Digital Radio: a numbers game

From virtually every perspective, predicting the future of digital radio, or "DAB", amounts to a numbers game. Broadcasters are crossing their fingers, hoping that DAB (Digital Audio Broadcasting) will make dollars and sense. As we venture into new technological terrain, we are bombarded with signs pointing in all directions, luring us down a variety of different paths. The question is: Which road will consumers ultimately take?

I should mention that we at Hennessy & Bray Communications are pleased to be working with Digital Radio Roll-Out Inc. on a long term plan for the introduction and marketing of DAB, the replacement technology for FM and AM. DRRI is a joint initiative of private broadcasters, the CBC, and the government. At H&B, we have also done a considerable amount of Web based work with audio streaming technologies in addition to our work with satellite delivery systems. This experience affords us the opportunity to analyse the pros and cons of various technologies.

The success of DAB is critical to broadcast owners as the only way to protect the value of their properties. It is inevitable that AM and FM must give way to superior technology. After extensive research, the logical next step clearly appears to be DAB. Current license holders are the first to be granted the new digital licenses by the CRTC. Owners thereby continue to hold and control an extremely valuable portion of the broadcast "real estate".

DAB is up and running in Toronto, Vancouver, Montreal and Windsor, with more markets to be added shortly. This new resource, complete with additional datacasting capabilities, promises to be far more lucrative than the analogue properties. The alternative of a somewhat anarchic and unregulated community of streamed stations on the web is relatively unattractive.

The marketing of "digital" remains a formidable challenge in a world of unprecedented media fragmentation and a burgeoning Internet. Success will require a focused long-term strategy and a team that exudes a tireless passion for the medium. Anything less is bound to be drowned out in the cacophony of change. We face a wall of consumer apathy and a lack of understanding. The term "digital" is so common that it is innocuous. The road to the "next big thing" is littered with the corpses of AM Stereo, DCC, Mini Disc, etc.

Another major obstacle is the perception that "digital" has been in development for so long that it has died on the vine. People in the industry discuss listening to demo digital radios a decade ago. Still, the last decade has been spent developing a mature, solid technology. The actual launch date was November 1, 1999. Now, DAB is about to experience a new beginning and a swirl of promotional activity. The creative challenge is to hammer home DAB as an attractive new brand (much like the Nike swoosh) in as intrusive and attractive a fashion as possible.

A number of promotions have already been executed across the country. Working with local radio stations at high profile events, the new technology has been unveiled to consumers. For example, at the Rock101 presentation of the Symphony of Fire in Vancouver, DAB audio was broadcast to approximately 100,000 people. Crystal clear CHIN audio was demonstrated for substantial crowds at the CHIN picnic. A series of such promotions are planned for the coming year. We continue to work with receiver manufacturers and auto manufacturers who are critical to DAB's ultimate success. Once consumers are exposed to all the benefits of DAB, the response is overwhelmingly positive. The only barrier in this numbers game appears to be the high price point.

Still, our surveys taken at promotional events have indicated that over 70 per cent of respondents will be willing to purchase a DAB unit once the price point breaks $500. As with any new product, from CD to DVD, this is only a matter of time.

Radio has an unfortunate history of cannibalizing itself on the sales level. It is vital that broadcasters continue to pull together for the common good when it comes to DAB. Their economic health depends on it. It is extremely heartening that all major groups (including the CBC) are represented. Incredible!

DAB delivers a variety of fundamental benefits. Based on Eureka 147 technology, it has numerous advantages over both current analogue transmission and the more recent audio streaming via the World Wide Web. "digital" offers both outstanding CD quality sound and portability. It will lead to host of data display services for the consumer including geographic positioning, traffic and weather information, advertising supplements, song credits and a good deal more. All the while the listener is treated to interference-free reception. DAB's "point to multi-point" capabilities serve to illustrate the Web's "point-to-point" limitations and afford digital radio stations the opportunity to play to a much wider audience. Moreover, DAB will afford broadcasters a host of new revenue opportunities. Various datacasting opportunities, coupon printout for advertisers and LCD displays of retail phone numbers and locations are but a few of the things that will result in an incremental revenue stream.

The fact that the U.S.A. is pursuing IBOC while we have opted for "L" band with Eureka 147 technology poses yet another challenge. We must allay the concerns of consumers and the media who consistently question the lack of compatibility with our southern neighbour. The bottom line is that this should make relatively little difference in the end to listeners who continue to crave local radio in record numbers. It is worthy of note that Europe has enthusiastically chosen the DAB route. "Digital" is currently available to 60 per cent of the U.K, 80 per cent of Sweden. 80 per cent of Belgium and 100 per cent of Singapore.

Discussion of Web radio continues to dominate many discussions. As the Spring 1999 BBM RTS study points out, 3,539,866 or 85.5 per cent of people aged 12+ in Toronto alone actively search the web for information. Computers are perched hungrily waiting to consume traditional media ... or at least merge with them. In fact, the web represents complimentary technologies. Streaming audio on the Web will not soon present any real threat to DAB's superior portability, point to multi-point capabilities and extraordinary sound. Still, Web sites are unbeatable for cross promotion of contests, retail sales and text intensive deliveries. It is important to stress convergence and cooperation instead of competition.

One thing is certain. The consumer continues to crave local radio regardless of increasing media fragmentation. Cable music-only channels just don't cut it. As the Spring 2000 BBM points out, radio has a 94.2 per cent weekly reach of A12+ across Canada with the average person tuning in for approximately 22 hours per week.

In the end, the numbers tell it all. Consumers continue to believe in radio. Give them DAB at a reasonable price point and they will clamour for it. When this happens, broadcasters and manufacturers alike will enjoy a revenue stream that will have them wondering what they were ever worried about.