SBHD: Two new radio systems offer music free from ads and chat, but are listeners willing to pay?
Imagine radio with the speech and advertisements taken out. Then imagine a package of about 60 separate channels, each designed to cater for a specific musical taste – from top 40 to opera, from jazz to folk – broadcast to your home in CD quality. Imagine no more. For two such systems, Digital Music Express (DMX) and Music Choice Europe (MCE), are preparing to roll out across the UK.
It is a strange concept, and one based on the assumption that, given the choice, enough people would prefer to hear music clutter-free – and they would pay for the pleasure.
But will they buy it? Time Warner and Sony (the companies behind MCE) and cable giant Tele-Communications and International Cable Casting Technologies (both behind DMX) certainly think so.
Much of MCE’s output is not otherwise generally available, according to chief executive Stuart Graber. “Unless you buy it on CD you won’t hear it because radio stations just don’t play it,” he says.
But DMX European marketing controller Bob Brockelbank believes there is a vast potential market of people eager to broaden their musical tastes. “The biggest obstacle is awareness,” according to Brockelbank.
You could be forgiven for believing there is little to tell MCE and DMX apart. Both will offer 60-plus stations, charge consumers a monthly subscription and offer a range of music.
Graber stresses that MCE’s output is selected and scheduled locally by more than 40 European music enthusiasts, spanning numerous genres. Brockelbank insists DMX, although originated in the US, is scheduled according to the input of European programmers. The main difference is the way in which each service is delivered to the consumer.
MCE will be “uplinked” to the Intelsat communications satellite and distributed to local cable systems across Europe. It will be offered to cable TV subscribers for Ãº7.45 a month, for which the consumer will receive the package of themed stations, a decoder and customised handset. The latter will show track and artist details for every piece of music played on an LCD display.
DMX will be “uplinked” from the US. But, through a deal with Astra operator SES, it will be transmitted via the Astra satellite from August – when it will be available to about 3 million UK dish homes. DMX anticipates charging a monthly subscription fee of Ãº7 to Ãº10, which will be managed by BSkyB’s subscriber management and telemarketing centre in Scotland.
DMX subscribers will also require a decoder. But unlike MCE they will need a digital one. This will cost about Ãº250 for audio-only – Ãº50 more for a decoder for both existing analogue TV picture signals and digital audio. But once all broadcasts via Astra go digital in the next 12 to 18 months this hybrid option will need to be replaced.
MCE, which acknowledges that the digital transmission of TV and radio signals will be the future of broadcasting, says it is more cost-effective to wait before investing in digital technology. DMX believes being first into the market will give it the upper hand. Whichever has got it right, one thing is clear: marketing will be a deciding factor.
“Awareness of this type of service is pretty much zero. But the product stands up on its own. If you think about VHS and Betamax, VHS has become the dominant system. Why? Because of marketing,” says Brockelbank.
Positioning is the key. MCE will be “sold” not as New Age radio, but a concept “somewhere between existing radio stations and personal music collections”, says Graber. One of his hopes is that MCE will drive music sales (hence Sony’s involvement).
The target consumers are music buffs and lapsed music buffs who no longer keep up to date because of a lack of time due to other commitments.
It is not – and will not be – marketed in competition to radio, both firms insist. “Radio gets you up in the morning, but at certain other times of the day, we come into our own,” Graber says. But Brockelbank say: “Our research shows that one of the main gripes about existing radio is the advertising interruptions.”
MCE and DMX have so far adopted a “softly-softy” approach. MCE launched in Birmingham last year and will increase its availability from 3,000 to 85,000 homes on May 10. It is already available to Bell Cablemedia subscribers in Leeds.
DMX, which claims to be available in 17 million homes in the US, Europe, Israel, South Africa, Central and South America, can be received on cable systems in York and Leicester. But it will treble its channels and significantly increase its potential coverage by going onto Astra.
Success will depend on creating a brand. To achieve this they must win over not just potential subscribers but also local cable operators and dish retailers who, they hope, will help “sell” the services. DMX must be perceived as a service in its own right, Brockelbank says.
“Assuming predictions of 60 million European cable homes by the end of the decade, (MCE) would be happy with five per cent of this,” says Graber. At Ãº60 per year per subscriber it would be “a substantial business”, he says.
Whether both can survive is a moot point. Brockelbank believes there is no room for both. As each company prepares for major advertising offensives later this year, bets are being taken on whose marketing will enable it to survive.