I’m going to do something here that’s very dangerous. I’m going to conflate two separate stories into one. But follow me through. They are two separate stories, but there are commonalities and themes that run through them.
Today’s Daily Mail (listen to Monday’s I’m Sorry I Haven’t A Clue for more details on what this paper’s readers expect) they published an article claiming that motorists must replace their radios at a cost of £300 or “buy special ‘conversion’ kits that must be attached to the windscreen, often alongside Satnavs, which could also cost more than £100.”
This comes ahead of a speech that is to be given by Ed Vaizey at a conference in London tomorrow where it’s expected that he’ll continue with the previous government’s plans regarding the change to digital. Interestingly, Intellect the company putting on tomorrow’s conference, is the trade body representing precisely those businesses and manufacturers who will be building those digital radio devices.
The Digital Economy Act was passed during the “wash up” period of the last Parliament, and one of the things it allows for is a change to a digital broadcasting platform, much as TV has been changing.
Cue lots of wailing and gnashing of teeth as commentators (some might say “naysayers”) talk about the low level of digital listening (it’s currently at 24.0% of all radio listening) and the fact that we’re not ready to upgrade. Others will say that the technology being adopted out of date.
I’ve been through many of these arguments before, and feel free to peruse this blog to see my rebuttal of many of these points.
Returning to the Mail’s claims today – the £300 figure seems to come from Halfords. And it’s true that the popular motoring store does seem to only stock a single after-market DAB radio which is priced that highly. But DAB radios are available for well under £200 at Argos for example. And the industry is well aware of the issues surrounding car audio. These prices will drop. Major manufacturers will fit DAB radios as standard – some already are in certain lines.
The £100 “converter” price is confusing as the primary device in this market is the Pure Highway – priced at well under one hundred pounds. It’s £80 at Argos and can be had cheaper online. I believe that you can look towards Sat Navs having DAB functionality added to them in the fullness of time. We’re already seeing Freeview added to the devices, allowing a form of digital radio listening to be experienced in car.
In the meantime, some commentators (yup – pretty much the same ones), have read more into the BBC Trust’s interim report on the BBC Strategic Review than perhaps is actually there:
There are big challenges ahead for digital radio too, although the direction of future change is much less clear. The BBC’s newer stations were designed in part to drive digital take up. By 2010, we can see that take up of DAB radio has been slower than expected ten years ago and the BBC’s digital-only stations have not achieved the audiences or impact that was then expected, although the intention behind the Digital Economy Act was to provide new impetus. The BBC is already committed to playing a role in leading the UK radio industry to a fully digital future. A question remains about what that means in the longer term and what the potential is for internet-based radio platforms to evolve. If DAB is to be the future, the BBC can only be one player, alongside Government and the commercial industry, in deciding what the strategy should be for the future shape of investment in both infrastructure and services.
I don’t see that as them saying that DAB is “flop.”
I think that’s probably a fair assessment. Can more be done with DAB? Yes. Should we be looking at internet-based platforms? Of course. But a variety of formats for audio delivery is going to remain critical. Broadband penetration has largely stalled with the remainder either unable to get broadband at an acceptable cost or digitally disenfranchised perhaps on the basis of cost. An over-the-air solution is critical. And unfortunately the mobile networks are teetering with the current mobile data requirements. In their rush to sell us smartphones, their networks – especially in urban areas – aren’t built up enought to sustain the data levels that a push to more streaming media consumption would require. Hence the curtailment of unlimited data plans.
Nonetheless, the UK Radio Player is around the corner and should at least get the paltry 2.9% of listening that’s currently attributable to internet listening up a bit. Whatever the merits of IP distribution, broadcast listening is much more popular, especially amongst those homes who do have a decent broadband connection and are currently underutilising it for radio delivery.
Let me head off on a tangent for a moment, before I meet you at the pass. (Note to self: do not mix your metaphors like that.)
In today’s Evening Standard, Anne McElvoy takes a look at the BBC Trust’s report, and brings up the same ridiculous idea of selling Radio 1 and Radio 2 to a commercial operator as we’ve had before from various otherwise quite sensible people.
I’ve said this before and will say again: this makes no sense.
In the first instance, it’s most often the case that the commentator making the suggestion does not listen to either service. In the commercial sector we always have our “issues” with the BBC, but I think most will admit that in things like their news provision and their support for new music, there are few commercial competitors. There are genuine public service aspects to the stations. Indeed, there should be more.
Earlier in the week I linked to this document and pointed interested readers at page 33. It’s the financials from the BBC’s Annual Report and Accounts. It reveals the cost of Radio 1 at £43.8m and Radio 2 at £52.5m. There is not a commercial station in this country spending anywhere remotely close to that on programming. I’ve no doubt some costs could always be cut in those figures, but it’s not just going on Jonathan Ross’s Radio 2 salary.
A quick look at the Radio 2 schedule reveals regular documentaries, specialist programmes on folk, jazz, big band, soul, country, organ music, big bands, brass bands, and much more. Those things can be expensive to do. Friday Night might well be Music Night, but it sure ain’t cheap.
Furthermore, let’s look at the figures.
According to the Radio Advertising Bureau, commercial radio made £514.9m in the 12 months ending Q1 2010.
RAJAR shows that commercial radio has a total of 418m hours per week. Radios 1 and 2 between them have a total of 270m hours between them – 65% of what commercial radio has.
Hours are important because they dictate how much money a station can make.
It’s hard to imagine a similar scenario in another world, but what we’re looking at here is something akin to a medium sized town that only has small local food shops, most of whom have been actively prevented from expanding, suddenly being subjected to the arrival of both Sainsburys and Tesco. As people who live in small (and big) towns know well – the impact would be devastating.
So if Radios 1 and 2 became commercial, they’d immediately add nearly two thirds to the available inventory. And the advertising “cake” of £514.9m would have to be split very thinly among the current services. That’s a monumental market intervention. It wouldn’t so much upset the market as destroy it.
Agencies would be basically forced into paying what Radios 1 and 2 wanted to charge – think of ITV in the “old” days.
The inevitable result would be dozens and quite probably hundreds of stations immediately going out of business. (Putting this into context – there are only something over 300 commercial stations in the UK).
The advertising would flood into the only two popular music FM bands available. And listeners would have much less choice as the dial emptied of viable competitors.
Furthermore, even if stiff financial requirements were imposed on buyers – for example, the need to switch to digital being added to the licence – the costs would mean that listeners would have an inferior service. Profits would need to be returned to shareholders. Less money would be spent on output. And in general, we’d have a worse selection of services available.
There is simply no way selling off those services makes sense.
Instead, the need for a BBC digital strategy has never been stronger. Those two services should be used to drive digital listening. As that increases, manufacturers would develop those cheap radios that Daily Mail readers are crying out for. And the medium would end up in a much stronger position as we emerge into a digital future.
As always, these are my views, and aren’t necessarily shared by my employer.