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DAB in Ireland: RTE multiplex closed
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also can i draw your attention to the following article. found here http://www.digitalradioltd.com/online-v-fm/
Online v FM
29 March 2010 7 Comments
Last week a general email discussion has been going on talking about the costs of broadcasting online versus one-to-many broadcasting with FM or DAB.
JP Coakley, Director of Operations at RTÉ Radio made some very good points which I’m sharing with his permission. Please note these are JP’s personal thoughts and not necessarily those of RTÉ.
First things first. Let’s not demonise either side. This is neither a question of New Media refuseniks who are unable to see the tidal wave of the web coming toward them as they hold to a dying past, nor is it a question of New Media fanatics who are incapable of understanding the value of FM as a universally available and free to air platform. This is purely and simply a strategic dilemma that requires thought, discussion and critically, decisive positioning.
Costs of transmission.
Right now, we estimate the relative costs per listener per hour of the web versus FM is 2000 to 1. The web is 2,000 times more expensive per listener per hour than FM. Part of this is explained by the fact that the FM network is expensive to build but, once built, is very efficient at serving large audiences. The web is not. The unit cost to serve the millionth web user is exactly the same as the first. If we had a situation where 50% of our audience was on the web, we would be forced to reduce other activities to pay for it. Also, there would be a punitive charge to popularity, i.e. if a programme gained more listeners than it was expected to, the cost of transmitting that programme would rise.
We are in the very early days of internet traffic. What we can see is, in the UK, there are very real threats from ISPs to “throttle” the BBC iPlayer on the basis that it now constitutes nearly 10% of total online traffic. It is highly likely that the BBC will be obliged eventually to pay for the distribution of the iPlayer. Of course you will hear a lot about next generation networks but there is a real question over who will pay for them.
The problem with the web business model is that the people who make the networks are not the people profiting. There are five main businesses in net use, shopping, gaming, pornography, gambling and media. None of these returns money to the people who build networks, and of these, media (including social media) consumes most bandwidth yet delivers least return, both to the ISPs and, critically, to the businesses themselves. I really don’t see how this model will work in the future without businesses being charged by ISPs, according to use, or governments deciding to build the network. If the charge for the new networks is to be passed to the broadband subscriber we will see a very significant jump in tariffs.
Costs of content.
The web favours aggregators over originators. The most successful business model on the web, is Google. Ironically that’s our business model; charging advertisers for access to audiences rather than charging audiences for access to content (telco model). Google do this by aggregating content – they do not create anything – and bringing it to a single place where advertisers may also live. Where there are propositions that involve a mixture of aggregation and origination, such as YouTube and Twitter, money is not being made. Why? Because good stuff – veracity, reliability, creativity – costs money. So we see YouTube acknowledging that it will pay or share revenue to get the “good stuff” from established media. At the same time we see Rupert Murdoch, and many other papers, testing the idea of pay walls around their business. Why? Because as things stand they will have no business if they don’t. It is reasonable to suggest that they should adapt to this new reality but a “crowd in the cloud” remains an elusive way to ensure revenue.
The most successful media website in the country, RTÉ.ie makes approximately one twentieth of the total commercial revenue made by Radio (RTÉ Annual Report 2008). What all “traditional” media are facing is a situation where they cannot afford to be on the web on a free model and still, they cannot afford not to be there. Literally thousands of businesses have tried to find alternative methods to fund their activities online. Very few have survived without subscription models. Yet, as Liam O’Brien has pointed out, RTÉ is rightly obliged to avoid charging the domestic user on the basis that they pay a licence fee.
Rights – Intellectual Property.
Pandora, Last FM and Spotify are examples of organisations that started brightly but tripped badly on rights. All of them have had to confine and/or charge for their services in the past two years. Anyone who works in a web business that involves IP will tell you that this is the most troublesome and expensive element of their business. This is and was true also of “traditional” media, the difference being that they have learned to deal with it and have business models that incorporate these costs. Typically also, their rights are for limited territories, not the worldwide audience that the web offers. This time last year, Last FM were in negotiation with literally hundreds of separate rights organisations to try to secure rights for their service worldwide. They have not succeeded. Colleagues involved in internet only radio stations will tell you that the new cost models proposed by the record industry will simply close them down. However in tune or out of tune we are with the prevailing zeitgeist, if no one pays, then no one gets paid. Simple.
Overall
The theme is of money, investment and control re-asserting itself – to a certain extent. If the story of the web from 2004 to 2010 was real expansion post the dotcom bubble, it is likely that the next five years will see retrenchment as an unlikely combination of authors, artists, record labels, press companies, broadcasters and others try to make people pay for their content. For example, few musicians have the courage to publicly disapprove of file sharing but a Swedish 2008 poll of musicians (when Pirate Bay was at its height) found that 38% wanted to legalise file sharing – or to put it another way, 62% don’t. Ironically 59% admitted to using file sharing.
The good news is that RTÉ can provide the best of both. We are obliged, where possible, to avoid subscription and we can also provide quality content and access on the web. The warning is that, like many others, we don’t yet have a way to make this pay to the scale needed to sustain quality and diverse output.
In the meantime it’s about trial and error to a certain extent. Pre-rolls, mid rolls, dynamic ads (multiplatform) and yes, subscription for value add services, are things we should look at, try and learn from.
FM is still a strong proposition. However, it needs a face lift. This is why many broadcasters advocate digital radio. It is mobile, simple and free yet offers additional content and services more akin to the net. Of course there are huge obstacles and many problems associated with making digital radio as attractive, popular and ubiquitous as FM, but Dusty comments, and figures from other digital radio countries show, that if you get it right people like it – and not only that, they actually favour it over web radio.
One thing, unfortunately, we can say with certainty. If our audience is largely online in 5 years, based on current trends, we will be compelled to be a drastically smaller industry than we are today.
Key to our future (as we said in 2004) are digital radio and the internet. We will now live on two platforms, whether FM or digital radio is the first. We are actually not doing a bad job so far, but our next decisions on new web services must take into account that we are funded and paid to be RTÉ Radio, not RTÉ “Lost” FM.0 -
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The Sunday Times has a piece in Culture Ireland section today by the regular media scribe. Outlining the current fiasco. I doubt its online unless someone can scan it (I read it round my sisters pace and I ain't going back over to get it!)
edit this was meant ot be in the DTT thread.
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