Listen to this article
Radio has always played an important role in promoting music, whether by introducing new tracks to listeners or replaying old favourites.
But the industry has missed out on the boom in downloading music, in which consumers transfer music from the internet to portable MP3 players.
Simon Cole wants to change that. The chief executive of UBC Media, a UK radio content producer and digital technology group, Mr Cole first dreamt of a job in radio as a child when he played at being a DJ with his friends in Manchester. Now regarded as a visionary by many in the UK radio industry, Mr Cole is about
to launch a service that will allow radio listeners to download music to mobile phones.
The service is expected to make its debut through Virgin Mobile, the mobile phone operator, which this month launched its Lobster phone with integrated digital radio.
A digital audio broadcasting (DAB) chip and UBC software in the phone
enables listeners to buy a track they have just heard on the radio at the touch of a button. The track is sent to the phone and to the listener’s e-mail address.
Mr Cole, who started his career in radio as a DJ in the 1980s, says that for the first time radio companies will be able to take a share in revenues from sales of tracks.
“More than half the revenue from a download will go to the record company, with the rest split between the radio station, UBC and Virgin Mobile, which is expected to conduct the billing,” he says.
UBC has just conducted a four-week trial of the service in Birmingham. The 100 people who tested the download service found it was primarily older women and technophobes who liked it best.
“As we expected, the groups who found the service most attractive were those currently untapped by online music downloading,” says Mr Cole.
The ease of downloading led to greater impulse buying. Buying after listening to the radio bypassed barriers to buying such as thinking of a song in the first place and the time it takes to buy a song from the internet.
The Birmingham trial also showed that about a quarter of the songs downloaded were current chart hits, with the rest being “classic” pop songs. Digital technology generally has helped niche genres of content.
Mr Cole estimates that, based on pricing of £1.25 a track, about 1.2m people will be using the service by 2012. Assuming they download five or six tracks a month, the service will generate about £93m in revenues, of which £50m will go to the music industry in revenues and £11m will go to UBC.
Richard Menzies-Gow, media analyst at Dresdner Kleinwort in London, says that, with all the relevant agreements in place with record labels, technology and Virgin Mobile, the numbers are achievable.
However, some media analysts point out the upfront costs and the “jam tomorrow” nature of the project.
Mr Cole says he is searching for the “purest way to get the upside from digital radio” and that his investors are happy with the medium to long-term prospects.
The trial was conducted with Chrysalis Radio’s Heart FM in Birmingham but he is negotiating with a range of radio groups about downloading.
UBC is also talking to other handset makers and radio set manufacturers about installing the downloading software.
According to industry estimates, sales of DAB-enabled mobiles in 2006 will reach 20,000 units, rising to 100,000 in 2007 and 250,000 in 2008.
Mr Menzies-Gow says the concept is easy to buy into. “The ability to impulse buy music is something that people like. The big question is how quickly they can scale the service – how many phones they can get the service into and how many radio stations will start offering downloads.”
Any reservations Mr Menzies-Gow has arise from the length of time Mr Cole has taken to bring the download service to fruition.
But he adds: “The proof will be in the pudding. It will come when UBC starts publishing downloading numbers at the start of next year. Then we will know how to value the business.”