Blogging Nick Piggott

BBC Radio Holby co-shares with Classic Gold - from a Casualty shoot in 1999

John Myers’ report “An Independent Review of the Rules Governing Local Content on Commercial Radio” was published yesterday, and it’s well worth committing time to read through in detail.

If you’re outside the UK (or even outside the UK Commercial Radio Industry), you might be wondering why a report into the regulation of local content on commercial radio should involve Digital Radio.

I will very briefly précis 95% of John’s report. Commercial radio has got into a perilous state financially, through a combination of over-farming (too many new licences, not enough associated audience/revenue growth) and increasingly burdensome costs. The currently regulatory system promulgates this situation, and without urgent change, there is a real risk of sectoral failure.

John’s remit was to consider the regulatory environment surrounding local content, but Digital Radio (and digitisation in general) is brought to the report in a number of places. (I’m not going to talk about the issues and suggestions in respect of local regulation that John raises in his report).

A key tenet of the report is that the current regulation of localness is wholly inappropriate for the media environment of 2009 and  onwards. John mentions several times that it should be considered unreasonable for licensed radio operators to work under local content regulation when Internet radio does not. In my opinion, John has somewhat over-played the threat – current and future – from Internet delivered radio to support this argument. I believe the issue is that listeners are seeking choice and innovation, and that if the licensed industry can’t/won’t provide that, people will find it from new operators. In this respect, the method of delivery is largely irrelevant. Existing operators stream over the Internet, and new services can start on DAB (but see below too). It probably depends on how much choice you have to deliver to remove the incentive to buy IP-connected radios to seek out new stuff, and your estimation of the value that exists in the “long tail” of radio. In my view, radio operators have all the tools the need to reach out further down the long tail if they believe it’s profitable to do so, and have a unique advantage of doing so on both IP and into protected spectrum which will deliver universally into the fixed and mobile domains (that would be DAB then). Even with broadband penetration heading towards 80%, Internet listening is very very small, and dwarfed by DAB listening.

Whilst outside the direct remit of his report, John clearly identifies that costs and revenues are a problem for the radio industry. Growing numbers of stations have raised sectoral costs, and revenues are declining. Changing the regulation of localness would relieve the industry of some costs, but John is right to identify that the implementation of DAB has saddled the industry with burdensome long-term costs that it can’t support in the current environment. I agree. He reviews the rapid licensing policy of DAB, and notes that many of the multiplex areas licensed were barely able to profitably support one or two local FM services, let alone the addition of a local multiplex. Understandably, John has avoided detailing why DAB is so expensive, but you’ll know from my previous posts that I have a much more unequivocal view – the multiplex spectrum plan was too complex which drove up the infrastructure complexities, and the transmission provider offered prices that now look very unattractive. John suggests that the costs of DAB can be made more realistic by re-planning into a less complex configuration – which I hope also translates into fewer sites running at realistic power levels. This is a sound recommendation which I hope OFCOM and DCMS take note of and get moving on quickly. Sadly, DAB+ still isn’t mentioned, meaning it remains taboo in the UK. That’s a mistake in my opinion, but as I’ve said before, it’s an issue of frightening complexity, and I can understand its omission.

The most contentious recommendation, in my view, is this. John recommends that one of two things should happen; EITHER Broadcasters should not be allowed to run multiplexes OR the cost of multiplex access must be more directly regulated by government to ensure it remains at or below the equivalent analogue cost. I’m very much hoping that John made the first suggestion for it to be roundly and loudly rejected from all sides, leading adoption of the second approach. In all honesty, I don’t think either is optimal. It has long been an issue that the gatekeeper regulation of multiplexes included a loophole that allowed the gatekeeper/broadcaster to attempt to cross-subsidise the carriage of their own stations. This probably made sense in the heads of the accountants, but was a dismal failure on the ground. The high cost of DAB carriage deterred many new entrants (although that could also have been policy – deliberate or accidental) and thus multiplexes lost money in reality, even if the paper accounting looked OK.

But it had a far more detrimental effect, and one that goes to the root of the slowdown of DAB in the UK, and the failure to see enhanced revenues from going digital. DAB did not grow and flourish with new and innovative services that consumers were expecting. And neither did it deliver new things to advertisers in any volume. In short, the policy hindered the very innovation that the industry needed from digital. The reason that no data services launched in the UK was due to an unholy interplay of effects around multiplex ownership, costs and infrastructure capabilities.

I can understand John’s call for broadcasters not to be gatekeepers, given the circumstances, and maybe it will always be an unresolvable conflict of interests for a broadcaster to try and encourage competition and innovation against its own stations. I think the Australian model of multiplex ownership and regulation bears careful inspection, to see if it can be exported to the UK. I don’t believe it’s right for there to be no involvement from broadcasters in the development and management of their digital platforms, and I don’t believe an infrastructure provider operating in isolation has the right incentives to manage costs, coverage and functionality appropriately.

In respect of costs, the evidence is that DAB, when deployed in a sensible configuration, is naturally lower in cost than the equivalent FM coverage. Indeed, that was the whole point of DAB; to replace 6 identical sets of infrastructure costs with one single cost carrying 6 stations – but we lost sight of this somewhere. If DAB is replanned properly, and if the cost is equitably shared amongst the users (without daft “uplifts” for functionality), it will be cheaper than FM. Of course, someone has to bear the risk of the whole cost before it’s shared out, and that’s a tricky one to answer. But if broadcasters want to address the long-tail with more services, they’ll have to bear more costs of infrastructure and spectrum, and it’s naive to deny that.

John’s report uses the opportunity to address many of the failures in the UK’s DAB deployment, and I’m glad to see his recommendations concurring with many of my own suggestions. Now the report has to be acted upon by OFCOM and DCMS, and swiftly.

It’s been a difficult time for radio lately, and for digital radio doubly so. Since Fru Hazlitt made her dramatic announcements on 11th February 2008 (the “2/11″ for Digital Radio), it’s been a rollercoaster ride, consisting mainly of the scary bit of going down very fast and being apparently about to shoot off the edge of the tracks to certain death.

Radio is contracting. The contraction that means I’ve been saying goodbye to lots of colleagues, and that’s seeing many small analogue services go out of business, is also squeezing what can be done with digital radio. The enthusiasm for digital radio has evaporated, as the costs of an ambitious network build-out became crushingly apparent, and the revenues that should/could be generated from digital haven’t arrived (or been hit by a contracting industry).

Going Digital had a profound effect on the UK Radio Industry. The regulatory policies that set up Digital also shaped the analogue licensing regime, and committed the industry to investments stretching over long periods of times. The Digital Radio envisioned by the people who set it up doesn’t fit well with the plans of the people running the radio industry now.

Something had to change. If you’ve followed this blog, you’ll know that my hope was that some deal could be arranged to make the cost of the network more managable, and that the industry could reorganise itself to plan an inherently more cost-effective plan for digital. Some of that would have involved changing the digital infrastructure to reflect real-life requirements.

And now, nearly 14 months after Fru’s big announcements, and with Global the biggest commercial operator in the industry, things are changing.

The first big change is that Global is doing a deal with Arqiva, the transmission provider, which will see Arqiva take over DigitalOne (the national multiplex operator) and NowDigital (the local multiplex operator). This makes Arqiva a licence holder in their own right, and it’s the first time that multiple DAB multiplex licences will not be held by broadcasters (Ayrshire is already owned by Arqiva, due a regulatory anomaly when EMAP purchased SRH). In return for Arqiva taking over the multiplexes, Global will only pay for the capacity it uses, reducing the costs of transmission. As both DigitalOne and the NowDigital muxes are rather empty, this is a fairly considerable cash saving.

I think Arqiva have got a good deal. They will have to compromise their financials for a period of time, but I suspect that in the mid-term, demand for DAB capacity and infrastructure will grow, if not in the current configuration, then in something than can be met using the infrastructure currently in the D1 and Now networks. They now hold spectrum licences, and that puts them in a good position when it comes to any network replanning. The relationship has been spun on its head.

OFCOM has provided the other big change in the Digital landscape. Their submission to Digital Britain has proposed radical changes to the UK’s regulatory regime, both analogue and digital, in response to the changes that the financial difficulties of the previous year have brought. A lot of the headlines have focussed on the proposals by OFCOM to dramatically change the analogue regulatory regime – reducing the burden of producing local content; allowing the emergence of quasi-national brands that could theoretically have the scale to provide plurality to the BBC; explicit recognition that smaller commercial licences may never be viable financially. This seems to make the assumption that local brands cannot challenge the BBC’s dominance, or may not be able to hold onto the revenue to stay alive.

In my opinion, the most interesting and positive statement is that D2, which failed to get to air as a Single Frequency Network (akin to D1), could come back to life as a series of regional networks with effective national coverage. One suggestion is to blend the existing regional muxes together to create D2. This recognises that a true national SFN isn’t massively commercially valuable, and that’s a great move forward in my opinion.

OFCOM firmly supports continuing with DAB Digital Radio, whilst at the same time acknowledging that other solutions will appear over time. I think the likelyhood of LTE/4G technologies becoming a primary broadcast platform is slim if DAB continues, but there’s no doubt that a converged Broadcast+IP solution is looking increasingly important. This conviction from OFCOM and Government that DAB is staying is very beneficial to Arqiva and the other multiplex operators.

One theme recurrs. In both OFCOM’s and RadioCentre’s submissions to Digital Britain, as well as in the interim report itself, there is talk of using DAB to deliver innovation for radio. That innovation needs to harness the data capabilities of DAB to provide something new, enhanced and reflective of a more complex multi-media world, and more capable multi-media devices.

There has been virtually no innovation, despite 10 years of DAB in the UK.

There’s no lack of ideas for new services, but the barriers to making them happen have been many, high and hard to scale. Broadcasters have to pay for their capacity, and that makes it hard to justify speculatively taking more than the bare minimum to carry stereo audio. The multiplexing equipment is old, and doesn’t reliably support functionality beyond audio (including a number of other very important DAB features). There is a classic chicken-and-egg problem, where manufacturers won’t build receivers to support enhanced functionality because broadcasters won’t commit to services.

That needs to change.

Global Radio launched a series of applications for the Apple iPhone (for which my team deservedly got a SONY Radio Award nomination). These applications feature RadioVIS – a simple visualisation layer for radio. Whilst I’m not going to tell you the stats, I will say that the amount of visuals delivered is considerable and demonstrates a commercial opportunity. But as well as delivering visuals to the iPhone we also publish them as DAB Slideshow into 16kbit/s of 95.8 Capital FM’s DAB stream. (Admittedly, it’s taken 10 months work with Arqiva to get the right interface to the multiplexer).

It won’t take much more work to get the technology right, but launching innovative services needs to start with a commitment to face a digital future and start moving analogue to history. It looks like OFCOM can make that commitment, but will the radio industry follow suit?

Someone was very nice to me this week, and said they like the occasional dip into the world of aviation that I indulge in. So here’s a short one, linked to last week’s blog on a major international airline brand that appears to have snafu’ed their engagement in social networking.

No sooner had I committed that to teh Interwebs, than another not-major-international-brand but nonetheless well known airline was similar managing to spectacularly mis-engage with the on-line world. Step forth Ryanair.

The major-international-airline was trying to be good but got it wrong, largely through over-enthusiasm and mis-understanding. They’ll survive, apologise in a way, and ultimately probably won’t damage any perceptions of their otherwise immaculate, excellent and courteous service. One cock-up won’t damage the reputation that all their employees uphold with admirable consistency.

The problem with Ryanair is that they know they’ve behaved badly, they don’t care, and their opportunity to put their hands up and apologise appears to have been turned into an obnoxious rant.

And that’s the Ryanair brand in a nutshell.

Ryanair specialises in being obnoxious. It’s not clear who from Ryanair provided the official response:

Ryanair can confirm that a Ryanair staff member did engage in a blog discussion. It is Ryanair policy not to waste time and energy corresponding with idiot bloggers and Ryanair can confirm that it won’t be happening again.

“Lunatic bloggers can have the blog sphere all to themselves as our people are far too busy driving down the cost of air travel.”

however those words could have sprung lightly from the lips of Michael O’Leary, Ryanair’s CEO. Indeed, just the following day, something almost as amazing did spring from his lips:

One thing we have looked at in the past and are looking at again is the possibility of maybe putting a coin slot on the toilet door so that people might actually have to spend a pound to spend a penny in future.

We are always looking at ways of constantly lowering the cost of air travel and making it affordable and easier for all passengers to fly with us. I don’t think there is anybody in history that has got on board a Ryanair craft with less than a pound. What do you do at Liverpool Street station at the moment [when] you need to spend a penny? I think you have to spend 20p to go to the toilets.

or, indeed, the delightfully customer focused opinion of:

I have no patience with the Luddite approach that says people don’t want to use their mobile phones in-flight. You don’t take a flight to contemplate your life in silence. Our services are not cathedral-like sanctuaries. Anyone who looks like sleeping, we wake them up to sell them things.

If you make obnoxiousness one of your brand attributes, if you make it a core emotion of the business, then it’s not much of a surprise that the employees radiate it so readily too.

Ryanair have prospered by being cheap. They drive volumes of traffic through low-costs, and persuading people that flying to anywhere, no matter how ridiculous or remote, is “a good thing”. They benefit from smaller airports offering them good commercial terms, in order to bring incoming passengers to their particular region of Europe (and it usually is EU States, you’ll notice). The majority of people who step onto a Ryanair plane have low-expectations, and often they’re not disappointed.

But do they have to be obnoxious too?

Easyjet seem to do well, and are viewed far more positively than Ryanair. I don’t like the LOCO model (for various reasons) but I’ll fly Easyjet (and AirAsia and VirginBlue and JetStar and South West and TED etc.). I won’t fly Ryanair – I won’t reward obnoxiousness. (#)

As we hit an economic downturn, aviation is bleeding to death. If you think last year’s roll-call of airlines going under was bad, this year’s could be even more dramatic. Last year was knocking out the weaklings and the also-rans – this year, someone big is going to go down.

I feverently hope that Ryanair get punished for being obnoxious. It would be a real justification of the value of the soft-elements of brand for Easyjet to make it through because they’re generally pretty good guys, and for people to turn their backs on Ryanair and their atrocious attitude to their customers (actual and potential).

Bootnote: Someone else has applied Ryanair’s unique approach to revenue generation to the obligatory safety card, to humorous (but possibly also clairvoyant) effect.

(#) I have one exception. I will fly FR on the BRS-DUB route, because it’s neither time nor cost efficient for me to get over to LHR, and it’s not very environmentally sound to do so either. FR use a relatively modern, efficient 737-8 on that route, and loadings are naturally high. It’s a legacy route that has pre-dated O’Leary’s tenure at FR, and so whilst it’s a nasty, demeaning and irrating experience, it’s only so since FR went LOCO. Added to that, I make dammned sure that I get their “1p” flights, pay with a debit card, and don’t spend a penny with them anywhere else, thus ensuring that by the time they’ve paid APD and PSC in the UK and Ireland, they’re losing about £35 of real money on me, which makes me feel much better.

Photo: ryanair by jayfreshuk @ flickr – who’s clearly experienced once of their flights before

Google’s exit from the radio arena this week wasn’t necessarily a huge surprise. It was a bold move to try and port their successful advertising business from the Internet to radio, and to do so without primary control over the inventory they were selling and the environment they were selling into. But it didn’t seem to be getting the prominence in the marketplace to make it successful.

Google created a relatively rich technology ecosystem in order to support the on-line trading of  radio airtime. They acquired dMarc, and set about re-branding and reworking that company’s playout system, to relaunch it as Google Automation, with integral support for Google’s APIs for advert insertion. They worked with the vendors of other major playout systems to extend the number of playout products supporting Google ad insertion. They created a pretty good, simple, on-line interface to allow people to book airtime campaigns, and monitor the performance of them. And the Google Creative Marketplace allowed advertisers to find creatives to make their radio adverts.

There are some things that I don’t think we’ll really miss. I was really disappointed with the Google Automation product, which I didn’t think was worthy of having the Google brand applied to it. When I think of Google, I think of innovative UI design, clever APIs, and rich-meta data. Google Automation didn’t live up to those expectations, and I think there are much more capable and exciting playout products in the market.

Google tried to sell radio advertising as a commodity; buyers didn’t know what stations their ads were going to run on, and they only had vague controls over formats, demographics and geographic area. That Google was unable to commoditise radio is probably good news. It means that brand values, production values and market prominence are still important, and that advertisers want to be heard in the right environments.

But there are some things that I hope radio can hold onto after Google has left. The principle of on-line trading of airtime is really interesting, and could mark a change in the way that radio is sold, in the same way that airline shifted their business from selling through travel agents to selling through websites. The cost of processing those orders and transactions could fall, which means more money going to programme making, and maybe even more money going to make better radio adverts. It might even open up radio to new advertisers, particularly in the small non-metro markets that find life particularly hard.

I thought the Creative Marketplace was a very cool idea. I wonder if it will live on in another guise? I like the idea of many individual, freelancing creatives being able to connect with so many prospective customers – a trading floor for creativity. Great idea, and a shame for it to get lost.

The technology behind the project was good, as you’d expect from Google. Radio airtime scheduling is still somewhat archaic, often involving the nightly transfer of flat text files, and it’s difficult to really deliver on radio’s ability to be immediate. Google created a set of APIs to schedule and insert adverts in near real-time, and get the reconciliation back almost as quickly. Ad breaks were filled just minutes before they were played out, which is the way it should be. We should keep that as the benchmark for airtime scheduling, giving us an almost unique position in mass-media.

Google have said that, whilst they’re withdrawing from radio, they will keep this technology and develop it for personalised advert insertion in on-line streaming. I’m not sure that will give them any more success. If the radio industry is smart, it will create formats which will deliver targeted demographics with low wastage, meaning that the efficiency gap between broadcast advertising and personalised advertising will be fairly narrow, reducing the financial incentive for advertisers to get into the altogether smaller, more complex and more opaque world of streaming advert insertion. (Let’s see how Spotify does with that one).

One thing I was surprised about. Google did some clever technology, but didn’t really introduce any innovation into radio advertising. They didn’t seem to offer a service that encompassed advertising on-air and on-line or on the radio station’s website, something that is more routine in radio companies own sales forces. Why didn’t Google see the opportunity for synchronising visuals, audio and interactivity and offer radio stations a streaming “tuner” that did all that for them? That kind of differentiation might have given them the edge they needed.

Maybe it’s unrealistic to expect Google to have a vision for innovating with radio advertising. That responsibility seems to rest with us.

Photo: What’s Google Doing With Radio by James Cridland @ flickr – amusingly taken at NAB in 2006 in Rome, IIRC.

As you might expect, there are a few places on the Interwebs where people who fly now and then meet up to discuss the important things in life; destinations; routes; fuel surcharges, and how to maintain status with as few flights as possible.

But it’s interesting to see how the airlines and airports approach engagement with these communities of informed, eloquent, often high-spending and influential people.

Some airlines have created official representation on the forums. Often it’s someone with a passion for the web, who is pretty connected in their own life and works in or around the customer facing bits of the company. They participate in the community like anyone else, are subject to the same rules and moderation, but make it clear that they’re representing the airline/airport.

My experience is that these airlines are brilliantly super-serving their most influential customers, and also helping their own companies. They can see gripes arise, and often offer solutions or answers within hours, before pens have gone to complaint letters and grouses have spread around. Some of them will help people out with specific problems, and I can’t tell you how valuable I’ve found that personal attention when the system has gone wrong. (Incidentally, I always send those airlines a hardcopy letter to commend their online rep, and the airline’s commitment to engaging with the on-line community).

But the airline benefits from to it too. Now and then, someone might spot a loophole in the rules of a fare or routing, which allows people to accumulate vast numbers of miles, or fly on ridiculous routes, for tiny amounts of money. Those loopholes get quietly closed, and whilst there is sometimes a little “oh, don’t talk about that here, they’ll close the loophole”, generally it’s accepted that the airline rep is only doing their job by bringing it to the airline’s attention.

Some airlines/airports have unofficial presence. That’s where someone in the airline/airport is probably acting unofficially, and so has to stay very guarded in what they say. It’s nonetheless very valuable for them to watch what’s happening, and occasionally intervene with a salient point. The regular contributors know who they are, and the lurkers rarely come out from under cover.

But this week, one of the airlines is in the process of getting it spectacularly wrong. I’m not going to name the airline, but they’re a leading global brand and they ought to be smarter than this. For a start, the contributor has as his handle the name of the airline, correctly spelt and punctuated. He’s assured people he’s not connected with the airline, but then occasionally refers to information that would be hard to source from anywhere else. But what’s really annoyed people is that he’s not authentic. He’s always talking up the airline, saying how great the promotional fares are (even when they’re stinkers), how great the on-board experience is, and how well they compare against other airlines. (He seems to fly a remarkable range of airlines).

He’s being rumbled as a stooge because he chipped some information into a thread that could only have authoritatively come from within the airline. He is getting pilloried (for which I feel sorry for him personally), and his airline is a facing a mixture of laughing for being so cack-handed in their engagement, and indignation that they “have sent a spy into the camp”. Their failure to be authentic and upfront with their presence is backfiring on them.

I can’t understand what they were thinking. Surely they must have understood what the outcome would eventually be? Maybe these are the companies who need consultants to advise them how to engage with the web? That’s pretty sad, when all the have to do is be real, honest and authentic.

Interestingly (and with that exception) no matter how irate, heated or insulting the conversations on-line become, rarely does anyone attack the airline/airport rep. Indeed, the community will often turn savagely on those who start having a go at the rep. And it’s interesting because that’s often not the case when radio gets discussed on-line; in those situations, often the poor radio person who sticks his head in the door will get it torn off and thrown back at them. It’s a shame, because it means that it’s that much harder for the people who are passionate about radio to have a decent engagement with those people who are making radio. I don’t know how to change that.

Footnote

Tangentially linked, I was playing around with SQ’s IFE on the A380 this week, and stumbled across their “The Chart of XXXX” albums. They’re pseudo-albums listing the 10 most-popular tracks, by UK Chart sales, of each year from 1960-2005. Whilst many of them are really very good, it became clear just how useless the charts had come by the 1990’s when around 5 out of the 10 tracks were novelty songs. When I reached 1989, the warning signs were set – 3 entries from Jive Bunny. That’s where radio programming trumps sales stats.