DMB0037

Written evidence submitted by Radiocentre

RADIOCENTRE SUBMISSION TO THE CULTURE, MEDIA AND SPORT SELECT COMMITTEE

PRE-LEGISLATIVE SCRUTINY OF THE DRAFT MEDIA BILL

SUMMARY

1. Radiocentre welcomes the Culture, Media & Sport (CMS) Select Committee pre-legislative scrutiny of the draft Media Bill. Both the commercial radio sector and the BBC have long been advocating for a Media Bill which includes important safeguards that will guarantee access to UK radio services for audiences online and on voice assistant platforms, including smart speakers and in-car infotainment systems. These radio clauses reflect a number of the recommendations from the DCMS-commissioned Digital Radio & Audio Review.[1] The draft Bill also removes historic restrictions on commercial radio, reducing regulatory burdens.

2. These changes recognise the important role of radio in the UK media landscape and will help to secure the significant creative and public value delivered by radio broadcasters over the longer term. Clauses for radio in the draft Bill have also received strong cross-party support, including from the members of the CMS Select Committee.

3. In common with other media and content businesses, the radio and audio industry is facing a significant technological shift, with audiences moving from traditional broadcast transmission (via FM, AM and DAB) to IP distribution. A rapidly increasing share of listening is forecast to take place online and on smart speakers powered by voice assistant platforms. While this digital transformation has provided many opportunities for the sector, there are significant risks if the ability of radio broadcasters to reach their listeners is increasingly dependent on the terms set out by large tech platforms. This is why new legislation guaranteeing unfettered access to UK radio services on smart speakers is necessary to protect the broad range of public value that radio delivers to listeners.

4. The draft Media Bill also enshrines the provision of local news and information on commercial radio. News and information represent an important and highly valued part of commercial radio’s broadcast output. In most cases this takes the form of short bulletins, providing updates on local and national issues at regular times throughout the day. The value of these updates should not be underestimated, as it is often providing essential information to huge audiences, many of whom do not listen to speech radio, read newspapers or regularly watch TV news.

5. While the draft legislation includes a number of welcome measures that support radio, there are several important areas where improvements could be made.

• Online audio advertising: the current definition of an internet radio service risks undermining the business model of commercial radio stations online. It appears to restrict the ability of broadcasters to offer targeted audio advertising online, as it requires broadcasters to make 'reasonable efforts' to run the same advertisements across the internet radio service and related broadcast radio station. This does not reflect the reality or work practically for commercial businesses or advertisers. Audio advertising online is often customised and targeted at specific groups, in a way that is not possible via broadcast radio. We understand that it is not the intention of the draft Media Bill to prevent commercial broadcasters from using targeted advertising, but the definition of an internet radio service should be amended accordingly.

• On-demand and IP only content: the draft clauses only cover linear (live) radio, thereby excluding the on-demand / IP only content provided by licensed UK radio broadcasters. As listening is shifting towards the latter, the draft Bill should be forward-looking and include licensed UK radio broadcaster’s on-demand / IP only content as well (in line with the regime that is proposed for TV prominence).

• Access to data: the free flow of data is crucial for direct relationships between listeners, broadcasters and advertisers to exist and grow. Licensed UK radio broadcaster’s access to their respective audience data collected by radio selection services is not currently safeguarded in the draft Media Bill, which is an essential element both for commercial broadcasters and the BBC.

BACKGROUND

6. Radio in the UK remains an important and powerful medium. UK radio listeners are well served by a diverse mix of national, regional and local broadcasters, from commercial radio and the BBC, with 9 out of 10 of the adult population tuning in every week. Radio broadcasters make a significant public value contribution by providing listeners with a broad mix of music, trusted news, entertainment and companionship.

7. Radio’s essential role in keeping listeners informed and entertained was especially evident during the pandemic. The sector is also a significant contributor to the creative economy. Commercial radio is estimated to provide £683 million GVA to the UK economy, as well as supporting 12,340 jobs both directly and indirectly.

8. Commercial radio alone has 39 million listeners and alongside the entertainment provided by stations these services play an extremely important role providing news and information to audiences. Around a third of listeners (13 million) rely on commercial radio as their principal source of news and information and are far less likely to seek news elsewhere.

9. While total radio audiences remain strong, there has been a notable shift in consumption habits in recent years. Radio faces increasing competition from other, non-licensed, audio services, including music streaming and podcasts. In addition, online listening to live radio has seen a rapid increase, practically doubling in size in the past three years alone and rising to a new record high of 24%. This is even higher for commercial radio where the share of online listening is now 28%, overtaking analogue listening (AM/FM) at 27% for the first time in Q1 2023. Smart speakers have driven much of this growth and now account for over half of online radio listening.

10. Radio listening is consistently found to be one of the most popular uses of voice assistant platforms, such as the Amazon Alexa. The choice of content and ease of use offered by these devices has led to rapid adoption. It is estimated that up to 50% of UK households now have at least one smart speaker. These platforms offer significant benefits to audiences and broadcasters, but also present a risk if this increasingly important route to market for the radio industry is effectively owned and controlled by global tech companies acting as intermediaries or ‘gatekeepers’ to radio content and audience data.

11. Due to this shift, and in the absence of any enforceable ground rules, the evidence suggests that there is a material risk of a non-benign scenario arising in which tech platforms could unduly exploit their market power.[2] For example, this could include pushing listeners to their own radio-like services (self-preferencing), limiting free access to UK radio, inserting their own advertising messages around UK radio content, and data hoarding. This would be bad for audiences and undermine the longer-term viability of radio services, as well as the significant investments made by radio in content, digital audio innovation and distribution.  In the absence of reforms to unlock access to audience data, platforms will be able to continue to realise value from this data and secure a competitive advantage over radio broadcasters who will continue to be unable to monetise their audiences fully. These were issues that were highlighted in detail in the DCMS-commissioned Digital Radio & Audio Review[3] (published in October 2021).

12. In order to better understand the relationship between radio services and voice assistant platforms in the coming decade, Radiocentre commissioned Frontier Economics to assess how radio’s increasing dependence on voice assistant platforms will affect future outcomes in the sector. 

13. This research[4] found that radio’s increasing dependence on digital platforms for distribution poses significant risks. Radio currently adds value to voice assistant platforms as the most common use case for smart speakers (the latest audience research from RAJAR MIDAS[5] shows 70% of listening on smart speakers is to live radio). However, in the next decade voice assistant platforms will likely be less dependent on radio services to attract users, whereas radio services will be increasingly dependent on the platforms for distribution.

14. A decline in radio’s relative bargaining power would harm broadcaster’s ability to agree terms of interoperability that enable them to offer audio content and advertising services. This weaker bargaining position could be exacerbated if radio services face growing direct competition (for example in the supply of audio content or advertising) from the tech platforms on which they depend for distribution.

15. We welcome the draft Media Bill as a timely vehicle for enshrining in legislation support that is necessary to secure the future of radio for listener, ensuring a more level playing field between the tech platforms and UK broadcasters who continue to deliver significant public value. We also welcome the inclusion, in the draft Bill, of long-awaited changes designed to update the regulatory framework for commercial radio, focusing on local news and information output rather than production and format requirements developed in the 1980s.

RADIO QUESTIONS

Is the definition of a radio selection service appropriate?

16. The definition of a radio selection service (RSS) is crucial, as it will determine which online services or platforms will be subject to specific obligations set out in the Bill designed to secure future access to UK radio stations online. This generally appears to be well considered and framed in an appropriate way. However, we would make the following observations.

17. The proposed definition is linked explicitly to voice activation. This means that aggregators and radio apps will not be designated as an RSS, which is appropriate. However, it also means that non-voice activated ‘in car’ infotainment systems will be out of scope of the protections. This is highly regrettable as around 25% of radio listening takes place in the car, making it a hugely important space for radio broadcasters to reach their audiences. With the number of internet connected cars on the road increasing every year, radio broadcasters are facing growing competition for listeners’ share of ear from other – non-licensed – sources of digital audio (in the future, this competition may also come from video).

18. Regulated discoverability and findability for licensed radio stations via connected car user interfaces is needed. This will help to ensure that radio continues to feature in cars, providing resilient communication for drivers and supporting safety through the provision of real time news and information, at a time when some car manufacturers are starting to sell cars with no radio receivers installed (this applies to electric vehicles in particular).[6]

19. More generally, the explicit link to voice activation may not be future proof as connected devices and platforms used to access radio content continue to evolve. In a rapidly changing market, the meaning of an RSS might need to be amended as new disruptive technologies emerge. For example, the recently adopted European Digital Markets Act[7] (DMA), which regulates inter alia “virtual assistant platforms”, defines these more broadly, in recognition of the above: ‘a software that can process demands, tasks or questions, including those based on audio, visual, written input, gestures or motions, and that, based on those demands, tasks or questions, provides access to other services or controls connected physical devices.’

20. The draft Media Bill does include powers for the Secretary of State to amend the definition of an RSS which should provide sufficient flexibility to adapt to developments in technology or changes in the market (for instance in relation to other methods by which listeners could select radio stations).

21. The RSS designation process seems appropriate. The Secretary of State has the power to designate an RSS following advice from Ofcom. In addition, we understand that Ofcom would hold a consultation process prior to any designation of a regulated RSS. It is not yet clear what the thresholds for ‘significant’ and ‘use’ will mean in practice, though it is clear from the DCMS press release on the Bill[8] that Amazon and Google are expected to meet the criteria be designated a regulated RSS.

22. It is likely that the thresholds will need to be different depending on the context, particularly with respect to home vs ‘in car’ listening. There is potential for more fragmentation in the voice interface market in car if vehicle manufacturers begin to develop their own voice assistant platforms. For example, it is not currently clear if a custom ‘in car’ voice assistant based on Alexa Custom Assistant[9] service would be covered by an Alexa RSS designation, or whether this needs to be covered separately (BMW is building a new custom voice assistant for its cars based on Amazon’s Alexa[10]). Similarly, it is not clear whether smart televisions or streaming devices with voice assistant integration would be covered by these protections – i.e. Amazon Firestick or a Roku device with voice activation. We would expect this level of detail to be considered in the designation process and addressed as appropriate.

Is the definition of an internet radio service appropriate?

23. In general, the proposed definition of an internet radio service (IRS) is appropriate. However, there are two key issues that require further consideration. The first relates to the ability of commercial operators to continue to use online advertising effectively; and the second concerns the scope of the definition covering only simulcasts of broadcast radio services, leaving on-demand content and IP only content out of scope.

Online audio advertising

24. The current wording will impact upon the ability of commercial radio stations to continue to use online advertising effectively in future. This is problematic as it is a fundamental part of the business model of commercial radio stations to be able to offer different advertisements to different audiences online.

25. Specifically there is an inconsistency between s. 362BF(2) and s. 362BF(3). Under the former, advertisements on the radio internet service and connected radio station do not have to run simultaneously to be able to benefit from protections; whereas under s. 362BF(3) a provider must make 'reasonable efforts' to run the same advertisements across the IRS and related radio station (albeit not at the same time).

26. As drafted s. 362BF(3) does not reflect the reality or work practically for commercial businesses or advertisers. Online audio advertisements are often customised and targeted at specific audience groups, in a way that is not possible via broadcast radio. Online and broadcasting advertising are both regulated by the Advertising Standards Authority but by different advertising codes (CAP and BCAP, respectively). This reflects the fact that some online audio advertisements may or may not be carried on broadcast platforms at all. Online and broadcast audio advertising also tends to be sold at different rates and in many cases by different teams.

27. We understand from officials at DCMS that the intention of the draft Bill is not to impact the ability of commercial broadcasters to provide different advertising on different platforms. In the draft Bill, DCMS seems to have assumed that most online advertising would also have been broadcast on either FM, AM or DAB at some point. This is not a reflection of what happens in practice and will be even less so in the future. With more listening taking place online (24% in Q1 2023), customised online advertising is an increasingly important revenue stream for commercial broadcasters.

28. In recent years there has been significant investment from operators in their online advertising propositions which can offer highly customised and sophisticated campaigns. For example, Global operates DAX[11], a digital advertising exchange, which launched in 2014 and reaches around 30 million people in the UK. In 2020 Bauer and News UK launched a new joint venture called Octave[12]. These services are used to reach audiences based on demographics and behavioural interests, 2nd party data, along with contextual targeting, using e.g. weather, location, daypart or point(s) of interest. Digital advertising now accounts for 75%[13] of all UK advertising revenue and is an increasingly important growth area for commercial radio.

29. To resolve this issue we have suggested removing s. 362BF(1)(c) and s. 362BF(3) altogether. In order to clarify that advertising on an IRS that is distributed via an RSS is responsible and can be trusted, it could be stated that such advertising must comply with the relevant advertising code. This amendment would ensure that radio services retain the ability to monetise their services while audiences remain fully protected.

On-demand content and IP only content

30. The current wording limits the scope of IRS services that will benefit from the legislation. At this stage the focus of the Bill is entirely on simulcasts of Ofcom-licensed broadcast radio stations only (including BBC, commercial radio and community radio). On the one hand, we understand the desire to restrict the scope to these Ofcom-licensed broadcast radio stations, rather than extend the scope to every online audio service or podcaster in the UK.

31. However, this approach excludes on-demand and IP only content offered by Ofcom-licensed broadcast radio stations, which is not a future proof approach when taking into account trends in listener behaviour. As listening continues to adapt, the legislation should be forward-looking and extend to online content offered by Ofcom-licensed broadcasters.

32. Listeners increasingly access a wide array of listening options available through IP connected devices. Broadcasters have responded to these shifts by expanding their audio offerings, which include podcasts and on-demand/catch-up radio, subscription services, as well as radio like-services that are only broadcast via the internet.

33. The current drafting will mean that, for example, LBC’s main radio station will benefit from the protections but not the News Agents podcast; similarly, Radio 4 will be covered but Newscast will be excluded. Furthermore, should a current UK broadcaster be looking to launch a complementary internet only radio station (i.e. not transmitting on DAB, FM or AM) without an Ofcom licence, then they would not be guaranteed the same protections as those which apply to their simulcast services.

34. As noted above, we understand that DCMS are concerned that a broader definition of an IRS could bring all internet radio and even international radio stations in scope, putting too great a burden on tech platforms. This could be mitigated by proposing that only on-demand content or IP only services provided by Ofcom licenced radio broadcasters and the BBC is in scope. This definition of an IRS that includes on-demand and IP only content would support broadcasters as they further invest in digital innovation, ultimately benefitting listeners.

35. The draft Media Bill establishes prominence for internet programme services to reflect the shift from linear to on-demand television services, and this covers ‘single’ on-demand programme services (see s. 362AA(10)), so there is precedent within the Bill for this to also apply to radio.

Are the obligations on radio selection services proportionate?

36. The draft Media Bill sets out backstop powers that ensure unfettered access to UK radio services on voice assistant platforms. These are proportionate, ex-ante regulations that prevent these platforms from unduly exploiting their power through the control of an increasingly important route to market for radio broadcasters.

37. The Bill covers core recommendations contained within the Digital Radio & Audio Review[14], and we welcome the proposed approach, including:

• Voice assistant platforms are obliged to provide unfettered access to BBC and UK radio stations licenced by Ofcom, similar to “must carry” obligations on TV (s. 362BH(1)).
• A ban on self-preferencing – the listeners’ station of choice must reliably be provided by a voice assistant in response to voice commands (s. 362BH(2)).
• Broadcasters are able to request a default route for their stations to be delivered to listeners, for example via Global Player, Bauer’s Rayo or BBC Sounds, and platforms must comply with this request (s. 362BH(3) and (4)).
• Tech platforms are prevented from overlaying content (such as unauthorised advertising) over the top of relevant radio services, including pre-roll advertising or the insertion of advertising into stations’ existing commercial breaks (s. 362BI(1)).

38. Nevertheless, there are a few important areas that are not – but should be – covered by the proposal or need further clarification.

Access to data

39. Tech platforms are not obliged to share data with radio broadcasters in relation to the distribution of the latter’s audio services. Voice assistant platforms collect vast amounts of data from different devices and services, but access to this data by 3rd parties is restricted. As noted elsewhere, audience and commercial data is increasingly important for radio broadcasters, who depend on advertising revenues for their survival. But as the use of voice enabled devices grows, data insights received from these devices remain very limited.

40. Free flow of data is crucial for direct relationships between listeners, broadcasters and advertisers to exist and grow. Any interruption to this data flow represents a commercial risk for radio broadcasters and a hindrance to innovation. Better access to user insights would enable an IRS to serve their listeners needs better (e.g. through service customisation). This was a key recommendation[15] in the Digital Radio & Audio Review.

41. Examples of the sort of data that is essential include user demographics such as age, gender and location, listening habits and other user preferences in order to help stations optimise their content and commercial offerings to better meet the needs and preferences of their audiences.

Barriers to carriage

42. Our understanding is that s. 362BI(2) – preventing a regulated RSS from imposing a charge on an IRS – has been inserted to ensure that the platforms do not create or impose any barriers to carriage of UK radio services and ultimately to ensure that these services are accessible to all.

43. There is a danger that the draft wording could be interpreted as only covering financial charges and therefore does not take account of other value exchanges or considerations which tech platforms could impose elsewhere.

44. The prohibition of carriage charges in the draft Bill should explicitly rule out any other form of barrier to carriage. Examples of alternative barriers could include a platform demanding a share of advertising inventory / revenue in exchange for carrying a radio station. Alternatively, a platform could require a contra deal on promotional activity / advertising on the radio station’s service; with the broadcaster obliged to promote the platform editorially and in its marketing.

45. The drafting in the Bill should be broad and flexible enough to cover all forms of barriers to carriage, rather than prohibiting (what some may interpret as meaning) financial carriage charges only, as this may become quickly outdated or be outmanoeuvred. This could be done by incorporating a “similar effects” prohibition clause.

Does the draft Media Bill sufficiently protect the relevant internet radio service to be played in response to a voice command?

46. As noted above, one of the key measures outlined by the draft Bill is to secure, as far as reasonably possible, that listeners are always provided with access to the IRS they have requested using a voice assistant. This is achieved by the obligations set out in s. 362BH(1) that ensures that radio services are carried and accessible, along with s. 362BH(2) that requires the platforms to take the necessary action to ensure that listeners can access the service they have requested using a voice command.

47. This approach appears sensible and proportionate. However, we would also note that broadcasters have had issues with radio selection services only responding to very complicated voice commands before selecting a relevant radio service. For example, in order to listen Radio X on Apple’s Siri you have to say: "Hey Siri, play radio X radio on iTunes music." There are also issues with radio selection services not playing the local versions of a broadcaster’s radio services.

48. To address this kind of problem we suggest a similar obligation to the one that exists under s. 362BH(3) (that enables radio stations to determine their preferred route to be served to listeners), so that an IRS may specify to an RSS the spoken commands that listeners can use to cause its radio service to play via said RSS, including defaulting to local versions of a broadcaster’s radio services where appropriate.

Are the provisions in the draft Bill sufficient to protect the identity and content of local radio?

49. Commercial radio stations are an important source of local news and information for audiences and make a significant investment in journalism across all parts of the UK. This output is valued highly by audiences and crucial to the identity and character of local commercial radio. According to the latest RAJAR audience figures (Q1 2023) its content is heard by 39 million people (around 69% of the population) for an average of 13 hours a week. Much of the news and information output on commercial radio takes the form of regularly updated bulletins throughout the day. Many listeners rely on these bulletins and the trusted information provided by radio, as they do not necessarily engage with the in-depth coverage provided by newspapers and television news.

50. Across the UK, around 13 million listeners rely on commercial radio as their principal source of information. As a result, audiences will often turn to radio for reliable local information during major incidents – for example during emergencies – and consider radio the most trusted medium for reliable news.[16] This output is complemented by BBC Local Radio and community radio, along with online audio and podcasts.

51. The news and information on commercial radio is provided by a combination of small local and independent stations, along with larger national groups who provide local services, utilising dedicated teams of journalists based in local broadcast areas and at broadcast centres and studios across the country.

52. The hundreds of journalists working in commercial radio are responsible for newsgathering and production of content on-air and online. They generate stories from a wide range of sources, including local contacts, news agencies and external suppliers such as Sky News/IRN. In all cases, it is the stations themselves that retain editorial control and produce the vast majority of bulletins throughout the day, ensuring it is reflecting the needs and concerns of local listeners.

53. For example, throughout the week Global and Bauer’s newsrooms across the UK each produce over 60 tailored news bulletins every hour for their local and national brands, gathered by teams of local journalists on the ground. Local news is provided across daytime hours, regardless of the programming output. While Global and Bauer are the largest commercial radio operators in the country, there are over 40 other commercial radio licence holders broadcasting on analogue radio that also produce highly valued regular local news bulletins throughout the day.

54. Commercial radio remains committed to providing this local content in future and so continues to make significant investment in the training and development of their journalists. Therefore, we support measures in the draft Media Bill to include new, clearer requirements for commercial radio stations and enshrine the provision of national and local news into law, while providing greater flexibility on where other content is produced. News and information output will continue to be at the heart of local radio programming, and it is right that this is the focus of the new regulation.

55. Local news is the form of local content that is particularly valued by listeners. [17] However, this is not necessarily guaranteed by local production quotas on other programming. Therefore, it makes sense for the new regime to focus on and regulate local news content. This position reflects longstanding government policy and was initially set out by then Ofcom Chief Executive, Sharon White, in a report to then Media Minister Ed Vaizey in 2016. Ofcom’s conclusion, based on its own analysis of the radio market, was that ‘where programmes are made is of less concern to listeners than their quality and local relevance.’[18] This was followed by a public consultation process and statement from DCMS setting out areas for reform in 2017.[19]

56. We believe that quality and local relevance of commercial radio services will be retained and supported by the measures in the draft Bill, due to the support for local news output. In addition, we would highlight that simplifying and updating the rules, with the removal of local production quotas, is not the same as the removal of local production. Some services will continue to make a virtue of the localness of their production or studio location, while larger commercial radio brands regularly provide more locally-made content than is required of them.

57. One recent example is investment in Heart and Capital Scotland that was announced in April 2023 and goes beyond the minimum licence requirements for local production.[20] This is not something that Global was required to do by legislation, but is a result of reacting to demand in the local market. In addition, Bauer provides local breakfast shows on stations such as Clyde1 in Glasgow.

58. The current framework for radio regulation was devised in the pre-internet era of the late 1980s and early 1990s. Since then, the choice of content available to listeners has expanded beyond all recognition, with hundreds more broadcast radio stations and many thousands of online audio services available on demand offering almost infinite choice. These changes have also created intense competition for audiences and advertisers that was never envisaged when the regulatory framework was developed originally.

59. There has been a series of incremental changes to these rules in recent years, but if commercial radio stations are going to compete in this highly competitive market, they must be able to respond to the needs of listeners and not remain tied to prescriptive format or production quotas from another era.

GENERAL ISSUES

Is Ofcom able to deliver its new and updated obligations set out in the draft bill?

60. We are confident in Ofcom's ability to deliver its new and updated obligations as set out in the draft Media Bill. We will continue to work with Ofcom on these issues including by providing evidence in response to any formal consultations following the adoption of the Media Bill.

Is the draft Bill flexible enough to address future developments in audience habits and new technology?

61. As we note above, there are some elements of the draft Bill that should be reviewed ahead of its formal introduction in order to ensure the legislation is sufficiently forward-looking, in line with rapidly changing listening habits and the development of new audio technologies and services, including:

• The definition of an of RSS which, as currently proposed, is explicitly linked to the use of spoken commands, may need to be amended over time in order to reflect the emergence of new disruptive technologies (see paragraphs 12-13, above).
• On-demand content and IP only content (without simulcast) which are currently out of scope, which seems out of step with the increasing shift toward IP listening (see paragraphs 26-29).

Does the draft Bill provide sufficient protection for those without internet access or who prefer to use broadcast services?

62. The share of listening to radio through traditional broadcast (FM/AM/DAB) distribution remains high, both for commercial radio and the BBC. Those without internet access or who those prefer to listen over broadcast will continue to be able to do so in the same way.

Are the proposed powers to be given to the Secretary of State proportionate?

63. Yes, the proposed powers granted to the Secretary of State, in relation to the clauses for voice assistant platforms and radio deregulation, appear to be adequate and proportionate.

May 2023

ABOUT RADIOCENTRE

Radiocentre is the industry body for commercial radio. We work on behalf of more than 50 stakeholders who represent over 90 per cent of commercial radio in terms of listening and revenue.

www.radiocentre.org

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