After a brief introduction to the radio scene in Finland by Marko Ala-Fossi, this chapter is going to concentrate on a theoretical discussion by the same author, about effects of deregulation on the radio industry by comparing the development of programming and formatting strategies in Finnish commercial radio with simultaneous developments in American radio.

FINNISH RADIO IN A NUTSHELL
by Marko Ala-Fossi (September 2009)

Radio broadcasting in Finland got its start in 1920’s when radio amateurs and different private organizations began their experiments with the new media. Early pioneers tried already both local and advertising-supported broadcasting, but without real success. National radio service for culture and education was of great importance for a country that had got it its independence only nine years earlier when national public service broadcaster, Yleisradio (YLE) was established in 1926. It was a broad-based private corporation which was financed by public license-fee income and advertising in radio was forbidden. In 1934 the Finnish government became the biggest stockholder of YLE and it was institutionalized as a de facto public service radio monopoly. Although it was challenged in the early 1960’s by the commercial pirate stations which broadcast from ships on the Baltic Sea, and despite the constant interest that the first commercial TV- broadcaster Mainos-TV had in commercial radio, it was not until 1985 when first new experimental licenses for private local radio broadcasting were granted in Finland. Unlike in other Scandinavian countries, in Finland advertising was allowed to these new local radios from the very beginning and actually only very few local private stations decided not to finance their operations with advertising.

In the new competition, YLE radio was first losing audience - especially young audience for the local independents. This changed after June 1990 when YLE profiled its three national Finnish-language FM channels to target different audience groups. Traditional public service programming and classical music remained the specialty of Ylen Ykkönen . A new youth and pop culture channel with self-ironical name Radiomafia had remarkable early success, but it later suffered steep decline in popularity. Regional programs, news and current affairs programming, as well as sports, were put together in Radio Suomi, which is a national network of 20 regional stations. Since then, it has also been consistently the most successful radio channel in Finland. In 2000, it enjoyed a 38 percent daily reach among all Finns over 9 years old, and a 44 percent share of all radio listening. These three YLE radio channels together reached then 60 percent of the Finnish population every day.

Commercial radio grows, conglomerates and becomes more internationally owned

The new local commercial stations in Finland were at first expected to promote local culture and increase the freedom of speech, but instead they started to attract audiences with music and entertaining programs, offering something for everyone. After the peak year of 1990, they lost a considerable share of their audience to the reformed YLE channels at the same time when the increasing number of stations and economic recession intensified competition. In 1994, international companies entered the Finnish market by acquiring the two first specialized stations. After the mid-1990’s private stations offered more targeted programming, mostly to young and young adult audiences with music-based formats. The first national commercial channel Radio Nova in 1997 had been licensed as a news channel, but it was formatted Soft AC to these same demographics and that hit the local stations. In 1999, networking was allowed to local stations and also seven semi-national format networks were licensed. In 2001, even more format networks were licensed and most of the already existing radio networks were able to expand with new licenses. For the first time, the commercial operators were now especially interested in middle-aged and more mature audiences.

After the economically hard years of 1990s, the commercial radio industry in Finland has been steadily growing during the 2000s, but the development has been very polarized. For example in 2000, two thirds of all private stations were unprofitable at the same time, when large radio networks were very profitable. In 2001- 2003, radio advertising revenues reached new record numbers every year. In addition, Finnish commercial radios were now able to gather more listeners during one week than YLE radio channels, and also the daily reach of YLE channels dropped below 50 percent. The biggest commercial powerhouse was Radio Nova, the most popular commercial channel with 14 percent share of daily listening. In 2002, Radio Nova alone grabbed 35 percent of the total turnover of commercial radio in Finland, while SBS Finland reached 22 percent with its three networks.

Besides national Radio Nova and nine semi-national commercial networks, in fall 2006 there were 57 local radio licensees in Finland, but only few of them were still local by any means. In less than ten years, international networks had practically taken over the market. Radio Nova used to be the only larger commercial radio channel with some Finnish ownership, but in 2005 it was transferred totally in to Swedish ownership, when Bonnier and Proventus bought the whole Broadcasting -division (MTV3 and Radio Nova) of AlmaMedia. The Swedish ownership in Finnish radio expanded even further, when the parent company of Radio Nova bought semi-national Sävelradio. Later same year also Finnish big media business re-entered to radio market, when Sanoma unexpectedly bought Radio Helsinki, a local radio station from the Capital region.

New licensing decisions and new services are changing Finnish radio landscape

Even more unexpected was the division of the new five year (2007-2011) licenses for private and commercial radio in May 2006. First time ever in Finland, an incumbent radio broadcaster and an applicant with a good financial standing was left totally without operating license. The Ministry of Transport and Communications argued that the channel was aiming at the same target groups as the local stations and renewing its license would also had strengthened too much the market position of the owners of Radio Nova. At the same time Sanoma, which had applied for its own nationwide channel, was given altogether two new semi-national licenses. This made MTV3 to send an appeal to the Supreme Administrative Court, but the original licensing decision by the Council of State was not overruled.

Besides the only nationwide commercial channel, Radio Nova, there was still room for nine semi-national private networks on the FM dial. Sanoma introduced a new soft music channel Radio Aalto and a new rock music channel Radio Rock. Another new company with a semi-national license was French-owned NRJ Finland, which network was previously built of locally licensed stations. Metroradio Finland, owned by Irish Communicorp, continued with a semi-national jazz network Groove FM and almost nationwide Finnish music network Radio SuomiPOP as well as classical music network Classic Radio. Also a Christian channel Radio Dei and a Russian-speaking Radio Sputnik were able to renew their licenses. SBS, a subcompany of German ProSiebenSat1 and the largest commercial radio operator in Scandinavia, renewed the license for its semi-national youth music network Kiss FM, which is currently known as The Voice. Altogether 47 local radio licenses were granted on this licensing round, including brand new local radio stations in Helsinki, Lahti, Joensuu, Kokkola, Oulu and Rovaniemi. The largest operator in Finnish local radio is still SBS, which runs through Pro Radio Oy altogether 10 stations: a chain of rock-oriented local stations in four of the biggest cities in Finland outside capital region and Finnish music Iskelmä-stations in six regions.

Less attention was given to the fact, that all the new licenses had more strict rules for program content. The amount of music was restricted, because depending on a station, the share of speech content should be 15 to 30 percent on daytime broadcasts. The license conditions were also designed to prevent the networking of local stations, because the transmission of each and every station should be clearly identified as its own, independent programming. This was supposed to be end of earlier business model of Finnish music network Iskelmä, which is composed of separate, locally licensed stations. However, SBS even expanded its Iskelmä network by making co-operation agreements with some new local stations in 2007 and 2008, and after making an appeal to the Supreme Administrative Court, the network was able to continue broadcasting mostly identical programming through 17 local stations over two and half years.

2008 was again a record year for commercial radio in Finland, and the total sum of radio advertising revenues was over 50 million euro for the first time. Although about 70 percent of the turnover was now made by nationwide or semi-national networks, Metroradio Finland was no longer making any profit from Classic Radio. So it decided to sell the classical music network to 4RadioOy in 2008, but the new owner was even less successful. About a year later, Classic Radio announced that it will discontinue FM broadcasting by the end of August 2009 and concentrate its on operations on the Internet, and became the first radio network in Finland ever to return its semi-national license. However, Ministry of Transport and Communications was already considering cancelling the license because of suspected malpractice.

The digitalization of radio - and especially commercial radio - has been slow in Finland. In the late 1990s commercial radio companies made numerous license applications for digital audio broadcasting (DAB), but no licenses were ever granted. By 2001, commercial operators had already lost their interest in DAB radio with practically non-existent audiences. This is why the first licenses for digital radio broadcasting in Finland were granted in 2003 for the digital TV (DVB-T) network. With a digital TV set you can listen to SBS Iskelmä as well as Iskelmä TV Harju & Pöntinen. Besides hosted music programming, these two stations broadcast also still pictures and text graphics on their DVB-T channels. Together with three more conventional YLE radio channels on digital TV, the weekly reach of DVB-T radio is only 6 percent, while the weekly reach of all broadcast radio in Finland is 95 percent.

The mobile TV network (DVB-H) launched in 2006 was originally expected to be the most interesting digital option for private and commercial radio, but its success has so far been very limited. After the initial enthusiasm had faded away, broadcasters faced problems not only with their business models but also with copyright organizations. So far only about 16 000 people have DVB-H capability in their mobile phones and only few channels are available, mostly simulcasting DVB-T or FM broadcasts. By fall of 2009, all commercial broadcasters in Finland except SBS have withdrawn from mobile TV and the future of “interactive, visually enhanced” digital radio on Finnish DVB-H seems to be rather bleak.

Internet delivery of private and commercial (as well as public service) radio in Finland was started already in the late 1990, but it remained quite modest for several years because of a long-standing disagreement over copyright payments for streaming of radio music. An agreement was finally reached in 2007, and the number of Finnish live web radio services has now grown from a handful to more than 100 different options. The weekly reach of simulcast internet radio in Finland is 9 percent – for some reason, the listening of internet only channels is not reported separately.

YLE reforms, rationalizes and changes its strategies

As a countermeasure for the growth of commercial radio, YLE made its second radio reform, “a strategic update” in January 2003 and re-positioned all three national analogue Finnish-language channels as well as one of the digital channels. Radio Aino, a channel for young adults and especially for women, was replaced with a new pop culture channel for young adults called YLEQ. Former youth and pop culture channel Radiomafia was also replaced with a new youth channel YLEX and most of the surviving pop culture - and special music programming were transferred to YLE Radio Suomi and to new YLEQ. YLE Radio Suomi was able to keep its name, but its music profile was revised towards younger audiences. Also the share of solid daytime network programming was reduced and national stories were now placed inside regional program flow. The successor of Ylen Ykkönen was YLE Radio 1, which carried now more national in-depth current affairs programs besides its traditional selection of culture and classical music.

The radio reform of 2003 raised a lot of public discussion, and it was not such a big success as the reform of 1990. Perhaps the most successful was the complete face lift and full reform of Radiomafia, because YLEX managed to attract much younger listeners than its predecessor. On the other hand, some of the program reforms of YLE Radio 1 had to be cancelled, YLEQ was reformed again already next year and moreover, the strategic update did not improve much the competitive position of YLE. Ever since, the daily reach of all YLE analogue radio channels together has remained slightly below 50 percent, and they have about 50 percent share of all radio listening. The most popular radio channel is still YLE Radio Suomi with 38 percent share on an average day.

After 2003, many of the changes in YLE radio have been motivated by the tightening financial situation of the company as well as by the interconnected changes in its operational strategy. During a harsh campaign of cost-cutting, the amount of regional units of the most popular radio channel in the country was not reduced, but the amount of the employees of YLE Radio Suomi was cut down by 10 percent by the end of 2005. YLEQ was unexpectedly shut down in September 2006. YLE external service and domestic broadcasting on the AM dial were both stopped in 2007- 2008.

Although even the independent YLE Radio Division ceased to exist in 2007 as a result of an organizational reform, the new strategy accepted in 2006 stated that YLE Radio Suomi, YLE Radio 1 and YLEX will continue as nationwide Finnish-speaking FM radio channels and the news and current affairs channel YLE Radio Peili, which is specialized on Finnish spoken word journalism, will be the fourth main channel. YLE Radio Peili became almost nationwide in 2008 and currently it is know as YLE Puhe. In addition, YLE operates two semi-national Swedish-language channels, youth channel YLE Radio Extrem in Southern and Western Finland, and news and current affairs channel YLE Radio Vega with five regional units, which has coverage also in Eastern Finland. In Northern Lapland YLE Radio has a Sámi-language service as well as a multi-language service YLE Mondo in the capital Helsinki region. YLE also continues its external radio and audio services, but only through satellite, mobile and Internet delivery.

In the fall of 2005, YLE shut down its DAB digital radio broadcasts in Southern Finland, which had been started seven years earlier. The sales of DAB receivers had been very modest and commercial radio operators in Finland were no longer interested in introducing their services on DAB. By that time, YLE first increased the number of its radio services on the digital television network to six, but currently it offers only three radio channels [YLE Puhe, Ylen Klassinen and YLE Mondo] on DVB-T – and two simulcast FM radio channels [YLE Radio 1 and YLEX] on the digital mobile TV- network (DVB-H).

YLE had started audio streaming on the internet with both simulcast and internet-only channels in the late 1990s, and it had already a wide selection of archived material and spoken word programs from YLE Radio available on the internet before 2007. However, only after reaching a new agreement over copyright fees of music streaming, it has been able to develop also extensive live internet radio services. On YLE Areena website, you can now listen to all YLE radio channels via internet– also all regional services in Finnish, Swedish and Sámi. In addition, you may for example download some of the over 200 different program titles, which are available as podcasts. Most of the new radio-like YLE audio services on the internet can also be used by mobile phone over a 3G network.