The Future of Radio

Digital is the future – and FFH CEO Hans-Dieter Hillmoth on the impending upheaval in the radio landscape, even more programs, and new digital distribution channels.

"None of us know if and which device listeners will acquire for radio in the digital future, but where the listeners are – that's where radio needs to be," says Hans-Dieter Hillmoth, station head of HITRADIO FFH. For Hillmoth, radio must experiment, even if it costs a lot of money at first. There are still many open questions about the upheaval in the radio landscape.

Schwinn: Are you worried about radio, afraid of the future?

Hillmoth: I believe if you were, you couldn't work in media at all. Our work is very forward-looking. So no: I'm not afraid, but there are, of course, many question marks for the future. I believe that in the next three to five years, radio will change more dramatically than ever before in its history.

Schwinn: Radio, as we know it, won't exist anymore?

Hillmoth: I rather doubt that. It will still be there, but supplemented by new things: for example, national formats. There will be more specialized, narrower programs that were not previously profitable at the state level but can be offered nationally. And there will be many new interaction possibilities through new digital technologies. This means accompanying material – whether it's videos, pictures, text – much more than is currently possible via the internet alongside radio programming. And the radio of the future will not have "one" main distribution channel – like FM currently, which generates 90 percent of our reach – but radio must go where the listeners are. And that means: to devices where as many media and offerings as possible are concentrated.

Schwinn: To the mobile phone?

Hillmoth: For example. With a mobile phone, I can access the internet, listen to the radio, watch TV, email, make calls. No one will put an extra box in their living room just for the radio anymore. People will prefer devices that are small and mobile and offer as many services as possible. Of course, that includes radio.

Schwinn: If you can do everything with a mobile phone, do you still need radio? You can also compile your own entertainment or information program with it.

Hillmoth: That sounds very easy, but the reality of life shows that many of us – I believe – will still want to be entertained in the future. Most people want to consume an offering rather than produce it themselves. Perhaps five to a maximum of ten percent want to put together their own program. But I believe that "broadcasting" still has a chance in the future. And we are not just relying on people's convenience. The problem is already today: to use all the beautiful technical features, we simply lack the time. How many of the mobile phone's capabilities do we really use? I'd guess 25 percent.

Schwinn: Does that also apply to music offerings?

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Hillmoth: Absolutely! I can already put together my own music program. There are some who have long been running their own internet radio. And that's a good thing, to quote a famous Berliner. But the usage is vanishingly small. Therefore: radio will continue to offer entertainment and information for many, without them having to become radio makers themselves.

Schwinn: But podcasters and internet radio makers are professionalizing and might become serious competition.

Hillmoth: Radio makers who believe they will remain alone in the market have already failed. I can already receive thousands of radio programs via the internet. And certainly there will be some who will listen to Radio Free Honolulu for five minutes, but I am quite sure that local, regional, and national radio brands will help with orientation in the media jungle, especially in the future. That sounds a bit like whistling in the dark – but experience from other markets also shows that there is a lot of truth to it. Of course, we are happy about that. Nevertheless, we must not smugly continue with our previous approach – but must create new offerings that have not existed before. More of the same – that will no longer work in the future.

Schwinn: Is the opportunity regionality – despite or because of the global internet?

Hillmoth: Of course. We fly around the world on vacation, we watch TV from China, we listen to the Latin station from Havana on the internet. In such a context, proximity and "home on the radio" play a special role. And proximity is not expressed by playing and listening to the latest Madonna CD from Kassel, but by interaction with the listener, through regional spoken word. Through spoken word in general! Also through presenters who know for whom and for which region they are broadcasting. This is – even with all the national offerings that will come – the great advantage of local, regional, and national programs: they simply offer this proximity that people are used to from radio, and which can certainly be expanded even further.

Schwinn: So what the WAZ-Mediengruppe has just done with its new internet portal "DerWesten" is trend-setting?

Hillmoth: That is one possibility. For the WAZ Group, the focus is certainly on rationalizing and coordinating the many offerings they have in the newspaper and broadcast sector (editor's note: the WAZ Group holds shares in over a dozen stations in North Rhine-Westphalia). We are also currently doing this: How can synergies between programs and internet presences be used? Once again: the proximity on which all this is based is certainly a very important distinguishing feature from all sorts of arbitrary offers from all over the world – not only in newspapers, but also especially for us – in radio.

Schwinn: In the somewhat heated discussion in the broadcast sector, it is repeatedly said: Anyone who does not invest in the internet now will not be found again after the digitization of the transmission paths. They will be swallowed up in the diversity of the new programs. So: which distribution channel to invest in?

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Hillmoth: We don't know that. We don't know if and which device the listener will acquire. That certainly depends on whether the device is affordable, and whether it can do more than the standalone radio device currently can. Where the listeners are – that's where radio needs to be. At the moment, I also can't say: Is it the internet, is it DVB-H for example? That's what's coming next. Is it DMB (Digital Multimedia Broadcasting, editor's note) in Band III from 2009? I don't know. But I believe that you can't just sit back and wait for developments to unfold. We radio people also have to be involved and experiment. Even if it costs a lot of money at first. And then at some point we'll have to decide which paths to use and which to switch off.

Schwinn: DAB for example?

Hillmoth: The old DAB can safely be switched off. I wouldn't even mention the name anymore; it's discredited.

Schwinn: And when will it be decided what gets switched on and what gets switched off?

Hillmoth: Right now, actually! After the failure of DAB in Germany, we now perhaps have a second chance for the digitalization of radio. But we have to use it together. That means: all market participants – the private broadcasters, ARD, Deutschlandradio. We have to stand together if we want a chance to make digital radio palatable to listeners.

Schwinn: But not by constantly testing and introducing new technical distribution channels?

Hillmoth: Exactly, that would be too expensive. That's why we need to consider what the three or four transmission paths of the future will be. There won't be just one, but we also need to guard against technical cacophony. There's also talk now about HD Radio – the digitization of FM. I have a bad feeling about that. If we force yet another transmission path, it will become truly confusing and many will ultimately say: Well then, let's wait for the next stage of development. The consequence: Then nothing will happen at all for a while. But something needs to happen now, otherwise we will lose touch in German radio.

Schwinn: So no new construction site?

Hillmoth: Please no! We agree with our colleagues at ARD on that. We are currently looking at DMB in Band III and DVB-H; we are keeping an eye on digital FM. With DVB-H, the state media authorities have decided that Neva – that is, Holtzbrinck and Burda – together with MFD are the intended platform operators. The Federal Network Agency has awarded the contract for transmitter operation to T-Systems. So next year there will be offerings to be heard in Germany – four radio offerings among them. We, with Digital 5 (a consortium of FFH, Antenne Bayern, FFH, Antenne Niedersachsen, Radio Hamburg, editor's note), applied for a license. We teamed up because we know that it will be difficult even for large broadcasters to tackle the national challenges individually. We are aware that it will take time for devices to be widely available in the market and for measurable success to appear, that it will remain a loss-making business for a long time. But: we must be involved to shape the future and not miss out.

Schwinn: With rising distribution costs?

Hillmoth: Clearly, our costs increase if we have to serve more and more distribution channels. Therefore, at some point, one will have to evaluate the costs and benefits of the individual channels. For us private broadcasters, the additional digital channels are difficult to refinance, because the number of listeners does not necessarily increase with new distribution technologies. The effort per listener reached increases. Public broadcasters can approach this calmly. They send a letter to the KEF (Commission for the Determination of Financial Needs of Broadcasters): Here are new transmission channels that we want to use – for that we need money. And of course, the KEF will then approve something. For us private broadcasters, the expenses are at the expense of profit, if there is any.

Schwinn: Perhaps the number of listeners can be increased with digital broadcasting, or at least determined more precisely?

Hans-Dieter Hillmoth – on air with FFH since 1989.

Hillmoth: Exactly. With digital broadcasting, you can determine very precisely and easily how often and for how long offers are used. On the internet, you can already do that. And we demand – the ARD is still a bit hesitant here – addressability for new digital devices too. Then you can see how many listeners there are and where. And there will be completely different possibilities for market research and presenting one's own performance.

Schwinn: Then the ratings become concrete and verifiable. The end of the MA, the Media Analysis?

Hillmoth: Not the end of independent ratings verification. But the current method of direct questioning will certainly be obsolete then. No one needs to be directly questioned anymore if we want to determine how many devices are switched on and for how long. But, of course, you need a neutral, independent body that guarantees that the ratings are calculated equally for everyone and published in a verifiable way.

Schwinn: Unemployed market researchers?

Hillmoth: Not in the broadcasters, who have long had their own qualified media research, which takes place in addition to the MA. And the generally valid figures must also be managed in trust in the digital broadcasting world. However, they probably no longer need to be retrieved from selected listeners by phone from memory. How would that even work when the current 350 radio offerings in Germany have grown to several thousand.

Schwinn: What is already being broadcast digitally is not even included in the MA.

Hillmoth: That is not currently being recorded, which certainly cannot remain the case. We ourselves have figures on the use of our digital and internet offerings, and they are rising sharply. We are currently striving for transparent reporting – also in cooperation with our marketer RMS – so that offerings for the advertising industry can also be created.

Source: "CUT – das broadcast-magazin" (www.cut.biz), issue 11/2007. Florian Schwinn is editor-in-chief of CUT.