Digital future or rainbows end?

Responding to a recent series of ftm articles about digital radio development in Europe and the US Enders Analysis partner Grant Goddard provided a detailed research note sent to their clients. The report – titled ‘Digital Radio Switchover: somewhere over the rainbow?’ – focuses almost exclusively on the UK media market. It casts, rather broadly, that digital radio as currently configured is failing and concludes that some UK broadcasters have come to the same conclusion.

Without argument, the bright spot in digital radio development to date is the UK market. Commercial broadcasters and the BBC chose the DAB platform more than a decade ago and undertook heavy technical and marketing costs. The gains, apparent from the most recent RAJAR audience survey, show 17% of the UK population listening to radio via a digital platform. Enders Analysis argues that neither audience nor digital receiver sales growth is great enough or fast enough to sustain broadcasters’ further investment. And this is digital radios’ bright spot.

Once, not many years ago, digital radio developers counted on analogue switch-off, as with television, to drive consumers shopping for digital replacements. Indeed, more the 5 million DAB receivers have been sold in the UK. UK regulator OFCOM even suggested, three years ago, that analogue radio shut-off might follow quickly after analogue TV shut-off. Only in Australia – not the UK, the European Continent nor the US – is a regulator seriously considering analogue radio shut-off today. A hard date for analogue switch-off would, said conventional thinking, send a clear message to receiver manufacturers.

The Enders Analysis report argues explicitly that a clear message to consumers is missing and, possibly, the message heard is filled with unintended consequences. Digital radio growth – in the UK, France, Germany and the US – is pointing in the direction of the internet – Internet Protocol (IP). The consumer benefit is clear : “massive choice, no subscription charges and no international boundaries”. Between cost conscious broadcasters and protectionist regulators that gold at the end of the digital rainbow looks more like pyrite.

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IP (internet) radio may seem like more “blue birds flying high.” Web-based media has only recently crawled out from under the linear layouts and styles of traditional media. But this is where true interactivity lives, one of the early, unmet promises of digital radio. The lesson of Web 2.0 is that consumers, not just nerdy ‘early adopters,’ are demanding control over the content the buy or trade in return for viewing ads. The advertising people, not given to nostalgia, will continue to desert media that cannot offer the possibility of direct interaction. As emerging WiFi offerings, including in-car WiFi, merge with IP radio consumers will certainly notice a whole new and different media world.

Newspapers have already heard the laugh of the wicked witch. She’s at radios’ door right now, broom in hand, just warming up for traditional, linear television.

What the Enders Analysis report exposes, in shattering clarity, is the myth of choices. New audio choices, with rare exceptions, never occur. New digital radio services – in the UK, US or anywhere – are overwhelmingly remixes of the same old styles and formats.

Other than tagging music play-out systems a bit differently and resinging the jingles, the genius radio programmers have done nothing. From the listeners’ perspective nothing new is happening, certainly insufficient to replace the tried and trusty kitchen radio or the one in the automobile. This becomes the message digital radio brings to listeners and advertiser: not very interesting.

The consequence was best expressed by an American radio programmer: “Five years ago if somebody wanted 5000 tunes in their pocket they had a radio. That has changed.”

“There is no way out for the commercial radio industry,” concludes the Enders Analysis report to its clients. Investment in content has not and, likely, will not take place on the order necessary to raise sufficient interest for either receiver replacement or ad revenue. Specific to the UK and Europe the ‘new’ digital radio channels will only add to the already dominant publicly funded broadcasters. More broadly the report strongly suggests traditional media operators are incapable of digital transformation. For them (and their shareholders), it’s rainbows end. For consumers, the fun has just begun.

Digital future or rainbows end?

Digital radio has made exciting advances over the last decade, leaving little doubt of a digital future. Broadcasters have invested in a range of technologies, which continue expanding into their own universe. A UK consultancy has taken exception to all the happy talk.