Media Forum: Is DAB radio now doomed?

GCap has closed its key digital stations. Will DAB survive?

When Digital One launched in November 1999 with five Digital Audio Broadcast services (Classic FM, Virgin Radio, Talk Radio and two digital-only stations, Core and Planet Rock), commercial radio was in an irrepressibly cocky mood. This, we were told, was another landmark moment for the medium.

DAB which, in theory, gives the commercial sector a more equal share of spectrum allocation, would give it more of a chance of competing head to head with the BBC - and revenue growth, already impressive, would really take off.

Well, it didn't happen. Perhaps one of the reasons for this was the fact DAB hasn't grabbed the public imagination in the same way as the internet, digital television and mobile platforms have. Although DAB equipment is now in 6.45 million homes, that's hardly an awesome cumulative total almost a decade in. And relatively few cars, for instance, have DAB reception equipment installed as standard.

It was inevitable that questions would be asked about DAB's long-term viability. Last month, a report from Enders Analysis concluded that DAB could end up being to radio what Betamax was to video.

Then, the most damning development of all - GCap was closing its remaining digital-only stations, TheJazz and Planet Rock, and selling its stake in the Digital One transmission network. GCap's predecessor company, GWR, had, of course, been the most important founder shareholder back in 1999, and DAB's greatest evangelist.

So, is DAB doomed? Nathalie Schwarz, the chair of 4digital, hardly thinks so - after all, 4digital is gearing up to launch commercial radio's second DAB multiplex, probably some time in the autumn. The latest Rajar audience figures, she points out, show that listening to digital radio is growing rapidly in the UK - and DAB accounts for the vast majority of digital growth.

She adds: "Other distribution platforms for digital radio are very small in comparison, and we think DAB represents the cornerstone of radio going digital. More than 500 million people around the world can now receive nearly 1,000 different DAB services, from mobile phones to cars. Of course, the most important impetus for any new platform is fresh and creative content. It is about offering the right kind of choice for consumers."

But advertisers are less than impressed with the whole business. Bernard Balderston, Procter & Gamble's associate director of media, argues DAB has been left in something of a limbo state because the Government has found itself unable to announce a timetable for analogue radio switch-off. He explains: "Without clear direction, it's doubtful if DAB will be able to achieve its promise - and it's clear that (the platform) does bring potential consumer benefits. The (Government and regulatory) view may well be that radio isn't as important as TV, and that market forces should be allowed to take their course, but it may be time for the radio industry to press the Government to make some noise about switching off analogue."

Absolutely, Jonathan Barrowman, the head of radio at Initiative, agrees, but he has no doubts about DAB's future. He adds: "We need to look at recent events with more perspective. GCap took this decision because it is a public limited company fighting for survival, and it needs to cut costs. I don't think you can argue that there are implications for DAB beyond that."

Perhaps, Shaun Gregory, the chief executive of the ad-supported free mobile operator Blyk and the former director of Emap Radio, says. But he points out that there has been a worrying lack of recent evolution in the DAB proposition.

He concludes: "It would be unusual for a single player to bring down a whole platform. Some people focus on DAB's role as a new distribution opportunity for existing formats, some focus on it as an opportunity for new formats, but when it comes down to it, it's all still just radio. And that's DAB's problem. It needs to offer something new or compelling."

NO - Nathalie Schwarz, chairman, 4digital

"Digital media convergence is becoming a reality. Consumers are comfortable with radio, and DAB enhances a familiar medium. It needs high-quality choice, backed by big brands."

MAYBE - Bernard Balderston, associate director of media, Procter & Gamble

"It's beginning to look like an opportunity that's not being properly grasped by either the commercial sector or the Government, which is not great news for advertisers."

NO - Jonathan Barrowman, head of radio, Initiative

"It's not good to see the supposed market leader unable to take part in the medium's most important development. DAB is the most important component of digital listening, and will play its part."

MAYBE - Shaun Gregory, chief executive, Blyk

"When DAB launched, there were no iPods, and broadband internet penetration was low. But digital radio is exactly what it was all those years ago. That is its problem. Unless it can offer something new to advertisers or listeners, it is going to remain a slow-growth platform."