Radio listening is at an all-time record high. DAB is up 20.8 per cent year on year; but listening to the radio via telly and the internet grew faster than listening on a DAB receiver. Year on year, the digital slice of the pie grew from 21.1 per cent of listening hours in Q3 2009 to 24.8 per cent from June to September. The target set by the previous government, and adopted by the current coalition government, is 50 per cent by 2015. The rate of growth still suggests this will not be achieved in time, as we suggested back in August.

Now for the quarterly change. The promotion ran for a month and ended on 26 June. RAJAR’s quarter began on 1 July – and ought to have reflected an audience uptick. Despite the promotion, however, DAB listener hours remained exactly where they were in Q2, at 162 million. So the plummy tones of Fry appear have been overshadowed by other factors, such as wider adoption of the BBC’s iPlayer, or people enjoying radio through their spanking new TVs, bought for the World Cup.

There may be other reasons why the promotion didn’t reflect in an audience uptake. Perhaps the discounts were not attractive enough. Perhaps it didn’t receive enough retail support – DSG’s Dixons and Currys outlets declined to participate. Or maybe they should have hired Hugh Grant.

You’d think the radio industry should be celebrating: the appetite for radio is tremendous, and people are seeking out new media devices with which to hear it. The fact that people are listening to radio on a TV should be particularly welcome, since it’s a linear format, where advert-skipping isn’t possible. But the radio industry has yoked its fortunes to DAB.

More from RAJAR here.

90 per cent of the UK listens to radio, and 94 per cent of listeners are happy with what they’ve got. The Lords accept most of the points made by critics of DAB and the Digital Switchover, noting: “The gradual rate of take-up of digital radio services does not suggest that consumers are enticed by the reception quality, extra functionality or the digital-only content so far available.”

How about something better, then?

“To go back on this policy now would risk turning confusion into an utter shambles” they write in a new report (pdf).

So the Lordships recommend everyone get on with the Digital Switchover. They advise implementing the Digital Radio Working Group’s (DRWG) recommendation to build out DAB coverage so it reaches 94 per cent of the population, but don’t say who how it should be funded. Both the BBC and the commercial broadcasters want extra cash for this. But the Lords duck this issue.

Punters will be browbeaten into buying a digital set, when an analogue one would do, we’re told:

“The Government must ensure that advice goes to retailers and the public that when purchasing radios, consumers should purchase sets that include a digital tuner.”

That’s the stick. But there may be a carrot. The Lords back a cash-for-trannies scheme, so perfectly good FM radios can be traded in.

“The Government should encourage the industry to devise a sensible scrappage scheme, recognising that the industry, manufacturers and retailers, will benefit heavily from the new sales generated by digital switchover.” They also advise “the Government inform consumers as soon as possible as to how the Waste Electrical and Electronic Equipment (WEEE) regulations will operate for disposal of analogue radios”.

Another recommendation is for car manufacturers to fit a multistandard chip, ASAP. It isn’t clear whether multistandard chip here means digital and analogue, or the different flavours of digital radio: DAB, DAB+, DVB-T too.

Anyone hoping a timetable for DAB+ implementation would be part of the deal will be disappointed. The Lordships say too much has been invested by the public in DAB, but advise a timetable for multistandard radios to be produced. In other words, the public will have to invest even more in obsolete radios.

It’s everything the DAB lobby could have hoped for – short of a blank cheque.

Two thirds of people don’t download unlicensed music at all, it’s a minority pursuit. But that “honest” mid-market is not only losing the habit of buying CDs, it hasn’t acquired the habit of buying digital songs either. NPD found that between 2007 and 2009, about 24 million Americans stopped paying for music in any form.

The number paying for digital song downloads fell year on year in 2009, the analysts estimate, by 600,000 to 34.6 million. None of this is particularly surprising – and gives impetus to the call that the music business start treating the public as customers again.

But what really put the cat amongst the pigeons was a comparison between free streaming services such as Spotify and on-demand radio services, such as Pandora. Spotify is the major labels’ darling: they invested in it, hold potentially lucrative shareholdings, and gave it preferential royalty rates to get it off the ground. Yet when people joined a streaming service it led to a 13 per cent decrease in paid downloads. Interestingly, NPD found that paid downloads by Pandora listeners increased 41 per cent. Why the difference?

“More listening just means more listening and tends to lead to less purchasing,” reckoned NPD’s Ross Crupnick.

Spotify wasn’t mentioned by name by Crupnick, it hasn’t yet launched in the US, and NPD only looked at US consumers and services. It should also be noted that Spotify has a “paid” option, as well as a link to purchase downloads. Yet, as we revealed last year, the conversion rate from free to paid was a third of what Spotify was boasting.

One major label refusenik is showbiz veteran Ed Bronfman, who runs Warner Music: he’s wary of cannibalisation and suspicious of rival Universal constantly talking up its investment in Spotify. NPD’s research has given him the ammunition he’s been looking for.

The argument for free streaming services is that they bring people in from pirate territory, a more subtle form of “behaviour change” than hitting them over the head with a hammer. This is the case put by We7, which targets a young demographic. But for hardcore music fans, who were pretty happy buying CDs in big numbers, Spotify gives them every justification for spending money on something other than music. Maybe the roof needs fixing.

For the first time, a top BBC executive admitted that DAB radio isn’t inevitable. The Director of BBC Audio and Music told Radio 4′s Feedback programme that “since I have arrived at the BBC, I certainly haven’t seen it as inevitable that we move to DAB.”

Davie continued:

“We do believe that, if radio doesn’t have a digital broadcast platform, it will be disadvantaged. I’m pretty convinced of that logic. What I’m not saying is that we have to move at 2015 if we haven’t delivered the thresholds – the right levels of listening to digital radio and to DAB. I don’t think we are on a course that is unstoppable to 2015, although we are pretty committed to a DAB switchover over time.”

Davie was responding to a deluge of negative responses unleashed by Carter’s Digital Britain report. The report, the nation’s Media Correspondents told us, would order analog radio to be switched off in 2015. Incorrectly, as it turned out. Emboldened by this, it was suddenly open season on DAB. The Tories have sniffed a vote winner, although shadow culture secretary Jeremy Hunt shows the same reluctance to grasp the underlying problems.

Radio 4′s Today programme sent its radio car to the remote location of er, BBC Television Centre, and discovered DAB reception “is more irritating than Norman Collier’s broken mic routine”. That is, if they could get it at all. Back in the studio, former TalkSport owner Kelvin McKenzie listed more DAB closures and concluded: “There are no advertisers out there, no listeners out there. DAB is a technology whose day is done.”

Davie was merely trying to defang the backlash. Listeners don’t like to feel bullied, and especially not bullied onto a technology that is perceived to offer only disadvantages. No one talks about the much-vaunted crystal clear reception any more, or choice, or whizzy new features.

“What we might be seeing is the opening salvo of an action folder marked ‘Possible DAB Downgrade/Exit Strategy’”, mused the radio analyst Grant Goddard. “The nuclear button might never have to be pressed, but it’s always useful to know where the exit doors are and how you are going to reach them, however little you might want to think about the DAB plane going down in flames.”

I’m not so sure.

Carter’s report failed radio by ducking two serious areas. DAB’s problems are both technological and financial, and the two are interlinked. More modern codecs offered by DMB (the DAB technologists’ preferred route) or DVB-H could cut the transmission costs, lead to cheaper sets, and give us better and more complete reception. This required something stronger than what Carter proposed – an airy desire that sets should be forward compatible somehow.

As for the financial issues which beset commercial radio, it’s hard to see how anything short of a compulsory nationalisation of Arqiva and chopping up the spectrum could help. (Arqiva is where the BBC and the Independent Broadcasting Authority’s transmission facilities, along with DTELs, the Home Office’s radio network for defence and emergency services, have ended up).

The BBC doesn’t want half of its audience to disappear overnight, either (one of the two switchover criteria is 50 per cent of listeners), so here we see Davie steering it away from backing any kind of commitment. But nor does the BBC want a fragmented world where the audience wanders off to discover more engaging material, as they have since the very beginning of radio. That’s what Davie means by “a digital broadcast platform” – he means one single, nationwide, one-to-many broadcast standard, with presets in all the receivers. The sheep must not stray from the fold.

So we’re muddling along as before, without the carriage costs being addressed, and without a firm roadmap for DAB’s successors. One thought ought to keep radio executives awake at night. By 2015, IP networks will be fully capable of IPv6 multicast, as we’ll be well into 4G (LTE) deployment by then. If half of the terrestrial radio is audience is disenfranchised overnight, the mobile operators will only be too happy to offer them – and advertisers – a home from home.

With an end-of-life government meandering to its termination, and Carter’s Digital Britain review soaking up all the attention of bickering departments, he can’t set policy.

Largely as a result of their own greed, financial miscalculations and lack of innovation, large radio companies are suffering. They want to slash costs and merge. Richards, who was addressing the “Radio 3.0″ conference in London, listed his preferred solutions. One was to put more emphasis on news and local radio as a community information service. (You could almost hear teeth grind at that one). This was especially useful “during flooding or heavy snow” or other times of crisis. (The grinding continued).

Another was allowing stations to co-locate and merge to form bigger stations, which perked the audience up a bit, since it’s what the big boys crave. He said savings would help about 60 per cent of commercial stations, with the example that two merging could save £135,000 a year. He hinted at relaxing sponsorship opportunities.

Richards reiterated the line that before we can switch off FM, DAB should be profitable – or as close as it can be. This could be helped by replanning DAB transmission areas, merging some multiplexes and making DAB frequency changes. But the switch-off looks as far away as ever.

It’s not as simple as the TV switchover, Richards told Steve Hewlett. There are far more radio receivers out there. And with TV it was a case of necessity: the regulator couldn’t extend FreeView without first turning off analogue, because of spectrum scarcity. The DAB lobby is praying for an early switch off date – but will settle for any kind of commitment now. DAB is absent from cars and mobile phones – one traditional and one a new medium for radio listeners.

Hewlett asked again – why can’t we force people onto digital radio? As a Grauniad regular, chivvying and beating people up with regulation comes as second nature. Might electric cattle prods be just what’s needed?

(I made the last part up).

Well, it wasn’t that easy, Richards said. “There’s no point in doing something the audience regards as a disaster” he replied.

The panel that followed hinted at the extent of the DABacle. It’s not radio’s only problem, but the poor uptake and high carriage costs contribute to many of the others.

Daniel Nathan of Brighton’s Festival radio pointed out that with such low numbers for DAB-only stations (favoured by only 3.2 per cent of the audience in all) you might as well as stick it out over the internet.

“While IP is not satisfactory it’s more effective to reach those 20,000 listeners than DAB”.

“Planet Rock will need a 90 per cent fall in carriage fees to achieve a profit within five years,” he said. Why not just consider radio as radio and use IP to deliver the addons?

Steve Ackerman of production company Somethin’ Else, thought DAB was helping to lose the young audience. “I see a digital future encompassing a variety of technologies that may or may not include DAB”.

Richard Wheatly, chief exec of the loss-making Jazz FM, described himself as a former DAB critic who had had a “Damascene conversion”. It didn’t sound much of a conversion.

“Brands will move on past DAB. We’ll go to internet and satellite.” Wheatly just wanted to broadcast where he could find an audience.

Tony Moretta of DRDB, which was set up to promote DAB radio, was confident DAB would get in the car – eventually.

He said he was encouraged by the two commercial giants “singing from the same hymn sheet – FM isn’t a long term future – everyone is getting behind DAB.”

Maybe they just have funny ways of showing that love. Last year Globalt torched its DAB stations, and in April sold its stake in the national multiplex that no one wants to broadcast on (DigitalOne) to transmission company Arquiva.

Apparently, for just a quid.

DAB has been a very British failure. While the specification is almost 20 years old, and (just about) adequate, bureaucracy and regulatory greed left British listeners with an experience far short of the “CD quality” sound they were promised.

Digital radio has been expensively promoted by both the BBC and Ofcom – both of whom have deeply vested interests in the digital switchover. And the vested interests range far and wide, too – media companies have digital stations of their own, and prefer cross-promoting their investments in their publications to reporting the subject frankly. Meanwhile, analogue radio remains Briton’s best-loved and most popular medium, a survey confirmed this week, with 100m analogue sets in use – compared to 6.5m DAB receivers.

Finally, GCap blew the whistle on the charade two weeks ago, when it announced that it was canning two of its DAB stations.

“We do not believe that – with its current cost structure and infrastructure – [DAB] is an economically viable platform,” the commercial broadcaster said.

The FT reports that secret crisis talks are taking place in Manchester today to try and make digital radio more attractive to commercial broadcasters. Coercion of one form or another seems high on the agenda, however.

One idea is to make the analogue receivers obsolete overnight, by withdrawing BBC broadcasts from analogue radio. Want the Beeb? Go out and buy a new set.

Running down analogue has also spawned dozens of thriving community FM stations, which provide a stark contrast to government-backed “community empowerment” programs based on web technologies such as social networking. These stations also embarrass the BBC, whose own lacklustre local radio stations too often appear to serve as a home for washed-up Alan Partridges. When given the choice, people prefer listening to real people, rather than the patronising “local” voice of the BBC.

Another idea cited is to use our own money for more digital propaganda. The FT reports that the BBC has a £250m spare license payers’ cash, in the kitty handed to it for digital radio:

“Another radical idea would be to use public money to support a huge switchover advertising campaign – and subsidies for elderly and low-income families to buy new radios – in the same way that as has happened in aiding the switch-over to digital television.”

This one doesn’t come from MySpace itself, however, but Orb Networks. Orb already allows you to listen to or view media stored on your home PC (music, playlists, photos or TV channels), at work, or on a mobile via it’s “MyCasting” service. Now it’s added MySpace integration to the list of features. Using the Orb client MySpace users can upload songs to their MySpace page – and stream them.

A drag and drop client makes the operation trivially simple.

Last year, El Reg was the first to notice how MySpace is really a radio set of sorts: you push a button, and out streams music. There’s only four songs per station, and there’s millions of stations – but it’s still radio.

Where Orb’s MySpace integration could prove interesting, is that it greatly expands the radio set’s “playlist”. MySpace users can add their own favourite tracks to their home page and stream them.

There isn’t really a snappy name for this: Orb talks of “jacking a user-powered radio network into an artist-powered radio network”, which once you’ve got past the Americanism is as accurate as you can succinctly get.

As for legality? Well, we reckon it skirts the boundary of the law but stays on the right side. Most of the users will be limited by a 128kbit/s uplink, which means in practice only three or four people will get a decent stream concurrently.

But it is likely to increase the pressure on MySpace to pay royalties to the artists. There are some similarities with Mercora, the ad-supported person-to-person streaming service. And Mercora calculates the royalties and pays the appropriate rights holders.

(Sling Media, Mercora and MP3Tunes Oboe all offer variations on getting stuff at home to you anywhere).

So why haven’t more people noticed the significance of this trend outside the pipes industry? (Orb won the best of show at 3GSM).

Partly, we suspect, because everyone has a baked-in preconception of what MySpace is: in the US it’s a teen site, in the UK it’s a music site. But more than that, almost every digital media pundit has been obsessed with the idea of “User Generated Content”, which increasingly looks like a gigantic red herring.

Orb’s own statistics seem to bear this out.

Orb users use the MyCast for 90 minutes a day, in contrast to the average internet user, who uses the net for just 31 minutes a day. Orb says that’s twice as long as its users were spending six months ago.

As for “User Generated Content”, it’s been around since the early days of the public internet – from the Hamster Dance (sic) and Mahir to All Your Base – and it will surely be around until the last router on earth is turned off. But the “digital revolution” it was supposed to represent really looks like a utopian wet dream, as what most people would rather use the net for is listen to stuff they’ve already bought. Most pundits don’t realise the good ship UGC has already left.

That could be because it doesn’t have a snappy name, yet. OrbSlingCoraOboe?

The idea of being able to play your music anywhere, on any device, has become a cliche without quite coming to pass. Viewed from a distance, this looks like one of technology’s greatest failures.

If you’re acquainted with Orb, Sling Media, or MP3Tunes – all of which fulfill that promise to some degree – you’ll know how close we are to this goal. But for every breakthrough, it seems, there’s yet another setback.

Look a little closer, and we see that for the most part it’s not the fault of the basic technology components. The networks are in place, the hard drives are big enough and the processors are fast enough for “audio everywhere”. And all are fairly affordable to a critical mass of the market, although the cost we bear is undoubtedly higher than it was in the analog era.

“If I can play it to myself, then I should be stream it to myself on any of my networked devices,” says Orb Networks’ EVP of product marketing, Ian McCartney.

Politics and greed are the problems.

This week Michael Robertson’s MP3Tunes service enabled subscribers to play their iTunes music collection on their TiVo. That’s no thanks to TiVo or Apple, though. It’s possible because subscribers first upload their iPods to the “cloud”, in this case MP3Tunes’ servers, which then performs transcoding if needed.

Orb does something similar, although with a different architecture. In its case the PC punches a hole out to the network, and via Orb’s servers – which also transcode if necessary – allow any device to access the media. Another approach, taken by Sling Media and a host of consumer electronics companies, is hardware based. Like Orb, the media files remain on your own devices, rather than being cached in the cloud. Sling concentrates on TV access, but the problems all three face in getting an end-to-end approach to work as expected are very similar.

As Robertson reminded us this week, what the Orbs and MP3Tunes are doing is removing incompatibilities – TiVo doesn’t know what a WMA or an AAC file is – only to see technology vendors put new obstacles in front of us.

McCartney describes the digital download music services as “walled gardens”. If you have bought a song from iTunes or Rhapsody, and you want it then and there, you’re out of luck, he points out. While it allows a few manufacturers to sell a lot of gear – Apple being the biggest beneficiary – this isn’t the solution to the problem – it’s actually part of the problem.

He cites Sony’s recent addition of Flash to its PlayStation Portable – in a form that nobbles audio playback -

For their part, both Robertson and McCartney pitch the copyright holders – who insist on DRM in the belief that technology can solve the problem – on the basis that their revenues will increase once the frictions and incompatibilities have been eliminated. McCartney pitches Orb to rights holders on the basis they have the final decision on formats.

“We say, ‘Don’t worry about it. Encode it anyway you want – just let people get to the stream and the home processor will take care of it.”

Robertson, meanwhile, points out that MP3Tunes has published the API to its Oboe music lockers.

“TiVo is just one example of what we hope is a wide range of supported devices phones, PDAs, DVRs, Wi-Fi devices, and car stereos for example – each of which requires a different interface to work best.” It’s easier to browse your audio collection on a TiVO, he reckons, because the set top box has already bought, and the TV’s already on, and the remote is (probably) already in the hand.

No need for then for Viiv, Windows Media Center or Front Row. Unless you already have one instead of a TV.

Robertson also touts security as a feature – there’s always a permanent copy on the MP3Tunes servers.

(This raises the perennial question of whether you can really trust a start-up to secure your backup – and ensure it’s there in many years time – but we won’t go into that now.)

Network barons

But in addition to the turf wars between Sony, Microsoft and Apple, the seamless services face another threat, which McCartney says Orb takes deadly seriously. It’s the prospect of the major network owners bumping off internet services that threaten their own content services.

“Verizon’s VCast is the ultimate walled garden,” he says.
While agreeing that the phrase “network neutrality” needs to be ditched for something more attractive – “neutrality also suggests you’re hiding something,” he says – McCartney thinks the technology lobby needs to do more in Washington to preserve an even playing field. Orb will be doing what it can.

For now the rivals have more in common than they have to squabble about. McCartney paid tribute to Robertson as “fantastic, a dynamic envagelist, and far and away one of the best speakers. He says that this is what the net is for – and he’s absolutely right.”

With digital audio and video services are reported with such enthusiasm that the fine details, the kind of things that doom great waves of capital spending, are overlooked. We still have a long way to go.

Bootnote

Finally a word on cost. Much like the Emperor’s New Clothes, few have dared point out how much more digital costs, for lower quality audio.

Paul Sanders, of file-sharing ISP State 51, pointed out here last year,

“the Total Cost of Ownership of music has really gone up from when all you needed was a £100 CD player and a set of shelves from IKEA. Now your cost of enjoying music is a computer – that’s £400 to £1000 – another couple of hundred quid for your iPod, and in the UK, between £20 and £25 a month for broadband.”

We rarely think of it like this, because we assume they’re paid for. But how much more are people willing to pay? This is the cost of this friction, and we hope it’s very temporary.