us a date?

ER: It depends what the date was. It wouldn’t be helpful if the date was next year. I think the most important thing is … Let me rephrase the question slightly. You can only have a date if you have got a credible plan that delivers that date. So I could give you a date now but it would be meaningless. It would be rather like the television switchover date in one or two countries around the world – which I won’t name because it would get me into trouble – but they name dates, the governments stand up and puff up their chests and name dates but they are meaningless and, as soon as they have left the room, everybody laughs. So a date is meaningless without a credible plan to get there, so I recognise ….

Q: It’s a bit chicken and egg, isn’t it?

ER: Well, you have to have one in order to have the other. I think where people really are on this is, when they say we must have a date, that is another way of saying we must have a credible plan which gives us a date, and I would agree with that ….

Q: But how close are we to a credible plan?

ER: We are getting closer. We are doing a lot of work, as I said in my contribution, around the re-planning and I think the re-planning is very important to it. We need to have a clear set of proposals about quality of service and coverage and all those sorts of things, and those things need to be in place before you can have a credible plan. But there is work actively taking place on that and being driven forward. But better to get that right and to have a sense of urgency and determination, than just to pluck a meaningless date out of the air.

…..

Q: I’m still struggling slightly with [FM] switchoff only because it strikes me that almost everything hinges upon this and what you say is perfectly sensible – you can’t really have switchoff until you have a credible plan – but we know that, in the real world, unless we are forced by one thing or another, we don’t actually face this and businesses are very similar to life and everybody is still hedging their bets on FM. I speak to mobile phone manufacturers who say ‘well, look, we only have room in our phones for so many transmitters and receivers. We have got Bluetooth, we have got infra-red, we have da-da-da-da-da and all our users tell us they really value FM’. So they are not going to switch it until they have to. People with DAB radios in their cars are still a rarity and the manufacturers are not going to start installing them as standard until someone says ‘OK, 2013, 2012, 2011, whatever it is – that’s it’.

ER: Well, that’s the attraction of setting a date and driving everyone to it. But I’m trying to think of something different to say than what I said earlier.

Q: Would you favour it as an option?

ER: If there is a credible plan, yes. You’ve got to have a credible plan. And what you can’t do is just pluck a date out of the air and say ‘we’re all going to get there’ because I know what will happen under those circumstances. What will happen is that it will be fine for about a month and then, going for coffee outside the conference room, everyone will say ‘well, that is not going to happen, is it?’

Q: Except in TV, it has and it is.

ER: In TV, we wrote the original document which said ‘we will push on to digital switchover in this timeframe and here is how you can do it’. We wrote that document and said ‘these are the six of seven things you have to do to deliver it’ and we knew what you had to do to re-plan, we knew what you had to do to lead people across, we knew about the re-tuning, we knew the vast majority of things and there was a plan. That plan was then picked up by the creation of Digital UK, and so on. We’ve got to get to that next step, so I think it’s an exciting prospect but we’ve got to believe that it’s credible and deliverable. So I know that I’m repeating myself and not being particularly helpful but I do genuinely believe that and we need to – senior people in the industry need to sit round, look at this, stare at the steps and say ‘will that deliver it, is it consistent with what is in the audience’s interest?’ There’s no point in doing something which audiences then regard as a disaster. We have to do something that audiences, as it took place, will regard as a good thing. That’s an acid test and I think that’s possible, but there’s a lot of work to do and we’ve got to see if we can get there.

Exclusive digital radio content: saying it and doing it are two different things

Everyone seems to agree – it is the availability of exclusive radio content on digital platforms that will drive consumer uptake of the hardware and digital listening.

In its Final Report, the Digital Radio Working Group had said in December 2008: “We must present a compelling [DAB] proposition for consumers not only through new content, but in building a whole new radio experience”.

In its Interim Report, Digital Britain had said in January 2009: “We will expect the radio industry to strengthen its [DAB] consumer proposition both in terms of new and innovative content and to take advantage of the technological developments that DAB can offer”.

In its report commissioned for RadioCentre, Ingenious Consulting had said in January 2009: “…. there is not as much DAB-only material as hoped, and very little that’s truly compelling – there’s no ‘must have’ content as with sports and movies on Sky [TV]”.

In its submission to Digital Britain, Ofcom had recommended in March 2009 “the creation of new commercial radio stations to create a consumer proposition analogous to Freeview: a wide range of popular and niche services, delivered digitally”.

The Digital Radio Working Group had spent a year meeting throughout 2008 and made its final recommendations in New Year 2009. Five months later, for the consumer turning on their DAB radio, the choices do not seem much different than they were then. While the industry continues to talk and talk and talk and talk endlessly about what should be done, the consumer proposition for digital radio seems to be disappearing down the tubes. The data from the Q1 2009 RAJAR audience survey demonstrates that.

For commercial radio, its digital stations are now capturing a lower proportion of its listening (4.5%) than a year ago (5.5%). Only 23% of listening to commercial radio via digital platforms is to exclusively digital content, compared to 30% a year ago. These results are not surprising, given the closure of many digital stations during 2008 (Core, Oneword, Life, TheJazz, Virgin Radio Groove, Yarr, Easy, Mojo and Islam Radio). In 2009 so far, Stafford’s Focal Radio and London’s Zee Radio have also closed.

For the BBC, the results are almost as disappointing. Its digital stations have recovered from a poor performance last quarter, but it appears that much of this improvement may have been due to heightened public interest in 6Music following the Ross/Brand affair. BBC digital stations now capture 2.9% of listening to the BBC, compared to 2.7% a year ago. Only 14% of listening to the BBC via digital platforms is to exclusively digital content, compared to 16% a year ago. For the BBC, it is beginning to look as if interest in its digital content is no longer growing as it had been during 2006 and 2007.


The summary graph (below) of hours listened to exclusively digital radio stations demonstrates the trend’s recent tendency to have levelled out, primarily as a result of commercial radio’s performance since 2007, but now also as a result of the BBC’s performance in recent quarters. Whilst commercial radio experienced significant station closures in 2007/8, the BBC’s portfolio has remained constant and is receiving as much cross-promotional marketing exposure as ever.


It is true that some new initiatives to provide exclusive digital radio content have happened in recent months:

* Colourful Radio launched on DAB in London on 2 March 2009.

* BFBS Radio is available nationally on the Digital One DAB multiplex from 20 April 2009. The station is government funded and aimed at British forces and their families. Unfortunately, listening to BFBS by the general public is likely to substitute for either commercial radio listening, reducing its ratings and revenues, or substitute for BBC radio, reducing its ratings. In the end, neither result will help commercial radio or the BBC make DAB a successful platform.

* NME Radio launched on DAB in London on 13 May 2009.

* Amazing Radio is available nationally on the Digital One DAB multiplex from 1 June 2009 on a six-month trial. Amazing Tunes is a UK website showcasing unsigned bands and musicians. This is a great idea for an on-demand internet service but I am not sure this content will prove so appealing as a broadcast station. The problem, as Xfm discovered with its own disastrous experiment two years ago, is that listening to a playlist chosen by listeners can be as entertaining as looking through a relative’s 300 holiday snaps. Out of several million people’s playlists on Last.fm, I find there are no more than a handful of other people’s selections that I can sit through. What works well online for Amazing is not necessarily going to work in the broadcast medium.

However, at the same time:

* Bauer Radio has relocated Q Radio from London to Birmingham, and Heat Radio from London to Manchester, effectively downgrading these digital stations and making redundancies

* Bauer Radio has removed five stations (Kerrang!, The Hits, Q, Heat, Smash Hits) from the Sky platform

These downgrades are significant because Bauer is easily the biggest player in digital radio, now that Global/GCap/Chrysalis has sold/closed all but two of its digital stations, both of which (The Arrow and Chill) survive only as music jukeboxes. Commercial radio’s commitment to exclusive digital content seems to be hanging by the barest of threads. If Lord Carter decides not to respond positively to the commercial radio industry’s demands for some kind of financial support in the Digital Britain report published in a fortnight, that thread is in imminent danger of snapping.

And so the talk about the need for exclusive digital radio content is likely to run and run and run. But, as long as it remains talk rather than significant action, consumers will remain unimpressed and the graphs above will continue their present trajectories. Nobody wants this to be the outcome, but nobody seems to be doing anything concrete to stop it happening.

Digital radio: never mind the content, feel the bandwidth?

“It’s a simple equation. The BBC has had an unfair share of the analogue spectrum but digital enables the commercial players the space to compete on a much more equal footing.”
Steve Orchard, operations director, GCap Media in Music Week, 9 December 2006, p.10.

For almost an eternity, the UK commercial radio industry has complained vociferously that it has been discriminated against because the BBC has the use of more analogue spectrum than it does. The argument has been made repeatedly that commercial radio will always ‘under-perform’ against the BBC as long as the BBC is allocated more space on the FM waveband. To support this argument, its proponents hold up the fact that the BBC has four national channels on FM, whilst commercial radio has only one (they choose to ignore the fact that, additionally, the BBC has 40 local stations on FM, whilst commercial radio has 200+ local stations on FM).

When DAB radio arrived a decade ago, there was a widely held notion within commercial radio that the new technology provided an opportunity to even the score with the BBC. Whereas the government was unlikely ever to re-allocate analogue spectrum to provide equal amounts to the BBC and its commercial competitors, in digital spectrum the commercial sector pushed ahead with DAB (before the BBC did) and a successful ‘land grab’ rewarded it with much more DAB spectrum than the BBC. The prognosis was that, in the future, DAB would replace analogue usage, and that the commercial sector’s dominance of digital spectrum would eventually reward it with the dominance over the BBC it craved.

It is difficult to say precisely how much more DAB digital spectrum the commercial radio sector has than the BBC. With DAB, there is a degree of flexibility because you have the choice to either use a section of spectrum for one station (in high audio quality) or for two or three stations (in lower audio quality). Commercial radio and the BBC each have one national DAB multiplex (though their coverage of the UK is not identical). Additionally, commercial radio has 46 operational local and regional multiplexes that cover the most populous parts of the UK. These multiplexes probably more than double commercial radio’s superiority over the BBC in DAB spectrum. But then commercial radio also leases some space on its local multiplexes to the BBC for its local stations. This makes comparisons complicated.

Whatever the detail, it is obvious that commercial radio has control of far more DAB digital spectrum than does the BBC. To compound the situation, commercial radio also has control of far more Freeview digital radio spectrum than does the BBC. So, as had been hotly anticipated a decade ago, surely by now commercial radio must have the upper hand over the BBC in digital radio listening. The answer is ‘yes’ – commercial radio had almost been winning the digital race – and ‘no’ – it is no longer. In fact, the latest RAJAR data show that commercial radio’s share of digital listening (40.5% in Q1 2009) has fallen below its share of analogue listening (41.6% in Q1 2009) for the first time.

These data cover all digital listening to all stations available on digital platforms (including simulcasts of analogue stations). However, because of the RAJAR methodology, the data do not include time-shifted listening to ‘listen again’ and ‘podcast’ radio content. These are both areas in which the BBC offers far more content (and markets it much more heavily) than does commercial radio. If it were possible to incorporate this time-shifted listening into the above data (which it is not), it is likely that commercial radio’s share of listening would be much lower than its present 40.5% via digital platforms.

The long-held belief that commercial radio would somehow automatically win the war with the BBC on digital spectrum purely because it controlled more spectrum had always been mistaken. This belief assumes, somewhat bizarrely, that each consumer randomly spins their radio dial and then leaves it on whatever frequency the radio has landed on. Only by utilising such a random system of selection would usage ever be proportionate to the amount of spectrum. Unfortunately for the commercial radio sector, consumers are not mindless idiots. Anyone endowed with an Economics GCSE can easily see the gaping holes in this notion. Apparently few in the commercial radio industry could.

Consumers make choices and the radio station they decide to listen to is the one from which they expect to derive the most ‘utility’. This is why ‘content is king’. This is why BBC Radio Two and Three both use equal amounts of spectrum, but the former has a 16% share, and the latter 1%. And this is why one fantastic radio station will always attract more listening than any number of mediocre ones (viz Atlantic 252, Laser 558, Luxembourg 208). It is not about how much spectrum you occupy, but about what you do with it. Consumers are motivated to listen by your content, not by your spectrum.

For commercial radio, after a decade of trying to convince itself and others that its abundance of digital spectrum would somehow entitle it to automatically trash the BBC, the dream (and it was a dream) is now over. Belatedly, it is back to the drawing board. As the BBC, PrimeTime, Bauer and Planet Rock have demonstrated, if you put some content on digital radio that consumers want to listen to, then they will listen (if they are made aware it exists through a marketing campaign). Digital radio would have a lot more listeners today if that simple truism had been understood by more players in the commercial radio sector a decade ago.

DAB: actions speak louder than keynote speeches

Giving the commercial keynote speech at the Radio Reborn 2009 conference this week in London, Global Radio chief executive officer Stephen Miron banged the drum for the radio medium, banged the drum for Global Radio, and banged the drum for digital radio.

It was the last of these three exhortations that appeared particularly contradictory, given Global Radio’s track record with the DAB platform. However, nothing could stop Miron from proclaiming:

* “At Global, we believe that the government must set a clear and rightfully ambitious programme for digital migration.”
* “As you would expect from the largest commercial radio broadcaster, we plan to play an active role in helping ensure the successful delivery of that [digital] strategy.”
* “We back digital and we back the [Digital Britain] strategy, but we cannot afford to get this wrong.”
* “Digital Britain has made us focus our minds. Now the government must focus theirs.”
* “We have embarked on a clear path to digital, to DAB, and we need to make serious progress and do it quickly.” [emphasis added]
* “This means naming a date for [digital] migration …. A firm date needs to be set.”
* “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.” [emphasis added]
* “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.”

Miron’s comments seem particularly difficult to reconcile with Global’s ‘actions’ on DAB, which hardly demonstrate confidence in the platform.

1. Global Radio exits DAB multiplex ownership
On 6 April 2009, it was announced that Global Radio sold its 63% stake in the sole commercial radio national DAB multiplex owner Digital One to transmission provider Arqiva. Global Radio also sold its local DAB multiplex business Now Digital to Arqiva. After almost a decade of operation, these multiplexes were still to generate an operating profit. Global Radio’s involvement in DAB multiplexes was thus reduced, at a stroke, from having been the biggest player to zero, writing off a decade’s worth of massive investment in the process, because the transaction is likely to have happened for a nominal amount.


2. Global Radio/GCap Media closes digital stations
Digital stations Capital Life and TheJazz, both of which had been carried on the national Digital One DAB multiplex, were closed on 31 March 2008, the day that Global Radio acquired GCap. (GCap had already closed another national digital station Core in January 2008).

In a recent interview, Tony Moretta, chief executive of the Digital Radio Development Bureau, tried to explain the closures of these stations: “Well, the main stations that went away – aside from all the Channel 4 stuff, which never launched and was nothing to do with DAB – where the GCap stations, such as The Core and thejazz also had nothing to do with digital.” [sic]

3. Global Radio turns digital station The Arrow into music jukebox
In December 2007, Global Radio dropped live presenters from the digital radio station The Arrow which it had acquired from Chrysalis Radio. The Arrow was removed from DAB in London in May 2008, and is now only available over-the-air on the 5 MXR regional DAB multiplexes. However, Global’s recent sale of its share in these multiplexes to Arqiva puts a question mark over the station’s future. Why would Global Radio pay Arqiva to carry a digital station in which it is has demonstrated no interest to develop?

4. Global Radio does nothing with digital station Chill
Part of Global Radio’s acquisition of GCap Media, Chill is also only available over-the-air on the 5 MXR regional DAB multiplexes (and not in London on DAB). Like The Arrow, Chill’s future looks very precarious. However, it would prove embarrassing to close these two digital stations before Lord Carter’s final Digital Britain report is published.

5. Global Radio cancels deal with Sky for digital news radio station
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 spokesperson said then that “Global was not prepared to make the necessary investment in this project”.

6. Global Radio scraps digital-only shows on Galaxy Radio
In January 2008, Global Radio dropped dedicated shows from the digital version of its Galaxy Radio brand, instead simply simulcasting its local FM output on DAB multiplexes that also carry it.

So what is going on here? Miron’s speech is a large part of Global Radio’s public campaign to cosy up to Lord Carter ahead of the publication of his final Digital Britain report. Global needs a big favour from Carter if it is to retain a shred of intrinsic value on its corporate balance sheet – an automatic renewal of its Classic FM national analogue licence (see my earlier blog entry). In return for the favour it seeks, Global is responding to Lord Carter’s insistence that the radio industry speak with one voice on the issue of the transition from analogue to DAB radio.

The important thing here is to be seen to be saying the right things publicly about DAB – it’s great, it’s the future, we are committed to it, we love it. Forget the past. Forget our recent ‘actions’. Conveniently forget that, less than a month ago, we transformed our company from the leading player in DAB infrastructure into less than an also-ran. DAB is the future – we are part of that future. Our commitment is to say all the right things, and probably to do absolutely nothing. The endgame is to persuade government to amend primary legislation so that Global Radio can hang on to Classic FM, as Ashley Tabor explained: “It is one of those times when common sense has to prevail. Classic FM is a national treasure and to lose it would be tragic.”

The consumer and trade press willingly obliged by reprinting chunks of Miron’s speech without any kind of critique. This ensures that the press cuttings, demonstrating Global Radio’s glowing confidence in DAB, will land on Lord Carter’s desk and, Global hopes, convince him of the ‘common sense’ of not bothering to auction the Classic FM licence to the highest bidder (which is required by existing legislation). Here is a selection of that press coverage.

Broadcast magazine reported that “Miron’s comments mark the first time that Global Radio – the largest commercial player in the UK radio sector – has come out so strongly in favour of DAB and migration” under the headline “Global Radio chief demands DAB deadline”.

Radio Today reported that “Global Radio has also called on the government this morning to set a switchover date for DAB” under the headline “Industry unites for a DAB future”.

Marketing Week reported that Miron wanted the government “to name a date for a switchover from analogue” under the headline “Radio industry needs to be bold, says Miron”.

Media Week reported: “Global Radio has made one of its biggest interventions in the debate over the future of digital radio, with chief executive Stephen Miron calling on the Government to set a date for digital radio switchover”. The headline was “Global boss Miron calls on Government to name digital radio switchover date”.

The Guardian, to its credit, published the only report which acknowledged Global had “sold its majority stake in national DAB platform Digital One to transmission business Arqiva earlier this month”, though its headline nevertheless read “Government must be bolder on digital radio, says Global chief Stephen Miron”.

But today’s Sunday Times developed the theme by including this comment from Global Radio’s Ashley Tabor about digital switchover: “I am really confident now that all the right things are happening that will get us where we need to be. We are in favour of switch-off, so can we do it quickly please?” Maybe Lord Carter is tiring of Tabor’s persistent phone calls, so Ashley is now having to turn to weekend press puff pieces to labour his point.

The Sunday Times article’s headline, without a hint of irony, is “Global evangelist for digital radio”. Closing digital stations, selling off DAB infrastructure, baling out of DAB development deals – is this some kind of ‘do as I say, not as I do’ evangelist?

UK Commercial Radio in numbers: Q4 2008

Click here for my latest presentation containing data for the UK commercial radio industry’s key performance metrics in Q4 2008 on revenues, audiences and receiver sales.

Revenues

Commercial radio had started 2008 positively with revenues in Q1 up 7.3% year-on-year. After that, everything slid downhill. Q2 revenues were down 10.1%, Q3 down 7.8% and Q4 down 14.5% year-on-year. 2008 ended with Q4 revenues of £129m, the worst performing quarter since 1999. However, in 1999, only 244 commercial radio stations had been licensed, whereas that total now exceeds 300. The result is a revenue squeeze on commercial radio businesses unseen since the 1990/1 recession.

The present situation is a direct result of a severe contraction in national advertising expenditure on radio, the last three quarters’ totals having been down 15.9%, 12.2% and 21.2% respectively year-on-year. Whereas, in 1990, national advertising had accounted for 47% of commercial radio’s total revenues, by 1999 it was contributing 67%. National advertisers’ enthusiasm for radio had contributed significantly to the commercial sector’s growth in the 1990s, but it has also made the medium more vulnerable to national economic trends and the shifting marketing priorities of the big brands.

Although more concentrated sector consolidation had once been touted as the saviour of the commercial radio industry, the sector is now in grave danger of being crucified by the very policy for which it had lobbied. Two owners now control two thirds of the UK commercial radio industry, which would render the potential failure of one of them a catastrophe of hitherto unseen magnitude. Current economic pressures are likely to create casualties at both ends of the scale, with some smaller radio groups proving just as likely to run out of cash as their larger rivals. Whether your radio group’s bank loan is £2m or £100m, debt servicing has now become your biggest headache.

Audiences

With so much industry attention focused on sharply falling revenues and the necessity to cut group central costs and station overheads, it is inevitable that investment in content has not been a current priority for many players. Total hours listened to commercial radio (427m per week) have continued their long-term decline, with Q4 2008 being marked as the second worst quarter this millennium (Q1 2008 was the worst). Although commercial radio’s audience reach has been maintained, average time listened fell back to 13.7 hours per week in Q4 2008, equal to the all-time low in Q1 2008.

The blame for these declines can be laid at the ears of listeners aged under 35, who are choosing to spend less time with commercial radio. Over the last eight years, 15-24 year olds’ listening to commercial radio has fallen from an average 15.3 to 12.8 hours per week, while 25-34 year olds’ listening has fallen from 16.1 to 13.1 hours per week over the same period. These changes, combined with the declining numbers of these younger demographics within the UK population, can only make commercial radio more susceptible to long-term decline.

At the same time, the BBC continues to chip away at commercial radio’s ‘heartland audience’ of 15-44 year olds, with Radio Two maintaining its position as the UK’s most listened to station. In London, the BBC performed particularly well in Q4 2008, pushing commercial radio’s share of listening below 50% for the first time probably since the early 1990s. As noted previously, commercial stations outnumber BBC stations in London by a factor of three, demonstrating that it is ‘quality’ rather than ‘quantity’ that creates success with listeners.

Digital Radio

The grim figures for digital radio only add to the commercial sector’s woes. Although cumulative sales of DAB receivers passed 8.5m in Q4 2008, unit sales were down 10% year-on-year, the first occasion that the vital Christmas quarter has exhibited negative growth. The danger is that the relatively high price tag of DAB radios will not entice buyers in Credit Crunch UK, particularly when the content offered on the platform is not being expanded or enhanced.

It is ‘content’ that continues to hold back digital platform growth. Only 4.6% of commercial radio listening was attributed to digital-only radio stations in Q4 2008, the lowest level since 2007, and a consequence of several commercial digital station closures in 2008. An increasing proportion of commercial radio listening via digital platforms is to stations already available on analogue (76% in Q4, up from 72% a year earlier) which demonstrates that exclusive digital content is not effectively driving consumer uptake.

Although the radio industry has been busy with discussions about the future of the DAB platform for more than a year now, almost nothing has changed from the perspective of the consumer. In Q4 2008, Bauer closed five-year old Mojo Radio, Sunrise closed five-year old Easy Radio, and Islam Radio in Bradford closed. The revived Jazz FM replaced GMG brands on four regional DAB multiplexes, but owner The Local Radio Company is already seeking a sale of this digital station.

As noted previously, many of the remaining digital-only stations (both commercial and BBC) suffered significant audience losses in Q4 2008.

Commercial Radio Station Transactions

As yet, there has been no announcement from Global Radio as to the sale of its local stations in West and East Midlands that had been required by the Office of Fair Trading in August 2008 as a condition of its acquisition of GCap Media.

On 31 August 2008, Global Radio quietly handed back the AM licence for its Gold brand in Exeter and Torbay. On 23 December 2008, UTV closed its Talk 107 station in Edinburgh. On 30 January 2009, Abbey FM in South Cumbria was closed by joint owners CN Radio, The Local Radio Company and The Radio Business. In November 2008, CN Group had said it would close its Touch FM stations in Coventry and Banbury if it did not find a seller, but nothing further has been reported. Ofcom decided at its November 2008 radio meeting to “start formal licence revocation proceedings” against KCR FM in Knowsley which has been “failing to broadcast in line with its licensed format” since 24 October 2008.

In September 2008, UKRD sold Star Radio in Cheltenham to a local company, and The Revolution in Rochdale to Steve Penk. Tindle Radio sold Dream 107.7 in Chelmsford to Adventure Radio in September 2008, and sold Dream 107.2 in Winchester to Town & Country Broadcasting in November 2008. In January 2009, UTV sold Imagine FM in Stockport to Damian Walsh. In February 2009, UKRD sold Star Radio in Bristol to Tomahawk Radio. No prices were reported for any of these transactions.

The insolvency of Laser Broadcasting in November 2008 resulted in control of five of its licences – Bath FM, Brunel FM in Swindon, 3TR in Warminster and QuayWest in Bridgwater and Minehead – being transferred to Southwest Radio. It appears that control of Laser’s Sunshine FM in Hereford & Monmouth has transferred to Murfin Music.

The Local Radio Company, one of only two remaining plc’s in the radio sector, is seeking to raise £1.51m gross through a share issue. The company’s auditors noted on 5 March 2009 that “until it is successfully completed there remains in existence a material uncertainty which may cast significant doubt about the Company’s ability to continue as a going concern”. These concerns, which could apply equally to several other radio groups, are likely to result in a rash of transactions and an unprecedented number of station closures during the rest of this year.

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: there is no alternative?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[thanks to The Guardian’s Jack Schofield]

DAB: the medium of consumer choice?

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

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

There are two distinct assertions here:

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

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

ASSERTION 1
“dedicated analogue radio sets are no longer part of the retail mainstream”

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

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

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

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

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

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

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

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

ASSERTION 2
“DAB has become the medium of consumer choice”

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

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

SUMMARY

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

Digital Britain: the devil is in the indefinite article

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

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

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

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

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

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

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

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

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

The precise wording was also reported badly by some media:

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

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

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

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

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

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

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

Warning! Digital radio objectives may appear closer than they are in reality

By coincidence, the Interim Report of Lord Carter’s Digital Britain team was released on the same day as the latest quarterly RAJAR radio ratings data. The former focused optimistically on the inevitability of the UK replacing its existing analogue radio system with the DAB platform. The Digital Britain report stated:
“We are making a clear statement of Government and policy commitment to enabling DAB to be a primary distribution network for radio” and “we will create a plan for digital migration of radio…….”

This coincidence of timing between Lord Carter and RAJAR offered a perfect PR opportunity for the radio industry to emphasise just how successful its drive towards digital migration has been to date. But where exactly were the stories of dazzling digital radio success?

The RAJAR press release noted that “digital listening hours [are] up 10% year on year” and “DAB ownership [is] up 35% year on year”. The brief RadioCentre press release avoided mentioning digital radio altogether. The BBC press release only mentioned digital radio in the context of its digital-only stations, but nothing specifically about the DAB platform. The Digital Radio Development Bureau [DRDB] press release was headed “Digital listening and hours up” and noted that “radio listening via a digital platform has increased year on year while remaining stable quarter on quarter”. The Bauer Radio press release avoided all mention of the DAB platform. So, not much evidence today of digital radio’s success.

What about the DRDB’s statement that digital platform usage is “stable quarter on quarter”? Only two months ago, DRDB announced the launch of a joint BBC and commercial radio Christmas marketing campaign “aimed at driving sales of DAB radios this season”. Although DAB radio hardware sales in the final quarter of the year had subsequently proven disappointing, might not the campaign have also encouraged some consumers to use the DAB platform more, if they already owned the DAB hardware?

Apparently not. Whilst it is true that the latest RAJAR data show increases in listener usage of digital platforms year-on-year, that growth is nowhere near fast enough to make DAB “a primary distribution network for radio” anytime soon, as Lord Carter has advocated. The Digital Britain report has simply decided to endorse wholesale the earlier proposals contained in the Digital Radio Working Group’s Final Report, as it stated:
“We will create a plan for digital migration of radio, which the Government intends to put in place once….. 50% of radio listening is digital”.

Furthermore, the Report pledged the Government to “work with industry to satisfy the migration criteria by 2015 and, where possible, identify initiatives which could bring forward the migration timetable”.


These are bold words. The RAJAR data shows digital platforms’ share of listening was 18.3% in Q4 2008, down from 18.7% the previous quarter, but up from 16.6% year-on-year. If this last year’s rate of growth is projected and compounded into the future, the 50% criterion would not be attained until 2019. To achieve the desired outcome by 2015, let alone before 2015, would necessitate a remarkable change in radio listening habits, the likes of which have not been witnessed to date.

DAB is presently, by far and away, the most significant platform for digital radio listening (the others are digital TV, the internet and ‘digital’ mobile phone). As a result, Lord Carter’s anticipated increase in digital radio listening is heavily dependent upon consumer purchase of DAB radio receivers, rather than simply a switch from one available technology to another. However, the disappointing sales of DAB hardware last quarter point to sales growth being unlikely to move into positive territory during 2009.
DAB receiver sales in 2008 did not meet the forecast made by the DRDB in 2007, let alone the more optimistic forecasts of previous years. The DRDB did not publish a sales forecast in 2008, but there is little doubt that the growth trend is beginning to look more linear than exponential. DAB receiver uptake is presently the main pre-requisite for growth in digital radio usage and one that is looking increasingly uncertain.

The other essential factor is consumer usage, not just ownership, of DAB radios. If owners continue to listen on their other analogue radios (the average household has six radios) rather than via DAB, it will still take a long time to reach the 50% threshold. It surely must be the exclusive content available on the DAB platform that will promote its usage (though other factors such as DAB’s ease of use and signal strength will play a part). However, 2008 saw a significant reduction in available DAB content, precipitated by GCap Media/Global Radio’s decision to withdraw almost entirely from the DAB content market.

Somewhat surprisingly, given this reduction in available content, the DAB platform’s share of commercial radio listening showed a significant increase last quarter (to 9.9% from 9.2% the previous quarter) but the aggregate usage of digital platforms has stayed remarkably flat during 2008 at around 19%. Put simply, we are not seeing much, if any, growth in digital platform usage for commercial radio. (NB: much of the apparent growth in the graphs above and below derives from re-distribution of earlier ‘unspecified’ respondent data in recent quarters.)
If commercial radio’s success with digital platforms seems ‘stuck’, then the BBC could be in an even worse position. In the last quarter, usage of both the DAB and internet platforms declined, leading to old fashioned analogue radio having accounted for a greater proportion of listening than in the previous quarter (up from 68.8% to 69.6%). This is particularly alarming, given the BBC’s much more extensive cross-promotion of its digital platforms across all media, and given the integration of radio into the BBC iPlayer in 2008. It is true that one quarter’s data alone might only prove to be a statistical aberration, but it is worrying news to arrive on the very day that Lord Carter chose to pin his colours to the ‘radio must be DAB’ mast.
Digital-only stations are not proving to be as attractive to listeners as they need to be in order to drive up usage of digital platforms quickly towards the desired 50% criterion. Year-on-year, hours listened to national digital-only stations are down 7%, yet DAB receiver ownership increased by 35% over the same period, according to RAJAR. In aggregate, 16 national digital-only stations accounted for 33 million hours listening per week last quarter, a drop in the ocean compared to radio’s total 1 billion hours listened per week.

So, the reason it might have been so quiet today on the digital radio PR front is that there really was not much good news from RAJAR to be shouting about, from either the BBC or commercial radio perspective. And the plan laid out in the Digital Britain document, which might look great in theory, still depends upon:

  • increased consumer expenditure on DAB radio hardware
  • increased investment in DAB content
  • increased investment in DAB transmission infrastructure

and thus does not appear to be a plan at all steeped in reality, in a time when discretionary expenditure (personal and corporate) is less forthcoming than ever.

The priority for the radio industry in 2009 must be survival, pure and simple. For commercial radio, it is survival in the worsening struggle against the twin evils of falling listening and declining revenues. For the BBC, it is the struggle to ensure that the commercial radio sector survives. Without a successful commercial radio sector, the BBC’s own radio services could be under threat.

Let us hope that the Final Report for Digital Britain incorporates a greater dose of realism and pragmatism, or unfolding events might easily catch up with it even before its publication.