Why KISSFresh can't be too successful

In May, Bauer launched two brand extensions of their KISS urban/dance brand. Both of these new services have eschewed DAB in favour of other radio platforms, which might make sense for the younger audience the stations are aiming at.

On Freeview (and the UK Radio Player), we can enjoy KISStory, an excellent version of what I'll call their 'oldies' strand, but what they probably call 'old-skool club classics'. It's a great listen. But it's KISS Fresh which is the interesting one. If it's successful, it might cost Bauer significant money - because it isn't broadcast at all, not even on Freeview.

If you terrestrially broadcast radio, you pay a straight percentage of your revenue - around 10.5% for most stations - to cover music costs. But if you're only on the internet, you pay per song, per listener. Which dramatically changes the costs.

PPL's standard online commercial radio licence will be charging Bauer £0.000722 per listener per song. For PRS, their full licence, as we note in our internet radio licence guide, is around £0.0005 per song per listener - assuming KISSFresh is set up to earn a relatively sensible amount of money (more than £200,000 a year).

So - the total costs to run KISSFresh could be 0.1222 pence per song, per listener. If they run 14 songs an hour, that's 1.7p per listener, per hour.

To put that into context: UK commercial radio was listened-to for 23,130,159,000 hours last year, and brought in £552.7m - making average revenue for the industry of 2.3p per listener per hour. Or, to put into another context: if KISSFresh gets just 2% of the audience of the main KISS service, that's 22,015,760 total listener hours in a year: or a cost of £374,267 in music licence fees alone.

Given that Bauer's all about cost savings at the moment, after Tfm and Kerrang!'s effective closure, they're probably wondering how to bring that price down.

They could claim that KISSFresh earns no money. That probably doesn't really wash with anyone: even if the only purpose of the service is to encourage confusion in RAJAR surveys, it's still earning money in a roundabout fashion. To declare KISSFresh's annual revenue at £10,000 or so might save the station over 50% of their music licence costs, since that goes under PRS's per-song per-listener threshold - but not PPL's.

They could only play extended mixes. Seriously. If they were to bring the number of songs down from 14 to 7, they save themselves 50% of their music costs - in spite of the amount of music used being identical. But KISS is, historically, all about editing songs down (and speeding them up) to give the impression of energy and a larger amount of music.

Or, they could find themselves carriage on a DAB multiplex somewhere. Because, once they do that, their music licence revert to a standard 10.5%-ish fee. If I were them, I'd launch KISSFresh as a DAB+ service, running at 48kbps or even 32kbps, on an out-of-the-way multiplex somewhere. Bauer do, after all, own quite a few multiplexes: and the UK's first full-time DAB+ service would be a useful PR coup for the company while saving them significant costs.

But, if you've ever wondered why the UK has no significant internet-only radio stations, this is why. And, this is why KISSFresh will, I predict, appear somewhere on DAB relatively soon. Or, of course, be a victim of its success and have to close down.