DAB radio – Weathering the storm

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To say that DAB started out with a bang in 2008, would be an understatement. The digital radio format has hardly been out of the newspapers or off the airways – although not always for the right reasons. After some positive news regarding DAB radio sales and listening figures (more on this below), there came an avalanche of negative publicity surrounding DAB, which has led some to wonder whether DAB’s future is secure.
The troubles aboard
First, research company Enders Analysis issued a report which asked: “Is DAB the new Betamax?” The company cited the recent closure of DAB stations Core and Oneword, as a sign of the problems facing DAB, adding that other radio broadcasters were scaling back their DAB commitments. Then came the news that GCap was closing two DAB radios – thejazz and Planet Rock – as well as selling off its stake in the Digital One transmission multiplex. Others have argued that DAB is using outdated technology or that it is being left behind by other developments, such as Internet radio.
With coverage like this, it’s easy to understand why manufacturers, retailers and consumers might be somewhat downcast about DAB’s prospects, but that would be a big mistake, say many of DAB’s supporters. Mandy Green, spokesperson for the Digital Radio Development Bureau (DRDB), says: “The problem with the Enders report was the way it was spun – it was a cheap soundbite.” Green adds that it’s not unusual for radio stations to be pulled: “Around 10-15 DAB stations have come and gone – that’s what happens. The problem with negative reporting like this is that it confuses people”, she says, “especially when there are so many positive things to say”. In December 2007, 550,000 DAB radios were sold, up 22% on 2006; cumulative DAB radio sales reached 6.45 million units, up 2 million on 2006. DRDB forecasts that DAB radio sales in 2008 will reach 2.6 million, taking the cumulative total to 9.1 million. Value is expected to reach £198 million, compared with £169 million in 2006.
When it comes to DAB’s audience, figures from Rajar, which measures radio audience figures, reveal that 10% of all radio listening is now provided by DAB, which equates to 100 million hours. And when it comes to choice, there are more than 320 DAB products and 433 DAB services, of which 238 are exclusive to DAB.  Bernadette Spofforth, Intempo’s founder, dismisses the negative reports: “So if DAB is the Betamax what is the VHS?,” she asks, “technology changes constantly, that’s why it’s so great! Just keep up!” Leslie Burrage, chief executive of Roberts Radio, says the current situation is: “A storm in a teacup. People are writing to their own agenda without knowing the facts. The problem is that the commercial broadcasters’ original business plans were flawed.” The biggest flaw, adds Burrage, was in assuming that the analogue radio signal would be switched off around 2010, but that was never on the agenda, he adds, not least because of the 100 million or so analogue radios out there and that few of the 33 million car radios are DAB-enabled. “The BBC is very pleased with the way DAB is going and so are the manufacturers – DAB radio sales are exactly in line with what we predicted,” he adds.
Holding strong
Peter Hainsworth, Sony’s technical marketing manager for audio, says: “We talk to our customers who are up-beat regarding DAB’s ease of use and wide programme choice. The broadcasters are also upbeat about DAB. Consumers are voting by buying DAB, which dominates certain product sectors –  83% of all sales of kitchen portables are DAB; 69% of all sales of personal stereos are DAB; 47% of all sales of clock radios are DAB. Our customers demand greater choice of content, which due to limited  [analogue] spectrum, can only be delivered in a digital format such as DAB.” Colin Crawford, Pure Digital’s director of product marketing, says that the fact that some DAB stations have closed isn’t exactly news, adding that: “DAB has enabled the radio industry to target niche audiences and part of this process is that some ideas work and others don’t.” He points out that the new  4Digital service, led by Channel 4, will see even more choice coming to DAB later this year.
Intempo’s Spofforth says: “Retailers need to constantly have their finger on the pulse in order to convey all the latest trends to their customers. According to Apple, customers upgrade their iPods on average once every seven months. With entry level DAB costing less than £30 it’s hardly a lifetime investment is it?” Green says its importance to stress to customers that: “DAB is going to be around many years, whatever happens. ‘Don’t worry about it’ is my message to retailers.”  But what about the talk about other technologies such as Digital Radio Mondiale (which uses the analogue waveband for broadcasting digital services) and DAB+, the improved DAB compression technology? And aren’t people using the Internet, digital TV sets and mobile phones to listen to digital radio these days?
Rather than being a competitor to DAB, DRM could help complement the service by enabling the 10% or so of the population who can’t receive DAB, get digital radio. There are no current plans for transmitting digital radio in DAB+ and even if there were, it would co-exist alongside the existing DAB service for many years. It’s also probable that we’ll see hybrid DAB/DAB+ radios in the way that almost all of today’s DAB radios also have analogue tuners. What’s more, we’ll probably see many more manufacturers following Pure’s strategy of manufacturing DAB radios that can be upgraded to DAB+ using a software update. But Pure’s Crawford points out: “We have three DAB radios that are also DAB+ compatible but that’s because we’re not just a UK company. But we’re not promoting these radios as DAB+ in the UK because that would just cause confusion.”
The market drivers
When it comes to alternative ways of receiving digital radio stations, a TV set, a laptop or even a mobile phone can’t offer the convenience and portability of a dedicated radio set. And more and more DAB products are being designed to work with evolving technologies. Roberts, for example, has launched the Stream 202, which includes Wi-Fi compatibility, allowing users to listen to Internet radio stations away from a computer. And a fair number of DAB radios also include MP3 players or are designed to connect to an iPod. “The average consumer wants something that’s simple, uncompromising and easy to use – who wants to spend hours listening to the radio on their TV or computer?” asks Burrage,
Many factors are driving the DAB market: “The DAB market is going fantastically well and people are buying DAB in droves,” says Pure’s Crawford, “why buy an analogue radio these days? There are quality, affordable DAB radios out there.” He adds that the clock-radio market has been turned around by DAB, with smart features that allow a person to fall to sleep listening to one DAB station and waking up to another. Intempo’s Spofforth says it’s important to understand where the market is at and to target the younger radio listening audience. “Intempo has been pushing DAB to the younger market by offering it in a format they access, such as iPod speakers,” she says. Robert’s Burrage says that premium content remains the main driver for DAB.
Sony’s Hainsworth thinks the main drivers are: “The choice of content – in some cases content that is only available on DAB, and in the case of special events, such as sport, it’s possible to alter the broadcast structure to provide commentary on many games rather than just the one.” Another driver is ease of use: “With a well-designed radio, identifying and selecting the station is simple with no re-tuning which is especially important for the mobile listener,” he adds. Pure’s Crawford agrees: “Choice has been turned around by DAB. You’ve got all type of products out there – micros, portables, clock-radios and more.”
Challenges ahead
But this isn’t to overlook the fact that DAB faces several challenges. Burrage would like to see the DAB market expand across other countries, to help make manufacturing more economical. He’d also like to see the DAB in-car market grow, although this sector is in the hands of car manufacturers and the equipment they fit on their production lines. Intempo’s Spofforth says: “DAB is developing slowly, but with greater integration and convergence into other audio products it should pick up pace.  It’s all about delivering DAB to a younger generation, 15-34-year olds are the biggest radio listeners but they expect it to be free and in general they don’t attach a value to radio – but they will pay £200-plus for speakers.  By including DAB or Internet radio into new technology – such as speakers – and allowing free access to music, the uptake of DAB will increase by stealth.”
Sony’s Hainsworth says: “DAB has only recently started to gain momentum, in part due to sales volume reaching a level where customers can benefit from economies of scale. One of the key issues is the lack of sales into the automotive industry. In some parts, this has been the result of flaws in geographic coverage. However, this is being addressed by filling some of the main commuter routes and adding intelligence to car radios which will automatically revert to an alternative or simulcast station on another band. Recently we have seen many car manufacturers starting to actively promote DAB as an option for their vehicles. This will help create the ubiquitous message regarding DAB.”
The reach
Some feel that DAB’s sound quality is holding back the format, with some broadcasters heavily compressing the sound signal, but Burrage thinks that only a small percentage of listeners who are hi-fi enthusiasts, are concerned about the sound quality. DRDB’s Green says: “Our research found that 88% of respondents thought that DAB offered better sound, and Ofcom’s research had similar results.” But Green concedes that in some areas, DAB reception needs improving and work is in hand to achieve this. Others think that the lack of a radio analogue switch-off date hasn’t helped, but Pure’s Crawford says: “I don’t think it’s needed. It might help, but there’s too much talk about an analogue radio switchoff, while we’re in the midst of an analogue TV switchoff. If we’re not careful, there could be a consumer backlash.” Intempo’s Spofforth, adds: “How can you switch off the analogue frequencies whilst DAB remains inaccessible in car? It will never happen.  A huge proportion of radio listening is done in the car, and since DAB is only popular in the UK, the huge car manufacturers aren’t rushing to line-fit DAB. Economically it’s not viable and until then, there should no switch-off.”
Sony’s Hainsworth agrees, adding that “Ideally, the DAB standard should be pan-European. This would benefit our customers and digital radio by offering [greater] product choice and significant economies of scale. Realistically, any talk of digital radio switch over would be at least ten-fifteen years hence, and very much depends upon Ofcom and the broadcasters’ road map to deliver the means.”
Meanwhile, DAB’s entry price is getting cheaper, with some own brand models starting at around £20. However, the entry price point for quality brands is closer to the £40-50 price point. “The good news for independents is that sales of quality brands are increasing while own brand share is decreasing. Sales are being driven by the big brands,” notes Crawford. And there is so much choice: Sony currently offer 17 DAB products, while Roberts has around 30, not including colour options. Pure offers around 25. Little wonder that Burrage declares: “I am optimistic and upbeat about the DAB market.”

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