The value of FM licences is decreasing. Here’s why it doesn’t matter

Wednesday 06 December, 2017
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Radio Tomorrow with James Cridland

The big news in London is that there are going to be two new talk radio stations shortly - CitiTalk and CitiSport. The station is looking for a programme director, on-air talent and production staff.

It’ll be run by Kelvin MacKenzie, a man who has run a successful radio station and the UK’s biggest-read newspaper, The Sun. He also ran a television channel which included a dwarf on a trampoline in front of a weather map, bouncing hopelessly to try to point at Scotland, entitled “Britain’s Bounciest Weather”. But I digress.

London isn’t short of radio stations. With a DAB radio, there are about 120 to choose from. (I wonder what the memory capacity of some of the older DAB sets are? There must be a point where they are going to run out, surely?)

If you’re an FM licence-holder, this explosion of choice on DAB might be a little vexing. After all, didn’t you purchase an FM licence because it was a near-monopoly opportunity? And now look, there are stations on DAB for builders and plumbers, or people who speak Polish, or children, or all kinds of niche audiences.

DAB uses higher frequencies (around 220 MHz) so it covers a different area - in Britain especially so, since in a vague attempt not to annoy the French, DAB broadcasts use a number of transmitters dotted around a city, rather than one big one on a hill.

Given that Britain has just voted to leave the EU, one wonders why they’re still so keen to avoid annoying the French. I’ve just checked Wikipedia for “Anglo-French war” and discovered we’ve had 23 of them.

Anyway, as a result of DAB having a different coverage area and vastly increased choice, those expensive FM licences that radio stations have hold of are slowly beginning to lose their value. Put aside the fact that FM might be turned off at some point soon in the UK, there are fewer benefits of having an FM licence as more listeners switch to DAB. In the UK, almost half of all radio listening happens on a digital platform.

This is sometimes seen as a reason for radio to oppose DAB. “We like having a near-monopoly,” the thinking goes, “and we really don’t want to allow others into the market.” Or, in my home town of Brisbane, “we really don’t want the DAB from Brisbane coming into the Sunshine Coast, which is next to Brisbane”.

History is littered with things we can learn from here.

Many years ago, there was only one telecommunications company - AT&T, or British Telecom, or Telecom Australia. Then, markets were opened. The cost of communications plummeted as new competitors came into the market, the quality of products and services went up, and things got better for consumers.

In most places, the local taxi companies - specifically licensed by local government - have been joined by Uber and other more technological solutions. It’s not been good news for the old taxi companies, for whom a taxi licence is no longer a licence to print money; but it’s been good for the consumer.

And the same goes for radio. In Norway, the average listener has moved from 5 national radio stations on the dial to over 35. Some broadcasters have benefited from the change; others haven’t fared so well.

Of course, the internet brings tens of thousands of radio stations to audiences. Interesting, then, that in Norway, the amount of music streaming through something like Spotify has actually decreased as listeners are given more choice and more carefully formatted music stations.

It’s almost inevitable that the value of an FM licence will go down in this new world. However, what won’t diminish is the value of a radio station that is real and relevant to its audience. That might be a heritage FM station, a new DAB station, or even something on the internet. But the listener will get a wider and better choice - and, ultimately, stick with radio.

FM licences might be worth less in the long run: but great broadcasting companies know how to keep themselves relevant into the future. Let’s reinvent ourselves where necessary, but also be aware that things change, and it’s our job not to fight that change but to delight audiences and advertisers accordingly.

 

About The Author

James Cridland, the radio futurologist, is a conference speaker, writer and consultant. He runs the media information website media.info and helps organise the yearly Next Radio conference. He also publishes podnews.net, a daily briefing on podcasting and on-demand, and writes a weekly international radio trends newsletter, at james.crid.land.

Contact James at james@crid.land or @jamescridland

 

 

 

 

 

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