IS DIGITAL RADIO A SOUND INVESTMENT FOR THE AUSTRALIAN RADIO INDUSTRY?
In this report I will use companies both in Australia and in the United Kingdom that are using this new media, to understand how the industry is developing. I will look at the advantages of digital radio, the cost involved in switching to digital radio, and other advancements in technologies to determine whether digital radio is a sound investment for the Australian radio industry.
INDUSTRY & PRODUCT INFORMATION:
Digital radio is the next generation of radio. Sound and data is turned into digital signals of transmission and then is decoded with digital receivers at the other end. The technology platform used to broadcast in Australia is called Digital Audio Broadcasting plus, known as DAB+. This new media has many advantages to traditional analogue radio such as:
- Find and choose radio stations by name rather than frequency
- Better quality sound and reception (interference free).
- More choice of music and stations (more stations can be broadcasted in the same spectrum)
- The ability to pause, record and reply programs.
- The digital receivers have a small screen to display album covers, advertising, web links and continuous feeds.
The digital start up day for Australia was on the 1st of July 2009, but not all areas of Australia fall under the digital coverage. Only Adelaide, Sydney, Perth, Melbourne and Brisbane metropolitan areas have access to the digital radio framework (digitalradioplus)
INFRASTRUCTURE EXPENSES:
In most cases digital radio transmission is more expensive to operate compared to analogue (Lax, S 2008, pg 156). In the first year (2006-07), the indicative total cost for Australia to launch digital radio, covering Technical Policy, multiplex access, cost and infrastructure, planning and strategy, Implementation Policy, content development, planning and strategy Transmission was $1,336,000 followed by an estimate of $14,959,000 over the next 4 years (CBAA 2006, pg 4). The costs related to infrastructure will be absorbed mostly by major radio broadcasters, in return for the government placing a six year hold on other entrants into the market. Broadcasters also bear the costs of both analogue and digital signal (Bushell-Embling, D 2008, n.p).
DIGITAL RADIO PROGRESS IN AUSTRALIA:
The ABC is Australia’s leader in digital radio with five of its existing local stations and four national stations, along with launching its new stations, ABC Dig Music, ABC Country and ABC Jazz (ABCNews). The government provides 80% of the funding for ABC (ABC website) so they rely little on advertising and sponsorship to survive. Austereo was the first commercial radio company to introduce digital radio in Australia. The digital station was named Radar and it focuses on broadcasting unknown artists (Austereo.com.au). Figures showed a loss in profits for Austereo’s for the financial year of 2008-2009 (Austereo directors report, 2009, pg 2). Unfortunately, because digital radio was only launched in July 2009, financial information related to Digital radio costs to AUstereo is hard to find. However, the development of on air studios for digital broadcasting contributed to an expense of $16.6 million dollars (Austereo directors report, 2009, pg 2).
DIGITAL RADIO DEVELOPMENT IN OTHER COUNTRIES:
In 2008, 28 countries were using DAB services (Lax, 2008, pg 152). Some countries have had success and others have closed DAB services completely. The United Kingdom has 98% digital coverage and has a large number of stations. The U.K has the largest number of DAB broadcasting stations in the world and has sold 3 million digital receivers (Lax, 2008, pg 154). 30% of households have a DAB receiver, but DAB services only account for 10% of those who listen to commercial radio (Myers, 2008 pg 91). GCap Media was forced to close two of its radio stations, the jazz and planet rock due financial problems and sold its stakes in Digital one. The company was then taken over by Global Radio in 2008. GCap was the largest commercial broadcaster in the U.K before take over (Wikipedia). The Chief executive from GCap stated that there “was no future in digital audio broadcasting (DAB) technology and announced plans to abandon many of its digital investments”. The chief executive of GCap Media also said that take up of digital radio has been too slow to invest anymore into the new media (Andrews, A 2008, n.p). Investments into the infrastructure of digital radio is yet to show profitable (Myers, J 2008, pg 5). Other countries using digital radio have had mixed results. Germany has 80 radio stations reaching 85% of its population. However, it has not had high sales of receivers. Norway had little success with digital radio and ended its transmissions in 2005 (Lax, 2008, pg 154).
CONSUMER COSTS AND INTEREST IN DIGITAL RADIO:
Although digital radio is free to air for consumers, to listen to it consumers will need to purchase a DAB+ receiver. The price for a receiver starts at $150 (digitalradioplus.com). A Survey conducted by Dick Smith Electronics, reported that two thirds of consumers said they would not be willing to pay $150 or more for a receiver. The survey also revealed 69% of Australians know what digital radio is, an increase of 30% since April 2009. interestingly 54% say they listen to the radio mainly in the car (Simpson, C 2009, n.p), but currently there are no plans for new cars to be fitted with DAB+ receivers, car kits are expensive and do not offer a range of products (Russell, S 2009, pg 18).
INTERNET RADIO:
Some fear that advancement of internet radio will overtake digital radio. In the U.K the number of online listeners of radio is growing rapidly. Its popularity allows other online mediums such as MySpace can exploit this new media (Donnelly, A 2008, n.p). In Australia many radio stations are now streaming there stations online. Austereo is the leader in online radio entertainment with their stations streaming live and an increase in podcasts of 255% (Austereo group Ltd 2009 results presentation). Online streaming could be beneficial for regional areas that can not transmit on DAB+ till at least the year 1010. This may see online streaming of radio take over the DAB+ service.
CONCLUSION:
The success of digital radio in Australia is yet to be known, but it seems to be an expensive investment for both broadcasters and consumers. Consumer interest in digital radio is low due to lack of product knowledge and product expenses. Digital success in other countries is varied and some countries have pulled out all investments into DAB services. New developments such as internet radio are becoming popular and may affect the popularity and growth of digital radio.
BIBLIOGRAPHY:
- ABCNEWS 2009, ‘ABC launches new digital radio stations’, 1/07/09, accessed 18/09/09, available: http://www.abc.net.au/news/stories/2009/07/01/2613170.htm
- Andrews, A 2008, ‘Blow for digital radio as GCap drops stations’, Times online, 17/07/08, accessed 16/09/09 available:
http://business.timesonline.co.uk/tol/business/industry_sectors/media/article3353461.ece
- Austereo group Ltd, 2009, results presentation, Austereo Audiences Strengthen and Sales Outperform Market, pp1-65, accessed 19/09/09, available:
http://www.austereo.com.au/docs/PowerpointPresentationASXVersion09.pdf
- Austereo website, Digital radio, accessed 19/09/09, available:
http://www.austereo.com.au/index.php?option=com_content&task=view&id=71&Itemid= 178
- Bushell-Embling, D 2008, ‘digital radio is coming in 2009’, IT News, accessed 16/09/09, Available: http://www.digitalradio-nord.de/uploads/media/Australien_Digital_radio_is_coming_in_2009_-_iTnews_Australia.pdf
- CBAA 2006, Adding digital value, digital radio cost estimates, accessed 15/09/09, available: http://www.cbaa.org.au/content.php/501.html
- Digital Radio Plus, FAQ’s, available: http://www.digitalradioplus.com.au/index.cfm?page_id=1010
8. Donnelly, A 2008, ‘Will internet radio drown out DAB?’, Brandt, pp 16-19, accessed 19/09/09, available academic onefile database.
- Lax, S 2008, ‘DAB, The future of radio? The development of digital radio in four countries’, Media, culture and society, vol 30, issue 2, pp151-166, accessed 10/09/09, available Sage database.
10. Russell, S 2009, ‘Will DAB radio catch on?’, Brandt.com.au, accessed 19/09/09, academic onefile database
11. Simpson, C 2009, “Dick Smith report says Australians keen to switch to digital radio. Seventy seven percent of people said they were likely to upgrade to digital in the near future”, Good Gear guide, 30/06/2009, accessed 17/09/09, available: http://www.goodgearguide.com.au/article/309410/dick_smith_report_says_australians_ keen_switch_digital_radio