Commercial Broadcasters Still Hesitate on Digital Strategy

Michael Hedges October 1, 2005

A decade after the unveiling of digital radio technologies, European commercial radio broadcasters continue to hesitate. There are exceptions, notable, but few.
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Any digital strategy implies a long-term view. WorldDAB and the DRM Consortium have effectively promoted the long view of digital media, seeing consumer markets eventually absorbing the technical advance. Public sector broadcasters involved themselves immediately, seeing potential in digital platforms as well as the limitations of analogue media. Regulators were happy, generally, to issue “experimental” licenses, seeing the spectrum dividend of digital media.

Private sector broadcasters asked, as they do, “Where’s the money?”  The rise of the new digital platforms could not have arrived at a worse time for commercial broadcasters, many in business for less than 30 years, most considerably less. Business models based on advertising were accepted, practiced and not questioned even though, outside of the major media markets of the UK, France and Germany, the financial reward had barely appeared. When the advertising market in Europe collapsed in 2000-2001 commercial radio broadcasters turned all attention to short-term survival.

None of that changed the position of public service broadcasters (PSBs) to move forward on digital radio. Not entirely beholden to the ad markets, with a tradition of experimentation and a desire to add a few exclusive market share points PSBs launched digital channels. Commercial broadcasters, unable or unwilling to take their eyes off their short-term financial needs, resisted. Publicly traded companies were under even more pressure as stock-market traders regularly punish those who view the world in terms greater than the next quarterly report.

The most notable exception has been in the United Kingdom (UK) where commercial broadcasters jumped in with the BBC and with a cooperative regulator. DAB multiplexes were built, adding several diverse digital-only channels. By the end of 2004, about a million DAB receivers had become part of UK households.

When asked to describe the digital strategy of a large broadcasting company located outside the UK, the spokesperson said only that the company’s seven websites were “handled” by the office receptionist. That company – like many others – is focused on their business model, controlling costs and selling ads. It is the analogue model.

Most European commercial broadcasters follow the analogue model, which looks more and more awkward as consumers buy iPods, watch television via Freeview and listen to radio on the Internet. Surveys in France, Spain, Sweden as well as the UK show dramatically increasing radio listening on either the home PC or TV set-top boxes. In the last two years several large radio companies have started to take a serious look at what these changes in listening behavior means.

“People accessing music are using digital platforms but radio stays analogue,” says NRJ Groupe Vice Chairman Marc Pallain. NRJ Groupe operates four national radio channels in France, owns and operates stations in several countries and launched NRJ TV – a digital cable television channel in France – in March 2004. The company also owns Towercast, fast becoming a major part of its portfolio, which provides transmission infrastructure facilities in 80% of France for radio and television broadcasting, mobile telephony and, eventually, DAB multiplexes.

Pallain sees digital solutions as non-exclusive and lists everything from DAB and DRM to DVB-H and UMTS. “It’s very probable that many solutions can co-exist in the near future,” he says. The NRJ Groupe digital strategy he described is based on more spectrum, new programs and interactivity. Digital multiplexes, he says, are a new platform on which to sell content.

Telecoms, says Pallain – and echoed by several industry leaders – want to offer radio services. In particular, he says, telecoms “want to take the spectrum to deliver pay services.” In particular, he says, “telecoms are interested in the content of the PSBs because it won’t cost much.”

Scandinavian mobile telephone producers are believed by some observers to hinder digital radio development, particularly in Finland, seeing audio content as part of a larger package of pay services for their new devices.

A different approach to digital strategy is evident at RTL Group, Europe’s largest media owner. With a long radio history RTL Group has embraced DRM to upgrade its existing AM frequencies to the digital era.  Its view, explained by Business Development director Dan D’Aversa at the recent Munich, Germany, Medientage, is built around pan-European coverage.

His announcement led some observers to speculate that RTL Group would relaunch Radio Luxembourg, the music station that brought popular tunes and commercial ads to the UK in the 1960’s, as a DRM service directed to the UK. RTL Group officials said it was an idea being studied but not in any immediate plans.

But DRM is certainly part of the company’s priorities. Currently simulcasting RTL (France) on shortwave using DRM, the company plans what it calls a “soft launch” of the German national program RTL Radio Luxembourg on medium and shortwave. And the company is looking for more available frequencies.

The receiver issue, however, is paramount for RTL Group – as it is for all companies developing digital strategies. At Medientage, RTL’s D’Averna said much of their present effort is to insure that “low cost DRM receivers will be on sale in time for Christmas 2005.”

Italy’s RTL 102.5 is pursuing its digital strategy through DAB, broadcasting in 45 cities covering about 60% of the country. “We believe we believe that digital is definitely our future,” says program director Luca Viscardi. “We have to exploit the technology at its best to compete with all new media available.”

The company, which is not related to RTL Group, is focused on establishing digital capacities even though, as Viscondi acknowledges, “it's going to be a long time before digital radio comes to reality and becomes a real market.”

Competition from new media, more than other radio broadcasters, has the attention of RTL 102.5. Mobile phone providers are not the only competition for listeners. It’s the iPod. “Digital music and portable hard disc players are our toughest enemy,” admits Viscondi.  “With 10.000 songs in your pocket, you can create your own playlist, changing mood and energy in one click. Unbeatable, if you don't have extra contents to offer.”

Nick Piggott is digital content manager for GCap Media, a position created to lead, not follow, digital media. He’s watched mobile telephones and personal music players, like iPod, impact consumers, and affect broadcasting today. The UK media market is far different from Europe or, for that matter, North America. The growth in digital media in the UK has been rapid.

Observing both the iPod and the mobile phone market, Piggott reminds broadcasters that they are content providers and that “listeners want to be in control.”  He looks to the interactive advantages of DAB technology to “enable direct response and reply mechanisms.”

Piggott also sees another part of the digital paradigm shift that will, as he sees it, change that analogue business model. “In 2004, for the first time, in the UK, revenue from subscription led revenue from advertising,” he said.  As digital content providers, radio broadcasters need to be aware that advertisers perception of effectiveness wanes the longer the medium hesitates from entering, full speed, the multi-media reality.  

Convergence, over the last decade, told broadcasters that digitization would change their world. It has. Listener demands, voiced by the choices they make, are, as GCap Media's Nick Piggott says, for more control. NRJ’s Marc Pallain underscores that consumers have already made a choice for digital media. Both see a shift in business models for commercial broadcasters.

“We are now facing an important moment of our history, “ RTL 102.5’s Luca Viscondi says, “and we have to strengthen the key factors that made radio successful in the past. Emotions are the drive to make radio always exciting. It's not only a matter of technology, but of contents.”

Previously published in Radio World International, September 2005, in a slightly different form.

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DRM Brings Digital Radio Back to Life - December 7, 2005

German broadcasters brought to life the Berlin consumer electronics exhibition IFA (Internationalen Funkausstllung) with demonstrations of new receivers to suit every broadcast platform.

RTL Group (RTL) provided three DRM (Digital Radio Mondial) programs, in English, German and French, and offered a conference on their digital strategies and DRM applications. German international broadcaster Deutsche Welle aired 90 hours of DRM programming. The first consumer offerings of table-model DRM receivers were unveiled and portable models were promised for 2006. Automotive industry audio products supplier Visteon, in a joint project with RTL, demonstrated an in-vehicle receiver expected ready for consumers in 2007.

More than 30 broadcasts including four programs of public broadcaster Rundfunks Berlin-Brandenburg (RBB) are now offered on DVB-T platform set-top boxes as part of a year-long trial sponsored by regulator Medienanstalt Berlin Brandenburg (MABB). German receiver maker TechniSat showed its DVB-T radio receiver, complete with its’ own 12 subscription programs.

DVB-H, promoted by mobile phone operators and handset manufacturer Nokia, received a go-ahead last November from the MABB and several broadcasters joined the IFA demonstrations.

With the opening of the IFA, all German public radio channels are offered in DVB-S on the Astra satellite system.

“The digital radio success story begins at the IFA 2005,” announced MABB Director Hans Hege at the exhibitions’ opening.

The 2005 IFA also featured the usual consumer electronics products, like every dimension of flat screen television. But the attention was obvious. It was a digital radio festival.

A star-studded German Radio Awards preceded this years IFA exhibition on September 2nd in Berlin’s Tempodrom featuring music from international artists and the Golden Microphone Awards to the best of German private broadcasters.

Previously published in Radio World International, November 2005, in a slightly different form.