Digital radio gets its wires crossed

A deal to put a digital radio in every new Ford marks a milestone for the fledgling industry, but it remains beset by internal divisions,

It is one year since the launch of the UK’s first national digital radio multiplex, Digital One, and 18 months since the first local digital multiplex licences were awarded.

But the radio industry remains unsure how to market the new technology and admits consumers are confused about digital radio. And some say a clash of egos within the industry threatens progress.

Last week a breakthrough deal was announced – Car giant Ford took a stake in MXR, the digital radio consortium owned by Capital Radio, Chrysalis Radio, Guardian Media Group, Jazz FM, Psion, Soul Media and UBC Media Group.

Ford’s commitment to fit digital radios in all its new cars by 2004 should persuade other car manufacturers to follow suit.

Other factors that will drive the growth of digital radio include a government target for analogue switch-off (although nobody wants to say that the 15-year horizon proposed by the industry is achievable), more spectrum, the investment of non-radio partners, cheaper sets and a cohesive marketing strategy.

In an attempt to impose direction on the marketing of the medium, radio company chief executives are to establish a Digital Radio Marketing Bureau (DRMB). They have met to begin establishing what the new body’s remit will be and are seeking a chairman, possibly from outside the radio industry.

But the DRMB has to knit together the interests of rival commercial radio companies, the BBC, radio manufacturers, retailers, advertisers and the consumer, whilst keeping radio industry egos in check.

Dissatisfaction within the industry at the role national multiplex operator Digital One has played in the marketing of digital radio so far is barely concealed.

Digital One, owned by the GWR radio group and NTL, has positioned itself as the industry’s standard-bearer. The industry as a whole agreed it should launch a logo to promote digital radio, and it came up with the “tomorrow’s wireless” strapline.

The group’s strategy is one not everybody agrees with. In his enthusiasm for digital radio, Digital One’s chief executive Quentin Howard has appeared to raise a few hackles in the industry.

Howard says: “Digital One galvanised the industry. The rest were lackadaisical about digital, it was seen as a turkey. On the road to Damascus, we were the Good Samaritan that woke everybody up.”

Although he admits “an undercurrent of dissent” may exist within the radio industry, he says only “one or two people are carping”.

“There are always going to be some complainers who say they don’t like what Digital One is doing and don’t like the digital radio identity. But I have not yet seen a better idea.”

Simon Spanswick, multiplex director of Switch Digital, the multiplex operator backed by Carphone Warehouse, Clear Channel International, Ginger Media Group and the Wireless Group, says: “Digital One has an obligation under its licence to promote digital radio, but there is a question as to whether it has gone the right way about doing it. I am not sure there is any evidence it has worked so far.

“There is a question whether one brand, which looks not dissimilar to the Digital One logo, is right for all the markets it needs to be applied to. Maybe some people think Digital One is using it for its own ends.”

Spanswick believes the muliplexes should not be brand-building: “Consumers do not understand the idea of the digital multiplex, but they do understand station brands. Consumers are already confused about digital TV, and you can get some digital radio stations on Sky. Plus ‘tomorrow’s wireless’ means mobile phones to many people.”

Chrysalis Radio regional managing director Mark Flanagan agrees that Digital One’s brand-building is unhelpful but says these are still early days: “We’d be fooling ourselves if we think consumers have grasped any idea of what digital radio is. But we are at the start of the process and inching along to every milestone.”

The Ford deal is one such milestone. The importance of the involvement of non-radio manufacturers and retailers such as Carphone Warehouse, Dixons Ford and Psion cannot be underestimated.

Consumer take-up, however, will depend on availability and affordability. Flanagan says: “Within five years, eight to ten per cent of the population will listen to digital radio in home or in car, and by year 12 the figure should be 65 per cent. So some time over the next five to ten years it will become a desirable product.”

Digital One is trying to get a &£199 digital set on sale before Christmas. The next target of a &£99 set by Christmas 2001 may be met by the DRMB investing in receiver development: “Digital One will do it anyway,” says Howard. “If the rest want to join us, then great.”

But Spanswick says the sets will have to cost as little as &£15 to achieve high market penetration.

SMG Radio’s commercial development director Lee Roberts believes the inclusion of digital radio chips in new appliances – such as third-generation mobile phones – over the next two years will provide new routes to receiving radio.

He says: “Everything depends on what happens in the next 12 months, if consumers are to be persuaded about the merits of digital radio. We rely on partners to say there is now a customer proposition.”

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