Tag: radio

France: "Let's not mess up digital radio"

In France, Le Monde newspaper published an opinion piece last week written by Pierre Bellanger, founder and president of commercial radio group Skyrock, and Sylvain Anichini, former director general of state-owned Radio France:

LET’S NOT MESS UP DIGITAL RADIO

The powers that be are asking themselves a question about the transition to digital radio – if digital terrestrial television is a success, why would the transition to digital terrestrial radio not be a similar success?

In reply, experts have suggested there are differences between digital television and digital radio. Digital television is nationally operated and is being introduced nationally, whereas digital radio is being planned region-by-region with no certainty for radio operators who must apply for digital spectrum. Digital television offers three times as many free channels as analogue, whereas digital radio offers only a marginal increase over the wide choice available on analogue. Digital television was launched with a new generation of TV receivers – flat screens and high definition – and with adaptors for existing equipment. This is not the case for digital radio – digital radio receivers are as sexy as bricks and 140 million analogue radios will have to be thrown away.

Furthermore, digital television launched just when the medium was exploiting new sources of advertising revenues – once the preserve of radio – and when purchasing power was growing in line with the economy. Whereas, the transition to digital radio is being implemented just as the radio industry is reeling from the 2008 financial crisis and household spending is in decline. Finally, the television sector received significant financial help to fund its digital switchover. For digital radio, the subject of funding has been mentioned, and even said to be desirable, but there has been no promise to date. Public funding is not there to support the public will.

These facts have not stopped the powers that be, who have promised to overcome these obstacles. Driven by legislation, they have proceeded towards the launch of digital radio by involving key radio industry players in their strategy to select both a digital radio transmission standard and the most appropriate waveband to use. Applications have been submitted by radio opertaors for the first digital radio areas and there will be a selection process, just as for analogue radio, with licences awarded to the candidates of choice.

This process involves a substantial number of declarations of intent as to the magic of ‘digital’ in a concept synonymous with modernity. Perhaps we are forgetting somewhat that the CD, also digital, belongs more to the past than to the future ….

We are where we are. At the moment of truth when ‘poetry’ must give way to number-crunching and it seems that national digital radio transmission will cost at least 3 million Euros per annum, adding up to a total 50 million Euros per annum for the main radio groups. Additional transmitters are likely to need to be added to alleviate pockets of poor reception. And the absence of real competition between transmission providers offers little hope of reducing these costs. Finally, no new tangible sources of radio advertising are anticipated, and broadcasting will begin without a significant body of digital radio receivers in the market …

This kind of investment – more than 250 million Euros over seven years – might be justified if it could be amortised over two future decades that offered technological and economic stability. But we presently live in the midst of a complete revolution: the emergence of mobile internet access. This offers consumers the ability to connect anytime, anywhere, without interruption, to the internet via the airwaves.

The logic of the mobile internet is redefining the physical distribution of information and is disrupting traditional media and telecoms. The fixed internet has already changed our present, and the mobile internet is opening up the future. Radio is fully participating in this mutation, with radio distribution adapting to the internet protocol with ‘IP radio’.

The future is already in our hands: it is the iPhone. This revolutionary handheld device has allowed the internet to break into the mobile environment via existing communications networks. It provides access to thousands of radio stations, personalised music choices, and the user’s own media library.

Access is either through telecoms networks or through free Wi-Fi available at home or from millions of free wireless terminals. The multi-standard chip lets us forget about having to make a choice between network connections. We click and listen to our favourite radio station, that is all there is to do. ‘IP radio’ offers every radio station that is available via a conventional transistor radio.

The internet handset is connected to the car radio, the home hi-fi, the radio alarm clock, and chips that connect us to the internet on the move will be everywhere.

Already one and a half million iPhones have been sold in France. An entire industry, in less than two years, has caught up with touchscreen technology and IP handsets. It is true that the bandwidth, like the handsets, remain expensive, and telecoms networks must gear themselves towards new demands, but the trend is there: prices will fall. Besides, on the horizon is a converged pricing structure combining fixed broadband and mobile internet access in a package that offers unlimited usage. Therefore, how can we possibly build a viable market for digital radio receivers when the replacement cycle for radios is ten years, whilst that for (subsidised) mobile handsets is 18 months?

Unlike digital terrestrial radio, there is a business model for radio delivered by IP – it allows listeners to demand and receive advertisements specifically tailored to specific audience needs. This is internet audio. Listening is measured in real time and advertising space is traded in virtual marketplaces. IP-delivered radio has produced an unprecedented explosion of creative initiatives, supported by new economic models suited to micro-enterprises – look at the success of Radio Paradise.

What had once been little but a visionary thought is now beginning to make headway as a global standard – mobile internet is the new deal. It is the antithesis of the existing strata of broadcast networks specific to each medium (radio, television). In the future fragile economic landscape, where the concerns of preserving energy and the environment are becoming priorities, can we continue as if nothing has happened?

Careful thought by the powers that be should lead them to take account of these facts and to re-focus their administrative processes which risk becoming bogged down without public subsidy. Why not consider better use of digital networks that already exist? Digital terrestrial television which already allows radio, for example? And, whatever the case with radio, promote mobile internet access in the broader context of migration to a ‘digital’ France.

The planned migration to digital terrestrial radio was not a mistake, but a ‘future of delays’ overtaken by a technological revolution which has surprised entire industries. Recognising this does not take anything away from those who have defended their point of view. A change of course is never a mistake when it allows you to avoid hitting the reefs.

[unabridged]

Digital radio in France: cold feet, no funding, sue the regulator

On 10 September, the French secretary of state responsible for the digital economy, Nathalie Kosciusko-Morzet, organised a seminar “Digital: investing now for tomorrow’s growth”. The objective was to lay out to the 1000 attendees the costs and opportunities necessary to create an integrated digital economy.

On 16 September, Jean-Luc Hees, head of state broadcaster Radio France, addressed the National Assembly’s Committee on Finance & Cultural Affairs. He told them that the broadcaster’s advertising revenues were forecast to decline in 2009 by 20 to 30% year-on-year (advertising comprises 8% of revenue, the remainder from the state). He said that the rollout of digital radio in 2010 would require adding 2m to 3m Euros to the budget.

Hees told the National Assembly: “We now know fairly well the timing of the introduction of digital terrestrial radio, with launches in the coming months in three areas – Paris, Marseille and Nice. …. Our goal is to achieve 95% coverage of France by the end of 2013, according to the CSA’s [France’s media regulator] schedule. …. We must understand that everything has a cost, and the impact on Radio France’s finances means that this house will have to fund dual transmission [analogue and digital] for some time. Analogue transmission presently costs Radio France 80m Euros per annum. The rollout of digital radio will entail additional costs and this is one of the things that require funding in our next budget. I want to emphasise this.”

Amongst commercial radio operators, opinions on digital radio appear increasingly ambivalent. Franck Lanoux, deputy director of NextRadioTV said that digital radio “will not affect 95% of radio listening. It’s hard to identify how digital radio will develop – the receivers do not exist, yet the broadcasters are being asked to make significant investments. Consumers have nothing to listen with.”

The publication mediasactu commented this week that digital radio in France has become ensnared in a quagmire and that reservations amongst commercial broadcasters are becoming stronger:

“After putting all their weight behind persuading the government to adopt the T-DMB standard for digital terrestrial radio in December 2007, which is now nearly two years ago, radio broadcasters, particularly those that are members of GRN [France’s Digital Radio Group] and the Bureau de la Radio [France’s newly created radio trade body comprising the four largest commercial owners], are much more dubious about the real chance of succeeding with the transition to digital radio. Although they were unwavering only a few months ago, now major national radio groups, along with SIRTI [the French broadcasting trade union] and the regional stations, seem determined to thwart digital radio, or at least seriously slow down its development. Angered by the CSA’s decision to only select a handful of new markets to launch digital radio, as well as the costs that will be inherent with dual transmission for several years, not to mention the CSA’s cancellation of applications for 16 of the first 19 areas designated for digital radio, the broadcasters are now showing real reluctance.”

“The [radio] sector, already suffering from its current lack of revenues, is still waiting for the financial aid promised by the government to fund the migration to digital radio. Now, it seems clear that the total cost of the implementation of digital radio will be made greater by the choice of the T-DMB standard by the Ministry of Culture, at the request of GRN, and that the rollout will be much more expensive than it would be for the DAB+ standard. Moreover, according to our sources, the major radio groups are now putting all their weight behind challenging the decision of the CSA about the channel composition of the first multiplexes in order to delay their launch and buy extra time. According to our sources, some have already initiated legal action against the CSA.”

At the government seminar on 10 September, CSA president Michel Boyon reportedly took the opportunity to try to ‘save’ digital radio, suggesting that part of a new significant loan raised by the French government should be allocated to the rollout of digital radio. But, as mediasactu commented:

“The problem is whether public funds can be used to finance the construction of radio networks intended to broadcast commercial stations. Will the public agree to fund not only a digital transmitter network for commercial radio, but also the purchase, at great expense, of receiver hardware that offers a range of stations almost identical to what is already offered on FM?”

Interviewed in Le Figaro, RTL president Christopher Baldelli said:
“The timetable [for digital radio] will be respected if the CSA believes it is right, but migration to digital terrestrial radio is not a matter of principle. It involves a different economic issue than digital television. One impact is higher transmission costs, at approximately 3m Euros per channel, costing us 12m Euros for the whole [RTL] network (RTL, RTL2, Fun Radio, RTL-L’Équipe). The economic difficulty must be taken into account. It is a matter for the radio groups, the CSA and the government. It will take a lot of consultation.”

As mediasactu concludes in its article:
“Overtaken by the internet, mobile phones and MP3 players, does digital terrestrial radio still stand any chance of seducing the general public?”

Funding DAB radio infrastructure upgrade: still 'no'

The Media Show, BBC Radio 4, 2 September 2009 @ 1330

Steve Hewlett interviewed Tim Davie, Director of BBC Audio & Music

We talked at the Radio Festival a few months ago and you talked a lot about DAB. The criteria have been stated now for moving forward to switchover, or before anyone contemplates switching off the analogue FM signal, of 50% of listening and 90%+ of coverage. Do you think that’s realistic by 2015?

I use the word ‘ambitious’ and I mean it. I think it’s tough. It is possible. I think the radio industry to date has shown an incremental path towards digital and, unless you get a big step change, you’ll never get there. And, to be fair, the BBC has driven this harder than anyone.

When we last spoke about it, there was a discussion of £100m or so being needed to pay for the rollout of not the BBC stuff but whatever is necessary for the commercial sector to go digital. At that time, I asked you specifically whether there was any money in your budget identified for that purpose and you said ‘no’. Has anything changed since we last spoke?

It’s another ‘no’. No, nothing has changed and until the plan ….

This is not going to happen, is it?

I think that radio will move to digital, and I think that ….

Will it be DAB?

I think at this point, it will be …. I believe in DAB. I say ‘at this point’ because I think we have hurdles to jump over.

Digital radio: Parliamentary Question

House of Commons: Written Ministerial Statements: 9 September 2009

Digital Broadcasting: Radio

Tim Farron: To ask the Secretary of State for Culture, Media and Sport whether his Department’s proposals for the analogue radio switch-off in 2015 have been submitted for rural proofing to the (a) Commission for Rural Communities and (b) Rural Advocate.

Mr. Simon: The Digital Britain White Paper set out our commitment to a full impact assessment of the Digital Radio Upgrade; including consideration of the rural impact. To inform these assessments we will work closely with the relevant stakeholders, such as the Commission for Rural Communities and the Rural Advocate.

Tim Farron: To ask the Secretary of State for Culture, Media and Sport what assessment he has made of the merits of providing financial assistance to (a) low-income households and (b) households in hilly rural areas in respect of the analogue radio switch-off in 2015.

Mr. Simon: The Digital Britain White Paper set out our commitment to conduct a full impact assessment, including a cost benefit analysis of DigitalRadio Upgrade. The results of this impact assessment will help determine whether there is a case for a Digital Radio Help Scheme, and if so, what its scope would be. In addition, the Consumer Expert Group, which brought together key consumer representatives to inform the Digital TV switchover process, has been invited to extend its scope to cover radio and will ensure that the Digital Radio Upgrade programme takes account of the wide range of listener needs.

EU Commissioner Viviane Reding: digital radio in Europe

Interview from the latest issue of Germany’s Meinungsbarometer Digitaler Rundfunk magazine:

EU COMMISSIONER OPPOSES EUROPEAN RADIO LEGISLATION
Equipment manufacturers and broadcasters must promote standardisation

In light of the national debate about digital radio [in Germany], EU Commissioner for Information & Media, Viviane Reding, in an interview with Meinungsbarometer Digital Broadcasting, has called for receiver manufacturers and content providers to implement compatible standards. This would ensure that, in most EU Member States, the family of DAB standards are either already being used or would be introduced. If the trend towards hybrid media devices continues, the EU Commissioner believes there is no need for statutory regulation.

Ms Reding, millions of European motorists make cross-border journeys and are subject to various digital terrestrial radio standards. What is the EU doing to achieve a unified standard for digital terrestrial radio in Europe?

This issue of EU-wide radio standardisation is still in its infancy. The main reason is that radio, from a political, business and consumer standpoint, is organised primarily as a regional or even local product. This is, in principle, rightly so. The reason the radio landscape in Europe is so fascinating is because it is so diverse and highly innovative. Therefore, EU-wide radio legislation is not advocated.

Standardisation, however, is still an issue during the transition to digital radio reception. The market is making considerable progress on this question. Currently, the DAB standard is the most widely used digital terrestrial radio technology in the Member States of the EU. DAB is already used in Belgium, Denmark, Germany, Spain, Luxembourg, the Netherlands, Portugal, Sweden and the UK. Malta is already using the newer DAB+ standard, and its implementation is currently also being considered in Germany. Later this year, France and the Netherlands want to test another new standard, DMB, for digital terrestrial radio broadcasting.

I hope that, in the interest of tourists and cross-border travellers, that device manufacturers and content providers here will soon agree with each other to use a standard or at least open, compatible standards. I therefore welcome the fact that device manufacturers are increasingly coming to market with products, at little additional cost, that can process several standards and codecs. If this positive development continues, a statutory standardisation will certainly not be necessary.

In Germany, there are moves to postpone the 2015 date for the planned closure of FM. How do you see this situation developing in other European countries?

I believe the time is not ripe for a single EU-wide radio FM switchoff, such as we are doing for analogue TV in 2012. I can also well imagine that the 27 EU Member States, given their different levels of development, will want to take their own innovative approaches to digital radio switchover. Therefore, it is important from the perspective of the EU that the Member States take into account in their plans what their neighbours – and beyond – have done and learn from others’ good and less good experiences. The European Commission is strongly promoting these individual views and experiences at a European level.

As for financing the construction of the infrastructure for new digital terrestrial audio broadcasting: can you envisage the Digital Dividend being used?

The digital dividend is defined as the spectrum freed by the shutdown of analogue broadcasting once all programmes are only broadcast digitally. The term “digital dividend” is therefore not a direct means with which one can finance digital radio networks, as it only creates efficiency gains through technical progress. The digital dividend in the medium of terrestrial radio is significantly lower than in terrestrial television where, through appropriate co-ordination at the European level, the potential economic benefits of the digital dividend between 2009 and 2015 will create an additional 20 to 50 billion Euros. With terrestrial radio, however, the digital dividend could be higher, depending on the performance of digital transmission standards that are replacing analogue FM. In my view, this is the strongest incentive for a shift to digital terrestrial radio broadcasting.

UK Commercial radio revenues Q2 2009

Commercial radio revenue figures for 2009’s second quarter have been published.

Q1 2009 DATA
£119.7m total revenues – lowest since Q3 1999
£34.8m local revenues – lowest since Q1 2001
£60.0m national revenues – lowest since Q1 1998
£24.8m branded content

YEAR-ON-YEAR
Total revenues – down 10.8%
Local revenues – down 6.0%
National revenues – down 16.1%
Branded content – down 3.7%

QUARTER-ON-QUARTER
Total revenues – down 6.9%
Local revenues – down 5.4%
National revenues – down 12.3%
Branded content – up 6.0%


FOUR-QUARTER MOVING AVERAGE DATA
£514.6m total revenues
Down 13.4% year-on-year (last quarter: down 13.1% year-on-year)


Whatever may be going on elsewhere in the economy, it is hard to see any green shoots of recovery in the UK commercial radio …. yet. Total revenues in Q2 2009 fell by 10.8% year-on-year to £119.7m. Initially, this might look mildly positive compared to the 19.5% year-on-year fall experienced last quarter. But remember that the downturn in UK radio first hit in Q2 2008 and had already reduced that quarter’s revenues 10.1% year-on-year. As a result, Q2 revenues in 2009 are now 20% below what they had been two years ago, a decline so significant that it will prove difficult to recapture even when the economy does improve.

National advertisers remain the weak spot for UK commercial radio, with revenues in Q2 2009 down 16.1% year-on-year. But once again, Q2 in 2008 was the start of the downturn and that quarter showed a 15.9% fall year-on-year. National revenues in Q2 2009 are now 29% below what they had been two years ago. It will be a mighty challenge to recoup such losses.

The notion that UK commercial radio is merely experiencing a cyclical blip and will quickly show recovery once the overall economy improves is a great feelgood story, but one that is not supported by the industry’s own data. Long before the ‘credit crunch’ hit us all, UK commercial radio revenues were already showing structural decline, a trend that the current economic cycle has merely exacerbated.

Nothing demonstrates the long-term trend more starkly than a glance at the year-on-year changes to commercial radio’s total revenues in recent quarters. Of the last 20 quarters, only 7 have demonstrated year-on-year revenue growth (one quarter in 2004, one quarter in 2005, one quarter in 2006, three quarters in 2007 and one quarter in 2008). The most recent quarter’s total revenues were 29% below the peak achieved as long ago as Q4 2003. If these comparisons were adjusted for the effects of inflation, the decline would look even more stark.


For the commercial radio industry, business will never be the same again. The ‘goldrush’ 1990s are never going to happen again, at least not without some kind of radio revolution (such as the BBC wilfully destroying Radio Two’s popularity, as they did with Radio One in the early 1990s). As a result, the commercial radio industry will need to change its modus operandi more substantially than ever before, not to thrive, but in order simply to survive. If it doesn’t change, we won’t have much of a commercial radio industry left at all.

The seemingly widely held belief that commercial radio MUST continue to exist in its present form because it is a highly regulated and licensed industry is simply false. If there was one lesson that should have been learnt from the implementation of DAB radio in the UK, it was that ensuring that a small group of commercial interests control a technology and the access to it counts for nothing if there is almost no demand for it. With DAB, radio broadcasting groups got what they wanted – their cartel became the licensed gatekeeper and owner of DAB. But if nobody wants your DAB, you are left being gatekeeper to a field of nothing.

It’s the same with commercial radio. If advertisers and listeners don’t want your product, there is no reason for it to exist, regardless of you waving around your scarce Ofcom licence. Not so long ago, station owners could still foist crappy radio content on the public because listeners were starved of alternatives, but digital audio and the internet have changed that FOREVER. No longer is there any market for second-rate radio. And, in commercial radio, if unwanted or irrelevant content doesn’t attract listeners, it won’t last long.

In this context, the latest Ofcom radio

consultation (“Radio: the implications of Digital Britain for localness regulation”) is a remarkably disappointing document. At a time when commercial radio is at a crossroads in so many senses (profitability, consolidation, platforms, localness, public service, interactivity, CPM, etc), this latest chapter in Ofcom’s many attempts to map out “The Future Of Radio” is no more than tinkering at the edges of existing radio regulation.

What was needed was a full-blown, courageous effort to overhaul the radio regulatory system in order to ensure that commercial radio continues to exist financially and that the diminishing number of licensees genuinely serves the public’s articulated radio needs. Instead, we have an Ofcom consultation that is no more than a grudging reaction to Lord Carter’s Digital Britain proposals, some of which are now adopted as if they were Ofcom’s own, some of which are watered down, and some of which have been ignored altogether.

The reluctance drips from every page. There are 81 uses of the word ‘if’ in this 82-page document. Almost every one of its proposals is tainted with uncertainty – “if and when new legislation is passed” or “if Parliament decides not to take forward”. Rather than seizing the opportunities that arise from the painful ‘crossroads’ when change is an inevitable necessity rather than a nicety, Ofcom seems happy to sit in the back seat and respond “whatever!” to ideas it receives, rather than grabbing at innovation and pushing it forward. It reads very much as if written by nobody who has ever themselves run a commercial business where painful life and death decisions have to be made, sometimes at breakneck speed and often without the aid of a parachute.

Ofcom continues to treat the commercial radio industry like a naughty child who, although 36 years of age now, cannot be trusted with more than a five pound note. Every Ofcom proposal continues to keep its centralised, London-based decision making about local commercial radio firmly within its own control, without trusting licensees to co-regulate in any meaningful way. For example:
· Proposal 1 requires stations to submit a request every occasion they seek a change
· Proposal 2 will lead to “a short consultation upon receipt of such a request”
· Proposal 3 requires stations to submit a request every occasion they seek a change
· Proposal 4 will lead to “a short consultation in most cases”
· Proposal 5 will lead to “short consultations in most cases”.

Only one thing is certain – Ofcom will be drowning in consultations for the foreseeable future. These five proposals alone (out of eight) multiplied by 300 stations plus DAB multiplexes yields a potential 1,000+ new consultations or requests. And yet the document claims that these Ofcom proposals are “broadly deregulatory”.

Sadly, more than anything else, the Ofcom document completely lacks any kind of vision as to what the commercial radio landscape might look like in the future, the antithesis of what the Digital Britain consultation exercise was trying to achieve. This is a missed opportunity for Ofcom. Not just this latest document, but in 2009 when the whole “what is the future of radio?” debate is probably at the most critical point in commercial radio’s history. It appears to many in the industry that Ofcom has simply disengaged from radio. This is a particular irony for an industry that prides itself on its success in one-to-one communication.

It may seem a stupid question……. If Ofcom still sees itself as the party with the skills necessary to make 1,000 potential individual decisions on the future of individual commercial radio stations, how is commercial radio presently in such a sad state of affairs as a result (partly) of previous regulatory decisions? We tend to respect and trust people who can demonstrate a positive track record. Why would I let a doctor operate on me who had killed almost every patient he had ever consulted?

DAB radio European update

NORWAY
The newspaper Aftenposten reported that “sales of DAB receivers are still at a snail’s pace”, with only 61,000 sold in Norway in 2008, compared to eight times that number of analogue receivers sold. Culture Minister Trond Giske said that, if his party wins the election this autumn, “we will present a white paper on DAB in 2010 which, amongst other issues, will discuss whether the government can contribute more actively to promote the digital migration of the radio medium. We now have good experience from the digital migration of television, though the radio medium will take longer and require more preparation. Among other things, there are many more radio receivers to be replaced than there were TV sets, so it is extremely important that this transition occurs at a socially acceptable pace.”

The following day, in an article headlined “Poor Sales Of DAB Radios”, Norway’s Kampanje magazine reported that sales of DAB radios are only 40,000 to 60,000 per annum out of a total 700,000 to 800,000 radios sold annually. Cumulatively, over the last decade, 300,000 to 400,000 DAB radios have been sold out of a total 8,000,000 radio receivers. Synnove Bjoke, managing director of electronics trade organisation Elektronikkbransjen, said: “We believe sales will increase in the years ahead. The day we are given a [FM] switch-off date, we will sell many more DAB radios, but we need a date. There has been uncertainty amongst people, and also in our industry, as to whether we’re ever going to switch off the FM band, and that uncertainty makes people buy regular FM radios.”

SWITZERLAND
Speaking at Swiss Radio Day 2009 held in Zurich last week, Swiss Radio German-language station DRS director Walter Ruegg announced the introduction of DAB broadcasts from 15 October and said that the platform would also be made available to local commercial stations in Switzerland. English-language public station World Radio Switzerland will also be broadcast nationally on DAB from the same date.

IRELAND
RTE Radio boss Clare Duigan told the Irish Independent newspaper that the absence of commercial stations on the DAB platform was a “big issue”. She said: “We’ve begun to talk to the Independent Broadcasters of Ireland [IBI] and we’re very much hopeful that over the next couple of months we’ll be able to work something out. DAB is one of those areas where we really need to work together as an industry.” But IBI boss Willie O’Reilly responded that commercial stations are not interested in rejoining the DAB platform “at the moment” because “the return on investment looks poor”. UTV head of Irish radio Ronan McManamy said that DAB is “not a priority” for UTV in the “current marketplace”.

Predicting the radio present, twenty years ago

Whilst looking for some information about the changes wrought by the Broadcasting Act 1990, I happened to find some old press cuttings from that time. What follows are some predictions for the 1990s UK radio industry that I had written in the February 1990 edition of “For The Record” magazine:

RADIO ONE continues to feel the winds of change instituted by the new Head of Music Roger Lewis and a team of younger presenters. It promotes and programmes itself more aggressively now and will continue to lead the way where commercial stations only follow. In the 1990s, it will sever entirely the relationship between its playlist and the current Top 75, thus sounding the death knell for the single as a commercial proposition.

NEEDLETIME RESTRICTIONS, which have held back developments in music radio for so long, will be legislated away, though not without a spirited fight by the record companies. As a result, all-music stations will become the norm in the commercial sector, leaving the BBC as the only producer of serious speech programmes.

MORE STATIONS will fracture the radio market into lots of small pieces, losing forever the kind of huge audiences attracted by the Sunday chart show or “Our Tune”. Record retailers will have to react by stocking a wider range of album releases and developing their specialist sections (a reversal of the 80s trend towards narrower stock). The album chart will increasingly reflect the sum of different sets of fans’ interests, rather than a common pop denominator.

OWNERSHIP of radio will narrow to a handful of large companies, despite the increased number of stations. The 80s saw radio shares treated as profitable propositions for the first time. The existing big boys (Capital Radio, Crown Communications, Trans World Communications) will continue to buy up anything and everything. Publishers (Associated Press, EMAP) will enter the fray, and TV companies will seek lateral integration with radio as a hedge against loss of their franchises. For the first time, radio shares will become an essential part of a media portfolio and change hands rapidly at inflated prices.

FM RADIO will reign supreme. Listeners will remember “medium wave” with the quaint fondness our grandparents reserve for “cats’ whiskers”. Push-button, auto-locate receivers become standard, timeshift recorders are introduced, knob-twiddling disappears, and listeners channel hop endlessly in search of the perfect beat.

SYNDICATED PROGRAMMES already enable David Hamilton to sound as if he works for your very own local station when he is really sat in a London studio. The development of whole syndicated networks in the 1990s means that your favourite rock station in Leeds is actually originated in New York and plays exactly the same records as WLUP Philadelphia.

DISC JOCKEYS will lose their aura as media stars and lose lucrative careers opening supermarkets, hosting TV shows or making their own hit records. Being a radio presenter will carry as much kudos as being a tax inspector.

SHOCK RADIO develops a huge cult following amongst young people, whilst deplored by their parents. The Radio Authority is belatedly forced to curb the phenomenon by introducing a largely ignored “Code of Presentation Conduct”. James Whale makes a film of his life story.

In the December 1989 edition of “For The Record”, I had written:

Asked whether the public service obligations in commercial radio would be abandoned completely, Lord Chalfont [newly appointed chairman of the newly created Radio Authority] has expressed hope that the Broadcasting Act would allow stations to continue with such commitments if they so wished. He added that, in his recent discussions with various MDs of local stations, they had expressed their avowed intent to maintain public service elements. This is a little like a headmaster hearing his class of fourth-formers promise never to drop litter, to always help old ladies across busy roads, and to keep their school uniforms on until they get home.

The issue of public service commitments in radio is important not just from a theoretical point of view, but because it directly affects the listener’s choice. We’re talking about the very things that should differentiate stations from each other.

At the bottom line, commercial radio does not exist to “satisfy” its listeners. It exists to deliver the largest targeted audience possible to the advertisers who pay money to do so. Listeners’ broadcasting needs are irrelevant to the stations’ profitability.

The cheapest form of radio programming is the continual play of well-known pop records linked by young local DJs who aspire to be Tony Blackburn – anything more fanciful than that costs more money and reduces the profit margin. So, in the brave new world where commercial radio is regulated by a “lighter touch”, the cheapest programming appealing to the lowest denominator audience wins hands down. Out go the rock shows, the folk shows, the local band slots and the ethnic language programmes that were necessary to comply with the IBA’s policy of serving all sections of the audience. Out goes anything but a token commitment to local news coverage, information services, off-air activities and social action broadcasting.

Independent Local Radio will increasingly have little that is either “independent” or “local” about it. If a bomb drops on your town at two in the morning, the one place you won’t hear about it is on your local station (unless the story makes the national news). They’ll simply carry on soothing you through the night – probably with a service beamed by satellite from London. ….

We’ll all get to hear more radio in the 1990s. But there are no guarantees to be seen so far that it will be any better for the consumer in its content.

Paying for DAB radio carriage: god only knows

Premier Christian Radio, the London AM station, is planning to broadcast on the national DAB platform from 21 September 2009. In an e-mail to listeners, its chief executive Peter Kerridge explained:

“Beginning in September, we will start to incur the cost to transmit on this digital platform – £650,000 per annum – which is an expense that is over and above our current operating costs. The only way the £650,000 in transmission costs will be covered is through the generosity of friends like you. It is fantastic that God has moved in such an amazing way to provide Premier this national digital licence! Now may you and I be found faithful as we steward this new resource for His glory and for the advancement of His Kingdom!”

DAB carriage remains a costly business. Digital One, the owner of the sole national commercial DAB multiplex, fixes the carriage costs for content providers such as Premier Christian Radio. If £650,000 seems like a lot of money for broadcast on a platform that reaches 33% of adults in the UK and accounts for only 13.1% of radio listening [RAJAR Q1 2009], understand that this is a bargain compared to the expensive contracts some content providers had signed previously. In January 2009, Digital One responded to the government’s Digital Britain initiative by cutting its prices. Acting chief executive Glyn Jones said:

“We’re turning the ideas set out in the Digital Radio Working Group’s report into actions. That includes looking hard at how Digital One can offer lower carriage costs. In turn we’re expecting that stakeholders involved in the Working Group, and other companies with the ambition to launch new national radio stations in 2009, will step up and engage with a view to adding compelling new choice for consumers. We’re expecting that prices will initially be set below Digital One’s 2008 rate card. One reason for that is to help provide an incentive for people to invest in high quality services. But, over time, companies providing new services will be expected to contribute to the costs of a transmitter roll-out plan which was something also identified by the DRWG as important.”

Digital One’s January 2009 press release was ambitiously headlined ‘New National Radio Stations To Launch In 2009’. Seven months later, what stations have stepped forward to take advantage of the Digital One offer? Government-funded BFBS Radio started DAB simulcasting on 20 April 2009, following a three-month trial in 2008. Amazing Radio launched on DAB in June 2009 for a six-month trial period, playing unsigned artists from its music web site. Also in June 2009, Fun Kids, which is normally on DAB only in London, launched a fourteen-week trial simulcast on national DAB. Neither BFBS nor Amazing Radio are participating in RAJAR radio audience research, so it is impossible to know how much listening these services are attracting on the DAB platform.

Have we seen any major media players step forward and put a new mass market radio service on the national DAB platform? Not yet. Why? Because, even at the knockdown rate of £650,000 per annum, it still proves impossible to make a profit from offering radio content on DAB. The table below offers very rough estimates of what digital stations measured in RAJAR (and carried on a mix of broadcast platforms including DAB and digital TV) should and might be earning in revenues. The second column lists the total hours presently listened to each digital station. The third column uses the average commercial radio sector yield (how much revenue was generated from how much radio listening in 2008) to estimate, in theory, what these stations’ revenues should be.


However, the ‘Commercial Radio: The Drive To Digital’ report commissioned from Ingenious Consulting by RadioCentre in January 2009 told us that:

“Incremental revenue from DAB-only stations is negligible at ~£130k per ‘bespoke’ station …”

The list above comprises the 14 digital radio stations that subscribe to RAJAR. Not all of these stations broadcast on DAB (Smash Hits Radio is only on digital TV), not all of them are national (Yorkshire Radio is only on the Yorkshire DAB multiplex, for example), but let us be generous and assume that each station earns revenues of £130,000 per annum. In total, these stations combined would generate £1.82m per annum of revenue. This is substantially less than the £29.7m revenues that would be expected to be generated from them attracting 22.7m hours per week of listening.

The final column in the table estimates how much revenue each station might be earning from the £1.82m total, if revenues were proportionate to hours listened. I must stress again that this only a rough estimate – none of these stations, nor Ofcom, publishes the actual revenues of digital radio stations. What these estimates demonstrate is that, if Planet Rock were (like Premier Christian Radio) paying £650,000 per annum for its carriage on the national DAB multiplex (the financial details of its “long-term” deal with Digital One were not made public), the station is still nowhere near breaking even, not even after ten years on-air.

The Ingenious Consulting report found that DAB-only stations are spending £25m per annum on operating expenses. The above table shows that, if these stations were attracting revenues proportionate to the listening they presently enjoy, collectively they would then be profitable (£29m revenues minus £25m operating expenses). But, in fact, their revenues are presently less than £2m. The Ingenious Consulting report concluded that, as a result, the “annual negative cash flow impact of DAB” on the commercial radio sector is around £27m per annum.

This £27m annual loss attributable to digital radio stations represents around 5% of commercial radio’s revenues, a significant impact on an industry which is only marginally profitable overall at present. The nub of the problem is this: digital radio stations presently account for 5.3% of listening to commercial radio, but digital radio stations attract only 0.3% of commercial radio revenues. Here is a massive economic disconnect that requires much more than a mere increase in productivity or some kind of performance improvement. Doubling or even tripling these stations’ revenues would barely dent the problem.

Maybe DAB is simply not a platform where the traditional commercial radio model can be made to work – the old model of ‘give away free content, pay for it by attracting advertisers to buy on-air spots’. Maybe DAB is not a medium from which traditional UK commercial broadcasters can generate profits from offering content, as they had anticipated in the 1990s. Commercial broadcasters are pushing no commercial product other than their on-air brand (and some music downloads, concert tickets and click-through purchases). Instead, perhaps DAB can only be made to work as a marketing tool to assist companies selling (non-radio) products. So, for example, it would make sense for Universal Music to have a DAB radio station to expose directly to the public the CDs/videos/movies they are currently selling. It would make sense for Amazon to have a DAB radio station to promote all the consumer products it is selling. Then, the £650,000 carriage cost could be considered an additional ‘marketing expense’ for these companies’ core business, rather than a direct operating expense that had to be recouped ON-AIR.

The other possibility is for DAB to be used predominantly by organisations whose objective is something other than breaking even financially. In January 2008, I had written:

“Worryingly, this sudden flowering of ethnic, religious and publicly-funded radio stations on the DAB platform echoes the fate of the ‘AM’ waveband in the 1990s, at a time when the radio industry and the regulator had become convinced that audiences were deserting that platform for the improved audio quality offered by the ‘FM’ waveband. By 2002, declining audiences of ‘AM’ stations had persuaded the regulator to suggest that the platform be used in future “for better serving minority, disadvantaged or currently excluded audience groups, whether defined by their interests, demographics or ethnicity”. The ‘DAB’ platform of 2008, particularly in London, is already starting to resemble the ‘AM’ platform of 1998, suggesting that ‘DAB’ might have already been written off by the sector as a means to reach the ‘mass market’ audiences that national advertisers desire from the medium.”

This trend towards non-commercial content has developed further since then. The national DAB platform has added BFBS Radio (government-funded) and now Premier Christian Radio (religious), but no new permanent digital radio stations operating on a commercial model. Local DAB multiplexes have added Traffic Radio (government-funded), Colourful Radio (ethnic) and UCB (religious). Interestingly, UCB has taken two channels on each of the regional MXR DAB multiplexes, giving it a substantial amount of DAB spectrum. But there have also been ethnic DAB radio casualties since my earlier report – Islam Radio in Bradford closed its DAB service in December 2008, and India’s Zee Radio closed its London DAB service in April 2009. Even for ethnic broadcasters locked out of analogue radio, DAB can prove a struggle.

Premier Christian Radio’s Peter Kerridge hit the DAB nail on the head when Media Week reported:

“Kerridge said Premier Media’s funding meant it was in a better position than other media organisations, as the ‘ad-funded model is smashed’ …..”

The available financial data confirms that, certainly for the DAB platform, an ad-funded model simply is not viable at present. To make DAB work for your content, you need government funding, direct listener financial support, a sugar daddy, or some kind of god smiling benevolently down upon you.

Digital Britain: the Implementation Plan

The government has published the Implementation Plan for Digital Britain, setting out its action plans for the proposals made in June 2009’s Final Report. These are the sections that directly concern the radio sector:

PROJECT 1: DIGITAL ECONOMY BILL
LEAD: Colin Perry

GOVERNANCE
– Bill Project Board oversees the delivery of the Bill. Members are David Hendon (BIS)/Jon Zeff (DCMS) – joint SROs, Carola Geist-Divver (DCMS legal), Eve Race and Jose Martinez-Soto (BIS legal), Colin Perry (Bill Team Leader), Laura Williams (secretariat)
– Bill Management Group tracks progress and drives delivery of the Bill. Members are Colin Perry (Bill Team Leader) chair, Deputy Directors BIS/DCMS, Carola Geist-Divver (DCMS legal), Eve Race and Jose Martinez-Soto (BIS legal), Laura Williams (secretariat). Other policy leads attend as appropriate.

ACTIONS COVERED FROM THE FINAL REPORT [exceprts]:
􀂃 Amending the Communications Act 2003 to make the promotion of investment in communications infrastructure and content one of Ofcom’s principal duties.

􀂃 Ensure the Board of Ofcom has a statutory obligation to write to the Government alerting Secretaries of State to any matters of high concern regarding developments affecting the communications infrastructure and in any event to write every two years giving an assessment of the UK’s communications infrastructure.

􀂃 Encouraging, where appropriate, adjoining radio multiplexes to merge and extending existing multiplexes into currently un-served areas rather than awarding new licences. Grant Ofcom powers to alter multiplex licences which agree to merge.

􀂃 We will make an amendment to the existing legislation to support a change in the localness regulatory regime to allow location in mini regions defined by Ofcom.

􀂃 Grant a further renewal for up to seven years of analogue radio licences for broadcasters which are also providing a service on Digital Audio Broadcasting (DAB).

􀂃 Grant Ofcom new powers to insert a two year termination clause into all radio licences awarded or further renewed before the Digital Radio Upgrade date.

PROJECT 6: DIGITAL RADIO UPGRADE
LEAD: John Mottram

ACTIONS COVERED FROM FINAL REPORT [in full]:
􀂃 Develop Action Plan for Digital Radio Upgrade, including a Cost/Benefit Analysis.

􀂃 Invite Consumer Expert Group to extend its current scope to inform the development of the Digital Radio Upgrade.

􀂃 Facilitate the roll-out of the BBC’s national multiplex to ensure it achieves coverage comparable to FM by the end of 2014.

􀂃 Encourage, where appropriate, adjoining local multiplexes to merge and extend coverage into currently un-served areas. Grant Ofcom powers to alter multiplex licences which agree to merge.

􀂃 Allow for the extension of multiplex operators’ licences until 2030, if part of an agreed plan towards Digital Radio Upgrade.

􀂃 Consider with Ofcom the case for delaying the implementation of AIP on DAB multiplexes until after the Digital Radio Upgrade is completed.

􀂃 Grant Ofcom new powers to extend the licence period of all national and local licences, broadcasting on DAB, for up to a further seven years, although this decision will be kept under review. In addition, amend the rules under which Ofcom grants analogue licence renewals to ensure that regional stations which do become national DAB stations do not lose their current or future renewal.

􀂃 Grant Ofcom new powers to insert a two year termination clause into all licences awarded or further renewed before the Digital Radio Upgrade date.

􀂃 Work with broadcasters and vehicle manufacturers to implement the ‘Digital Radio in vehicles: a five point programme’.

􀂃 Agree with Ofcom a two-year pilot of a new output regulatory regime.

􀂃 Reduction in number of locally-produced hours in exchange for enhanced commitment to local news.

􀂃 Ofcom to consult on a new map of mini-regions which balances the potential economic benefits but also the needs and expectations of listeners. We will make an amendment to the existing legislation to support this change.

􀂃 Consultation seeking views on proposals for a new licence renewal regime for community radio. This consultation will include proposals to remove the 50% funding limit from anyone source and the restriction preventing a station being licensed in an area overlapping with a small commercial service and extending our commitment to promoting best practice within the community sector and encouraging self-sustainability by allocating a small portion of the Community Radio Fund to support the work of the industry body, the Community Media Association.

􀂃 Insert two year termination clause into all new licences.

􀂃 Grant Ofcom new powers to extend the licence period of all national and local licences, broadcasting on DAB, for up to a further seven years (keep this decision under review). If by the end of 2013 it is clear the Digital Radio Upgrade timetable will not be achieved we will use the powers, set out above, to terminate licences and the existing licensing regimes will apply.

􀂃 Amend the rules under which Ofcom grants analogue licence renewals to ensure that regional stations which do become national DAB stations do not lose their current or future renewal.