The Stage

On the right wavelength - digital radio

Published Friday 21 April 2006 at 11:00 by Mark Flanagan

As digital radio nears its tenth birthday, Mark Flanagan takes a look at the future of this increasingly popular medium

Did you know that tests have shown you can tell the state of an organisation just by examining the physical appearance of its leader? Yes, all that money spent on opinion polls, league tables or brokers’ reports could be saved by regular inspections of the boss’ hair.

Tony Blair’s mane has receded in line with his popularity rating. Mark Thompson has grown more hirsute in parallel with the BBC’s growing dominance in all its markets. And commercial radio’s top executive Ralph Bernard has seen a transformation of his hair colour from a dark hue of grey to pearly white since his company GCap Media hit troubled times. Never mind a spin doctor, call in Toni&Guy.

I don’t envy Bernard’s job. GCap has been hit by haemorrhaging audiences, falling revenues and collapsing profits. Despite this, GCap continues to pump significant money into digital radio. I have an interest to declare here. In 1999, while working for Chrysalis, I wrote a major article for a trade magazine in which I described digital radio as a ‘turkey’ and warned commercial radio off pouring money down an enormous black hole. Bernard took umbrage at this, accused me of breaching industry unity and wanted me sacked.

Meanwhile Bernard has continued to pump £15-20 million a year of his company’s cash into digital radio - a platform which has generated about as much income as a medium-sized window cleaning business. The last part is a bit of an exaggeration but, hopefully, you get the point.

That said, it may be time to reach for the jelly and balloons because next year will be digital radio’s tenth birthday.

1997 saw the invention of DAB (Digital Audio Broadcasting) by a bunch of boffins in Germany and also the advertisement of the first multiplex. So how’s the nipper doing? Nearly ten years on and, even I, accept that radio is going digital.

Around eight out of ten adults are now aware of digital radio, according to Ipsos Mori’s Digital Audience Research Tracker. Monthly reach has increased from 29% to 35% over the last six months, with the vast majority of this listening through digital TV and the rest split between DAB and the internet. The real test of digital radio’s virility is the number of sets sold. Thanks to the proliferation of different sets at more affordable prices - 2.7 million sets have now been bought in Britain.

This number is expected to rise to 4.5 million by the end of this year and to 13 million units by the end of 2008. I used to joke that most of the DAB sets in circulation were owned by radio executives, each of whom owns about ten but even that line has worn a little thin.

It’s the case that, despite a tough retail market last Christmas, DAB digital radios, along with MP3, were the stars that bucked the trend. Retail magazine ERT Weekly reported: “New technology, including DAB, sold well, while old technology, including digital cameras, struggled.”

The real breakthrough will be when listening to DAB on mobile phones becomes commonplace. When BT and Virgin conducted a major trial in Oxford late last year to test interest in mobile TV, it was radio that tickled consumers fancy more than TV. Sixty-five per cent of respondents said they would be interested in receiving digital radio over their mobiles, with an average of 95 minutes spent listening.

In another exciting development, UBC and Chrysalis recently announced a very clever wheeze in which people can tune into DAB on a special mobile phone and download any songs they like there and then.

There are now officially more digital radio stations than buses on Oxford Street. There are now 421 DAB services (BBC and commercial) and Osco is about to advertise a new trance of digital radio multiplexes.

There is still a big mountain to climb before digital radio gets in the same league as digital TV. It’s estimated there are between 100 and 150 million conventional analogue radios in the UK.

With DAB sets costing more than £50, an investment by shoppers of more than £1 billion is needed to reach Sky levels of household penetration. And, at present sales rates, Ralph Bernard will be lucky to have any hair left at all.

Understandably, shareholders and licence fee payers have questioned radio executives when they can expect to turn off expensive analogue transmitters and start reaping the rewards of their investment in digital.

Moreover, the rest of the world has been slow to embrace DAB. The Americans, with their vast spaces, have opted for satellite radio and the Japanese aren’t great radio fans. In Australia, the government has been slow to get DAB transmission off the ground and there’s a growing view that the world has moved on and that new delivery methods will take over.

Mark Carnegie, of the Macquarie radio network, recently declared DAB ‘dead’.

“It seems pretty clear at the moment that some combination of always-on broadband and third-generation telephony is going to be the platform that replaces, in Australia, existing radio stations.”

Media organisations are attempting to respond to this change in listening habits. Recent months have seen both radio operators and other companies - usually print media - launch podcasts, while new products such as the Sky Gnome are being introduced to make digital radio listening easier over multiple platforms.

Paul Fairburn, managing director of Digital Platforms at Chrysalis, offers a long-term view: “Today we’re really only concerned with our radio brands delivering content to consumers, whether that’s in real time, delayed or podcast form. DAB is a success and, as the ultimate replacement for AM and FM listening, its place is secure. But while it’s easy to get excited about new platforms and technology, which we are, we’re some years away from the day when the majority of our business is something other than real-time radio. That time will come and our job is to prepare for it now.”

I think that’s a sentiment both Bernard and I can agree on.

* Mark Flanagan is a media and political consultant and can be contacted at mark@peopleinpower.org.uk