Digital media: on time or out of time

Michael Hedges March 10, 2008

Suddenly broadcasters are speaking the heretofore unspeakable. The digital ‘way forward’ is being met with ‘not now.’

Digital media means different things to different people. In this the 21st Century ‘going digital’ has become a rallying cry for ‘old media’ to morph into ‘new media.’ Broadcasters, radio and television, took up the challenge offering digital channels. On the TV side, the switch to digital from analogue is now, largely, mandated by national regulation. Radio broadcasters, exceptions noted, have moved more slowly. And if you don’t have a ‘web presence’ you’re so last century.

At last weeks’ meeting of the Independent Broadcasters of Ireland tough and blunt words were spoken. "What genius was it that said let's go and get the 10-year-old technology that is DAB?" asked iradio’s Dan Healy. Communicorp Chairperson Lucy Gaffney said broadcasters need to ‘get real’ about digital platforms, mentioning something about “the additional costs.”

Costs were the focus of GCap Media chief executive Fru Hazlitt’s well-reported new plan meant to stave off hostile suitors and embattled shareholders. She would drop two DAB-only national channels. Her predecessor strongly hinted, shortly before his departure, that digital radio’s cost structure was a problem. Channel 4 also announced it was dumping digital-only channel One Word. In the UK – and beyond – the word ‘digital’ connotes less about ‘future’ and more about failure.

Less reported but no less significant was ProSiebenSat CEO Guillaume de Posch announcing the closure of digital TV channels in Germany.

None of this is a complete surprise listening to broadcasters over the last several years, mostly in the private, commercial sector but also a few public broadcasters. Publicly, never is heard a discouraging word about the promise of a digital future. Privately – and universally – broadcasters are terrified.

And there’s much to fear. New digital channels - radio and TV - mean more competition for audience and advertising. Some broadcasters - in Hungary, for example - successfully lobbied national legislatures and regulators to slow the push to digital platforms.

Commercial broadcasters have the most obvious concern. Advertising is changing, all the more where consumer economics are turning sour. The ad people want something traditional media cannot deliver: targeted, performance-based ads. To be sure, interactivity has always been part of the digital promise. Traditional media remains one-way, even on digital platforms. You can take the boy out of the farm but you can’t take the farm out of the boy.

Public service broadcasters (PSB) have their own digital fears. By rights PSBs should own, figuratively, the digital platforms. Through the power of incumbency, ‘special relationships’ with regulators and parliaments, fixed (and fat) budgets and superior technical skills PSBs – largely – brought digital platforms to the marketplace. Only when forced did they share with private sector broadcasters.

But incumbency carries its own peril. Parliaments and presidents have their own ideas… and they change. Budgets are questioned: PSB directors forced to choose between sports rights and new channels. When PSB chiefs devise clever strategies for making buckets of ‘new’ revenue using digital platforms they find themselves face-to-face with EC Competition Commissioner Neelie Kroes. Check the score: she’s 12 for 12.

Broadcasters and their publishing brethren might take heed of the lessons from FM radio’s uptake, lo those many years ago. FM (frequency modulation) was first offered as a radio platform in the late 1940’s. Broadcasters, technicians excepted, wanted no part of it as no receivers were commonly available. Regulators offered special deals on FM licenses, such as ‘buy one, get one free.’

Slowly, very slowly, FM stations took to the air. The audience didn’t follow until three concurrent events: economic prosperity appeared, baby-boomers became teenagers and the music industry’s output exploded. Baby-boomers, flush with dad’s cash, installed FM converters in their Chevy’s so they could listen to all the great new music… different from dad’s favorites. By the mid-1970’s FM stations overpowered AM stations in audience and advertising. Yes, the platform shift took 25 years and a ‘perfect storm’ of economics, demographics and luck.

Today, boards of directors and shareholders have no intention of waiting 25 years. If digital media hasn’t become a huge money spinner, it’s time to move on. We must, they say, return to ‘core competencies.’ A board president in his 50’s, perchance, looks at all of this and concludes, “I’ll be dead.”

The analogue-to-digital platform shift shares all the attributes of shift from AM to FM, except the important ones. Grant Goddard of Enders Analysis points out that DAB in the UK is becoming a ‘ghetto’ of specialty radio channels. Digital television is much the same. The technology can deliver only so much. In a very real sense digital uptake is right on time. All it needs is that ‘perfect storm.’