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Future Radio: Will Digital Kill The Record Biz Star?

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The symbiotic relationship between radio and the record industry has helped drive music sales for 50 years. But given the increasingly interactive and on-demand nature of digital forms of radio, should the music business attempt to limit it's technological potential or is now the time to monetise this developing system of music distribution?

This Think Tank will consider whether the mainstream UK public are finally ready to embrace digital radio and if so, whether the same can be said for the music industry?

Recent studies found that uptake of DAB grew around 100% in Q4 2005, but still only 11.1% of UK homes own a set. Is this an acceptable figure, considering that DAB was launched in 1995, or could this explain the government’s reluctance to set a switch-off date for analogue radio?

The UK media also remains unconvinced – recent reports proclaimed the potential market for digital radio on mobiles and hailed Channel 4’s bid for a nationwide digital radio multiplex. Simultaneous broadsheet reports attacked digital radio for sub-FM audio quality and insufficient UK coverage. This mixed media message is not aided by the multiple forms of radio (DAB, Digital Radio Mondiale, HD Radio) that are continuing to emerge and compete for mainstream support.

The uncertainty surrounding take-up of digital radio has not, however, deterred active debate about its future potential. With some receivers already containing hard drives, will an iPod-savvy public expect to be able to store and manipulate digital radio broadcasts track-by-track in a similar way to MP3s?

Comparing briefly with internet radio, online services such as LaunchCast, Last.fm and Pandora stream content to match individual musical tastes. Highly sophisticated (and illegal) programmes are emerging that track thousands of online radio streams and rip selected tracks for unlimited personal use. Should evolving digital radio technology be allowed to offer comparable services – with personalised music product on-demand?

Many understandably fear that with such a growth in functionality, digital radio could cannibalise CD and download sales. At a hearing before Congress in late 2005 Mitch Bainwol, chairman/CEO of the RIAA, explained his position thus: “We merely ask that the line be drawn at automatic searching, copying and disaggregation features that exceed the experience they [the US public], and Congress, expect from radio.”

But will attempts to limit digital radio prove any more successful than previous attempts to restrict the outcomes of new technology? From “Needle time” enforcing a live performance quota on analogue radio in the 1960s, to the “Home Taping Is Killing Music” campaign in the 1980s, efforts to curtail technology have often failed, and the initial perceived threat not materialised. Is this an opportunity to learn a lesson from the past and actively develop new business models that enable artists, creators and record companies to enjoy new revenue streams that exploit, rather than limit, advances in digital radio?

In the UK, digital radio use has so far been funded via a blanket licence from PPL. The Rental Directive dictates that both record company and performers receive an equitable share of payments due. If digital radio evolves to replace traditional sales, however, few record companies will be happy to see a return on their investment of just 50% of licensing income. But what are the alternatives?

In the US, satellite radio charges a subscription fee of around £7.50 a month and is predicted to reach 55 million subscribers by 2010. The recent XM/Napster venture offered an added-value take on music radio whereby XM subscribers can pay track-by-track to download the music they hear or can subscribe to Napster and receive unlimited access to all the music in XM broadcasts.

UBC Media has gone a step further and recently previewed a subscription service for digital radio that will allow real-time downloads direct to the digital radio hard-drive. But will broadcasters and labels buy into this model, and even if they do, will rival companies build digital radios that differentiate tracks and record them for free?

It also remains unclear whether UK consumers will ever be willing to follow America’s lead and pay dedicated subscription fees for radio.

Meanwhile, lurking in the shadows, podcasters have already established fledgling licensing deals with V2 and AIM. But podcasts are currently downloadable only as complete programmes, not easily broken down into constituent tracks. Podzinger and blinkx are already developing systems that scour podcasts for specific audio content based on keywords. Is this the start of podcasts offering music-on-demand? Will record labels then have to tear up their embryonic licensing contracts and demand podcasting technology is reined in, along with digital radio?

Or will the UK music industry develop new business models that enable digital radio stations, satellite radio and podcasters to become distributors of core music product? If so, how can these models square the current royalty structure with that prescribed by the Rental Directive?

Should the UK follow the RIAA’s lead and clamp down on the threat posed by future podcasting and digital radio before it materialises, or has the time come to pre-empt the evolution of technology with a new, flexible business model that can embrace future radio?

Keynote: Phil Riley (Chrysalis)

Panel: Simon Cole (UBC Media), Tony Clark (PPL), Paul Brown (CRCA), Paul Sanders (state51, Consolidated Independent, PlayLouder MSP) and Geoff Taylor (IFPI)

To book visit www.musictank.co.uk

Location

Bertorelli Restauarant & Bar, first floor private dining room

11-13, Frith Street, Soho, London, W1D 4RB