Multiplex Win Signals New Era For Radio
Today’s digital radio multiplex win by the 4 Digital Group signals a hugely positive step forward for radio’s future, moving the medium into a new, innovative and interactive phase.
“The future of radio is about Electronic Programme Guides, about being able to download podcasts, to purchase music, to interact with your radio in a way that hasn’t been possible before,” enthused Simon Cole, chief executive of UBC Media and one of the directors of the consortium. “I think that’s a very powerful signal,” he added.
This focus on interactivity, new services and devices will “move the game on”, he said. “And the game needs to be moved on.”
Phil Riley, chief executive of Chrysalis Radio, and also a director of the consortium, said today’s announcement was “great news.”
However, he was unsure if the technological advancements like EPGs, ‘rewind radio’ and radio on-demand were exactly what consumers were after.
“I think [they are] interesting, innovative experiments that are peppered throughout the application and we’ll have to suck it and see,” he said. “Just like many of the things that digital radio promises, some of them will work fantastically well, some of them won’t work so well.”
He added: “These are all new services that digital radio offers, but ultimately the market will decide. You’ve got to offer them in the first place and see whether people will take them up. It’s fantastically exciting and at least we’re offering them – it’s great.”
Cole was of the belief that the entry of the new channels onto the market would not have a significantly detrimental effect on advertising revenues. However, he did admit the new players would dilute audiences, but that they would also enhance competition in the market.
“Those people who are concerned with more channels coming on the market, need to understand that more channels are coming on the market anyway,” he began. “The percentage of listening that goes on the internet and digital satellite television is huge these days, and on both of those platforms you can get hundreds of radio stations.
“You can’t in some King Canute fashion stand there and say ‘oh we’ve got to stop the number of channels there are’. The reality is more channels does dilute audiences, it makes more competition.”
He continued: “It just means you have to be better at what you do, and it also means you have to look at new ways of adapting your business model to that climate, and that too takes you back to interactive services. Radio stations for example sell people music and sell them subscription services such as podcasts, like Chrysalis are doing… Chrysalis are now earning decent sums of money from subscribers to LBC’s podcasts. Now that kind of money is money on top of advertising money.”
Cole said: “Advertising is not going to go away – it’s still going to be the most important part of financing commercial radio, but as the number of channels increases, so the offering you make to your consumers needs to be broader than just sustaining it by selling advertising.”
Riley said the introduction of the new channels would get the balance “probably just about right.”
He said: “Our view in general is that providing there isn’t a swamping of the commercial radio industry with hundreds of new channels, that a second multiplex with 8,9, 10 channels represents probably the right amount of additional growth to stimulate the market without causing significant problems.”
Both Cole and Riley believed that the new group would be a strong force in challenging the BBC’s dominance of radio, without it being a real threat.
“It would be too much to say that this consortium is a threat to the BBC, it isn’t a threat to the BBC,” admitted Cole. “The BBC will welcome the consortium, it will welcome competition from companies like Channel 4 and BSkyB because it knows that in the end that grows the market and the BBC definitely believes in a future of radio which is interactive – they’re doing more than anybody else to create that. So they’ll welcome a consortium that moves the game on.”
Riley said that the new music channels are “interesting and distinctive”, but that commercial radio already has enough music channels to take on Radio 1 and Radio 2.
It was the speech stations that he was most excited about. “It will be in the area of speech programming where the new channels will be most distinctive and will stand the most chance of being successful,” he said.
“There is now… a wider range of national commercial speech outlets that will give us the opportunity to take on the BBC.”
This morning it was announced that 4 Digital Group, a consortium led by Channel 4 Radio, had been awarded the new 12-year DAB national multiplex licence by Ofcom, which will lead to 10 new commercial radio stations in the market by the middle of next year (see Channel 4 Consortium Wins Radio Multiplex Licence).
4 Digital Group: www.channel4.com/radio/4digital