Digital Transitions

I was reading the, rather excellent, Infinite Dial blog last night and it made me smile. Over in the States they’re having some trouble with their version of digital radio, HD Radio. Unlike DAB in the UK, HD Radio basically allows them to squeeze a digital version of the station and usually an extra station within the FM frequency. So an analogue listener gets their station and a digital listener gets the same station and another one in ‘digital’ quality. It also stops any more of that pesky competition sneaking in.

The article talks about the problems that they face in pushing this new technology, especially when there’s well marketed Satellite Radio to compete with. The problems they’re facing – set prices, reception and retail interest – is something that we’ve faced in the UK as we started to roll out DAB Digital Radio. The key way we overcame this was:

Helping to get the prices down

1. Before a manufacturer could build a DAB radio they needed to buy a ‘chipset’ off a manufacturer. This chipset cost quite a lot, so when everything else was factored in, it made the radio expensive. Therefore, you need to get the price of the chipset down. Digital One invested around a million quid into chipset design (with a chipset manufacturer). This spurred them on to make a cheap chipset, Digital One then got a cut of every chipset sold. Result! It didn’t actually cost them a lot of money, and it produced a new (non-traditional) revenue stream. It also kicked the other chipset manufacturers into competing with this new release – the market takes over – Bingo! Mission accomplished.

2. The industry really wanted a £99 digital radio, but the volumes required to do this scared off the manufacturers. The UK radio industry therefore underwrote the first batch of radios. They were more confident than the manufacturer that they could be sold! The radio came out, was a huge success (the Evoke-1 is now the world’s best selling radio) and the money was never needed.

Retailers

Electronics retailers aren’t exactly known for their insight and enthusiasm for anything. The bosses, however, are obsessed with data, it influences all of their buying decisions. Manufacturers are also keen to jump on any trend. The radio industry formed the Digital Radio Development Bureau (DRDB) to help with this. They employed experts on retail and manufacturing to help sell the story of digital radio. Using case studies like the Evoke 1 above, market trend information and their own commissioned research they started selling the story to the naysayers.

This was all backed up with an ‘airtime’ bank donated by the radio groups. It would support manufacturers/retailers who supported digital radio. The lure of free publicity attracted some new players, they were turned into case studies and then the DRDB pushed again at more partners. For example, the main reason Sony came on board was that they saw the Evoke eating into their UK radio sales, with more information from the DRDB they had the tools to make decisions about how (and why) to enter the UK market.

Reception (from the building and from the staff)

Big metal sheds aren’t the best locations to pick up any radio signals. Sky TV get into all those stores because they hook them all up for free and the salesmen make extra money on the commission. There’s an incentive for them to sell. UK digital radio learned this (the hard way after being ignored). They engaged the staff directly. They turned up at all the multiples’ big training days and conferences teaching the staff about the benefits of digital radio and helped them with answers to the types of questions customers were asking. They also started a monthly prize draw for staff at any retailer across the country.

When any staff had made a sale they could enter a draw to win prizes. Yep, there was all the typical stuff, money, electronics etc, but they also used the radio industry relationships too. Things like meet and greets with pop stars, backstage tickets, visits to radio stations, even presenting your own show on a digital radio station too. It served to get them excited about DAB. They wanted to have more chances of entering, so the staff themselves helped fixing some of the niggles in-store.

Picking up signals in buildings has been a tougher nut to crack, but the UK industry has just got a fix for that too. In the same way Sky is hooking up stores, retailers are now being offered the chance of having an ‘instore repeater’ to boost signals in a building. The encouragement is also coming from research – when listeners can hear digital radio in-store it can increase sales by up to 50% – that’s an incentive for the retailers to jump on board.

All this activity is annoying and time consuming and not very radio at all. I was stuck at the Motor Show one year showing customers, but more importantly car manufacturers, about DAB in-car and the benefits etc. But it’s all incredibly necessary. If you really believe in the product – like UK radio has with DAB – you have to be willing to go the extra mile to persuade others to get involved too.

The UK’s DAB success (currently 5m sets sold) only started when we truly worked hard engaging with other sectors. Unfortunately we only realised this three years after we started broadcasting stations! If HD Radio wants to be a success, the US radio industry will need to work much harder with retailers and manufacturers to make it happen. Because without them on board, you’re wasting your time talking to the listeners.

One thought on “Digital Transitions”

  1. Great post Matt, but I would also mention the UK government and regulator has helped with some of the push with the 12 year licence extensions. Without this I suspect less stations and radio groups would be interested in DAB.

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