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If you missed the 2012 Future of Radio Conference, you missed one of the most comprehensive looks at how the Connected Car (and after-market enhancements) will affect terrestrial Radio in coming years. And you missed one of the real substantive, interactive conversations in which a station owner can participate. It’ll scare you. It’ll inspire you. It’ll get you excited to re-invent your business in creative new ways.
We had the chance to play with several of the latest automotive innovations, including the 2013 BMW 5 Series and the top-of-the-line Ford Escape with the full-blown Microsoft Sync system. We also took a look at two different after-market products. The Livio Radio device makes ANY car with a cigarette lighter a “connected car” that uses a mobile device with an Internet connection to deliver streaming and other content into the FM Radio in the car.
The term “Connected Car” is one of those buzz terms starting to get thrown around a lot. In short, it’s just about every vehicle these days. But that’s an over-simplification. Any car can be “connected.” But the term “Connected Car” mostly refers to the new generation of vehicles that have software-driven dashboard and entertainment systems, and which are ready to bring the world of web-based entertainment (streaming media, navigation and information data feeds, and a host of other new content) to drivers and passengers.
There is a distinct lack of quality research data sets to provide a good view of the impact Connected Cars are having on media consumption. This is mostly because everyone with a dog in the hunt (including the Radio industry) has its own data to tell its own story — good or bad. And none of them are trustworthy from the standpoint of methodology and scientific value. Some are flat-out misleading (on purpose).
And even if you can find it, the only good data offers a ”rear view mirror” look at what’s already happened. The pace of change here is so fast that it’s probably most useful to look at the potential future impacts and prepare strategically for those, rather than chase your tail trying to see what’s happening — by the time you see what you want to see, it’s too late.
Automakers are not helpful sources of good information, either. They all sense such a massive marketing edge in having the most “Connected” features that they’re all furiously developing things with Silicone Valley partners like Microsoft, Google, and others that everyone is running silent for fear of losing any technological edge or spilling the beans about something that could outsell the competition for even a short time. The most important thing you should probably know about Connected Cars is that they’re all software now — the hardware can take all the firmware upgrades it needs in the future to keep pace with whatever the “next big thing” may be…
Vehicles are now viewed by automakers as entertainment and technology platforms; not transportation. The transportation part is now a given; THAT you get there is far less important than HOW you get there… Think of web-enabled vehicles with their own apps, much like your smartphone. Think docking station for your smartphone, tablet, or laptop. And know that they envision completely separate strategies for driver and passenger (safety in the front, movie theatre in the back).
Connected Cars can now be smarter safety devices that pro-actively warn you via head’s-up displays. They are self-maintaining, and tell you what they need and when. They are smart appliances that can, theoretically, make your life simpler.
And before you start thinking it’ll take decades for this “connectedness” to proliferate throughout the install base of vehicles on the road, think again. Any car can be connected:
| Generation | Level of Connectivity | Barrier to “Complete Connectedness” |
| 2013 Onward | First Generation that is “Fully Connected” | None |
| 2010 – 2012 | Slave Connectivity via USB, Phono, or Bluetooth Interface | Cable ($10-$30) |
| Pre-2010 | No Digital Connection | After-Market Device ($100 +/-) |
New vehicles rolling off the assembly line have NO barriers to connectedness. And those built within the last 3-4 years generally can be quite connected via USB, phono, or bluetooth connections with a smartphone or other mobile device with its own Internet connection. The dashboard in this instance is just sort of a speaker system and the smartphone does all the work.
But any vehicle older than that, without an auxiliary connection, at first glance might seem “unconnectible.” That is a serious miscalculation. Because just like in the old days when after-market manufacturers figured out how to retro-fit for cassette decks and CD players, they’ve already figured out how to — for less than $100 — make any car with an FM Radio a connected car. In fact, Livio Radio – the device we demonstrated at Future of Radio Conference — uses our very own FM frequencies and the car stereo to bypass terrestrial FM programming in place of whatever you’ve got on your mobile device.
Automakers now view vehicles as mobile entertainment platforms that create residual revenue streams. It started with On Star and satellite radio, and now it is extending into navigational data, Internet access, and a host of streaming media options. Microsoft, Google, Intel, and Cisco are all forging relationships with automakers because vehicles are seen as the next big technology boom. AM/FM Radio is now a software function that no longer commands its own real estate on the dashboard. And it has been lumped together with a host of other options in one consolidated device that interacts via a screen interface — no tuner and volume knobs anymore. The CD player will disappear from all 2013 models, and Terrestrial Radio is NOWHERE on the R&D priority list for automakers.
Consumers have stuck with Radio so far. And don’t seem excited about ANOTHER bill for Internet in the car. But supply-siders are taking a “build it and they will come” approach (much like they did with satellite radio). Consumers HAVE shown quite a bit of excitement about replacing in-car CD listening with streaming media from a smartphone — and that is primarily where in-car media consumption has changed so far. Consumers have also reported finding most of the new dashboard systems confusing; common sense, but a short-term issue.
In the Future of Radio presentation we attempted to provide an overview of HELPING and HINDERING forces. We defined Helping Forces as bad for Radio (because they can speed up the evolution), and Hindering Forces as good for Radio (because they will slow down this evolution).
Helping Forces: Automakers see ”connectedness” as a competitive advantage to exploit. This will cause them to deploy these technologies faster and faster, and advance them until consumers see them as commodity. Pandora is pouring millions into co-op ad campaigns and essentially buying its way into dashboards, paying automakers to include Pandora-readiness into the software systems of the vehicle. Imagine if Radio had done this with HD… Radio’s loss of dashboard real estate is another negative. Dedicated volume and tuning knobs and AM/FM displays are gone; never to return.
Hindering Forces: A few factors are working in Radio’s favor. Consumers still like Radio’s curation of content. Most early adopters of Connected Car technology were never heavy Radio listeners to begin with; opting to curate their own music content with CDs or iPod. Government regulation is also going to be a hot spot that could slow the advance of these technologies. Safety is a huge concern; the more a driver is distracted by these technologies, the more likely accidents become. Lobbying is already heavy, and politicians will sense blood in the water and an easy target with populist support. Consumers are also resisting another Internet invoice every month; most have 2+ already, and the idea of another is hard to stomach. But watch for bundling of Internet connections (home, car, mobile devices (smartphone, tablet, etc.)… Another potential hindering force is mobile bandwidth. While the technologies APPEAR to be there to solve this issue, the question remains who will deploy these technologies, how fast. And, again, there are conflicting data sets that make it hard to peg.
Regarding the issue of mobile data capacity, consider that the number of tablet users DOUBLED on Christmas Day, and it is projected that more tablets will be in use by 2016 than PCs and laptops. Mobile network demand is growing exponentially. Yesterday you were one (1) mobile connection — your phone. Today, you are 3-4 mobile connections (smartphone is two connections by itself, plus mobile broadband, your tablet, etc.). Demand is growing like crazy, but supply is NOT. 4G roll-outs have been slow at best, and only recently has a standard seemed apparent. Why else would AT&T be throttling if they didn’t have to consider ways to slow demand growth?
Short-run solutions like putting FM chips in smartphones could be very good for Radio.
So what are the best strategic reactions for Radio?
Dashboard real estate is gone and never coming back. So the content must be worth finding.
Heavy streamers also tend to be heavy Radio listeners. And Radio’s strength with heavy streamers is its non-music content. They cherry-pick morning shows and other personality-driven content as well as information content like weather, news, and sports.
You might ask, “What is the Radio industry doing about all of this?” My answer would be an overwhelming, “Not NEARLY enough!” However, to be fair, NAB Labs is engaged in a development project with Emmis Interactive, iBiquity, Intel, and BIA/Kelsey that integrates HD technology into smartphones, and uses the encoded HD signal to display enhanced, user-friendly information like artist/title and album art AND create an interaction environment that includes social media and other Web 2.0 features. It remains to be seen whether it can gain any traction, and NAB doesn’t appear to see it as mission-critical. In fact, NAB appears to be working hard to protect status-quo — all at a time when status-quo is about as bad a strategy as could possibly be imagined.
How do we take the facts (even the bad ones), and mold a strategy that makes sense for the future? How do we adapt? How do we stay relevant and use these circumstances to our benefit?
First of all, Connected Car technology has the ability to make our Radio Stations MUCH more interactive. Mobile apps and mobile web can allow listeners to interact more from the car — vote, comment, call, LIKE, FOLLOW, and generally participate in everything from contests to discussion. And knowing more about where listeners are puts you into the SoLoMo game.
Connected Car technology allows you to integrate multi-media delivered via the mobile device with what’s happening on the air. For example, spots can have synced digital components with bounce-backs or BUY NOW functionality. Weather, traffic, news, and promotions can all have multi-media components. See the traffic map, check the RADAR, see photos and video that take you deeper into news stories, sign up to play contests…
Most listeners still like Radio’s curation of music content. But for those listeners that want to curate the music more on their own, you can stream a branded version of a Pandora-like environment that gives the listener total control of the music content, but retains your brand and advertising. You can even allow the listener to decide on the frequency of content like weather, news, traffic, and other elements.
It may sound crazy but you should probably consider offering tech support to help listeners find you in their new-fangled dashboard entertainment systems. The demonstration we showed at Future of Radio Conference demonstrated just how complicated it can be to find Radio in the dashboard, select a Radio Station, and especially remember it for next time. Believe it or not, tech support may be in our futures! And for certain we can envision step-by-step on-line instructions for how to tune the Radio Station in various system types (Ford Sync, Toyota Entune, etc.)…
Recognize that in 2-3 years it may actually be EASIER for a listener to stream your Station than tune the terrestrial signal in the car. As the quality of receivers continues to degrade and the maze of menus complicates what used to be a push-button on the dash, this idea isn’t too far-fetched. And if you have listeners over 40, EXPECT this to be a problem VERY SOON.
Because of safety concerns, be looking for ways listeners can interact with the Station in a hands-free way. For example, CTunes Network, which we demonstrated at Future of Radio Conference, and which many of our Radio owners loved.
Lastly, if you missed the Future of Radio Conference and our demonstration of the latest dashboard technology from BMW and Ford, do yourself a huge favor and go on an expedition to several different auto showrooms to try these things out. You’ll be astonished at what the systems are capable of doing, and it’ll fill your mind with possibilities.
The Connected Car CAN work to your advantage. It is, one the one hand, a very bad omen for those who plan to keep doing the same things over and over again and expect a similar result. But it is a path from terrestrial to digital delivery if you choose to make it that, and if you invest in ways to leverage the evolution of the automobile into better results for your advertisers and a more friendly environment for your listeners.
At this year’s Future of Radio Conference in March, Omry Farajun presented “Managing Your Internet Radio Experience in the Connected Car.”
Click this link to download his presentation which examines the evolution of the connected car, and the issues with monetizing it.
Here’s an example from AdAge of how local TV stations are leveraging their news position to become a digital multi platform medium. Radio has the same opportunity. The personalities have the same emotional relationship as TV anchors…probably stronger. Radio stations need to be training their air personnel in strategies to make the most of their bond with their listeners in the social space. In my most recent experience, stations are training sales people in digital media skills but leaving their air talent in the dark to fend for themselves.
Local TV Goes Social: Better Connections With Not Just Consumers But Also Advertisers
By: Alexandra Bruell Published: March 27, 2012
Local TV stations are using social media to extend their coverage and conversations with viewers. They’re also working to create more integration with advertisers and device companies, according to panelists at the Socializing Local TV session during the 4A’s Transformation Conference in L.A.
“We’ve taken the tradition of that emotional connection our viewers have with anchors and reporters and gone into the space in which they live, which is Twitter, Facebook, mobile and online, to have that connection,” said Rebecca Campbell, president of ABC Owned TV Stations.
Last July, for example, KABC in Los Angeles teamed up with the user-generated traffic app Waze as part of its coverage of “Carmageddon,” when a stretch of California’s 405 Freeway was shut down. Now all her stations partner with Waze, she said.
Social media helped a local NBC affiliate push past the dominant station in the market during Hurricane Irene, said Valari Staab, president of NBC Owned Television Stations.
“We were watching the Facebook page, and it just lit up. … The conversation got bigger and bigger, and more people became involved,” Ms. Staab said. “The station went on-air live at 3 p.m. instead of 6 p.m. and stayed on. We slaughtered our competition on the coverage.”
Local advertisers in turn can benefit from TV’s social extensions. “Local broadcasters, through their social presence, can build large audiences, but it’s difficult for local advertisers to cultivate audiences to news,” said Dunia Shive, president-CEO of Belo Corp.
When a smoke-alarm maker teamed up with ABC stations for a fire-safety campaign, the stations encouraged their Facebook fans to “like” a page for a chance to win a car, Ms. Campbell said.
It sometimes seems as if social media could challenge traditional news providers by breaking and spreading news, but the panelists said that hasn’t been a problem.
Even when Joe Paterno’s ouster from Penn State leaked on Twitter, for example, the local station’s coverage earned some of its highest ratings, according to Ms. Campbell. “[Consumers] want more of a story,” she said. “You can’t communicate that in social form, but you can in a newscast.”
Local broadcasters still have plenty of opportunities ahead in digital video and mobile, the panelists agreed. Belo is teaming up with tech companies to introduce a mobile streaming product later this year in 32 U.S. markets.
“If you have the right device, you can watch live TV on your mobile device,” Ms. Shive said. “We’ll have to see how consumers react to that launch and how content is used, and then build digital-ad opportunities.”
The convergence of social media and TV is a hot topic, one that Ad Age will explore further at The Social Engagement/Social TV Conference on May 9.
This latest data from Edison Research will have a significant impact on the Scenario Model we’ve been tracking driving future predictions toward what our participants have describe as “doomsday” or “wheel spinning” if Broadcasters don’t heed the warning signs and move to a multiplatform digital strategy. This is radio’s opportunity to win or lose depending on how they react to these changes in the listening behaviors of radio’s customers.
As we discussed in last week’s conference on the Future of Radio Conference in Hilton Head, SC, radio operators still own a significant music brand with their listeners but it is time to act by providing those customers with a 2-way music experience branded with the station’s name.
http://www.edisonresearch.com/home/archives/2012/03/a-dramatic-rise-in-internet-radio-usage.php
Radio ad revenue “to decline 1% to 2% annually”, says Fitch Ratings.
Fitch does see upside for radio in digital, and its “decline-modestly” forecast doesn’t apply to digital. Here’s the Fitch Ratings executive summary, verbatim –
• “Reduced time spent listening will be partially offset by modest pricing growth. Advertiser demand will remain, given the large core audience, the medium’s local reach, its targeted nature, and its low cost.
• “Internet radio streaming services will continue to grow audiences, particularly via increased mobile penetration. However, Fitch sees significant hurdles to these services obtaining the size, scale, and subscription or advertising dollars necessary to present a severe threat to terrestrial radio.
• “Digital initiatives by terrestrial broadcasters, although in early stages, could provide an opportunity to capture a sizeable portion of digital listening over the next few years. Whether this will translate into incremental revenue will depend on advertising demand and pricing.
• “Terrestrial broadcasters’ established, high-margin businesses will allow them to fund digital initiatives and provide room to absorb near-term revenue declines before any digital revenue becomes material. However, in the event of ongoing top-line pressures without a meaningful digital offset, lenders to radio broadcasters could be increasingly exposed to risks of more aggressive financial policies as companies attempt to boost their equity to the detriment of bondholders.” Finally, in its full report, Fitch deals with “other risks and opportunities for terrestrial broadcasters, including performance royalties, station formats, HD radio, satellite radio, in-car listening, and market and distressed valuations.”
Media analyst predicts continued steady growth for local radio, TV in 2012
Posted by Paul Maloney From Issue: RAIN 3/16: BIA/Kelsey reports $439 million in local radio online revenue for 2011
BIA/Kelsey says today that local radio 2011 online revenue was up more than 15%, to $439 million (for comparison, local television’s online revenues grew even more). And they’re predicting “a steady year of online growth” for local radio and television alike.
The data will appear in BIA/Kelsey’s new Investing In Television and Investing In Radio publications. BIA/Kelsey credits local media’s “assets” (“from valuable local content, to cross-promotional opportunities between on and off-air, and a trained sales staff that understands the local market and the advertiser community”) which enable stations to “expand their position in their local markets from solely an over-the-air media source to a local media company that can provide access to local audiences in different, effective ways for their advertiser clients.”
This was posted yesterday in Rain, Kurt Hanson’s online magazine. The march is on to a multiplatform world by both advertisers and listeners. We’ll be talking about the implications of this at our Future of Radio Conference March 14-16 in Hilton Head.
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Revenue growth outpaced web music audience gains last year, study finds
Posted by Michael Schmitt in RAIN 3/1: Online music audiences have long outpaced revenues, new study says that’s changing
For years, Internet radio and web music services have been growing their audiences but complained that revenues weren’t keeping up. That all changed last year, says AccuStream Research, when for the first time revenue growth outpaced listening hour increases. Moreover, the research firm expects that growth will “continue unabated in 2012.”
AccuStream’s report (“Internet Music Radio and Track Play Growth 2012-2014: Listening and Monetization Analysis”) found that listening hours for “Internet music radio and track play” (presumably including services like Spotify and Rhapsody) grew 50.5% in 2011, reaching more than 1.3 billion hours monthly.
Meanwhile, mobile listening exploded: it grew 222% in 2011, according to AccuStream, and now accounts for 41% of hours streamed monthly. In 2012 70% of Pandora’s listening is “non-PC,” says the report, as is 50% of Slacker’s audience.
Increases in monetization (including ad and subscription revenue) outpaced listening hour growth, with an advance of 64.6% in 2011. The study reports the industry generated more than $293 million in gross media spending (audio, video, display) and another $171 million in subscription revenue.
In late October 2011 SNL Kagan forecast that Internet-only radio stations would generate $293 million in revenues in 2011. That same study predicted AM/FM digital revenues would reach $713 million in 2011. Audio4Cast has more on SNL Kagan’s predictions here.
AccuStream expects the market to increase 78% in 2012, reaching 6.2 billion avails per month (“driven in part by Pandora’s increasing focus on the in-stream audio format”). Audio fill rates will reach 60% this year, says AccuStream, with an eCPM (average equivalent CPM) of $6.80.
“Combined with an in-house sales force selling into top local DMAs where terrestrial broadcast radio advertising has historically been bought,” writes AccuStream, “the audio format is moving to the forefront of the programmer’s monetization initiatives.”
You can find AccuStream Research’s press release here.
As automakers and a host of tech & content partners move quickly to develop a myriad of in-car entertainment options, the most pioneering forms of this evolution (led by early-adopter consumers who seek to bring favorite content of all types along with them in the car) have been delivered to the dashboard via the data connection in a smartphone.
And this makes perfect sense. Until or unless consumers decide it’s worth having a dedicated data connection JUST for the car — and certainly data so far suggests consumers have virtually little to no interest in that — the dashboard is really just a fancy speaker/screen/hands-free system for the smartphone. And the smartphone becomes the primary delivery mechanism for the content itself.
But America’s wireless carriers face significant short-term challenges in meeting the demand created by greater use of the data connections in smartphones — not just in the car, but throughout consumers’ day as they rely more and more on the smartphone to make digital media portable for them. This may provide a bit of a breather in the otherwise rapid pace of trial by early-adopter consumers, making use of existing AUX connections in the dashboard and easy-to-use after-market devices like Livio. After all, if you can’t get a fast data connection, or if you have to pay extra for that data, many consumers will think twice about these new options. So how will we use this extra time? Ideally, we will use it to determine a strategy to keep Radio’s content competitive and more interactive in the transportation environment. These new technologies can be harnessed to our advantage, creating a more robust and interactive listener experience. Will we take this opportunity?
Given Facebook’s new relationships with Spotify and other on-line music services, it’s interesting to think about how adding Facebook to the dashboard of a vehicle creates myriad more distractions from Radio. But here is a thought about how one of these dashboard advancements could actually ENHANCE the terrestrial Radio experience… What if the Radio Station becomes MORE interactive because listeners can instantly interact (hopefully in a safe way) via Facebook on the dashboard.
The new year greets us with a host of new dashboard technologies. Here is a thorough wrap-up from Kurt Hanson’s Radio & Internet Newsletter (RAIN), authored by Michael Schmitt:
RAIN OFFERS HANDY GUIDE TO DASHBOARD WEB RADIO SYSTEMS
Whew! It’s been a whirlwind couple of weeks for in-car Internet radio. Nearly every major car maker (and a slew of third-party retailers) has introduced some sort of dashboard Net radio system. And frankly, it’s tough to keep track of it all. That’s why today RAIN presents a round-up of in-car Internet radio:
FORD: AppLink Sync
Connection: Smartphone / Bluetooth
Available? Yes
The first major player to bring Internet radio to the dashboard, Ford’s AppLink Sync system was introduced at CES 2010 (RAIN coverage here). Pandora playback can be controlled through voice commands. The 2011 Ford Fiesta was the first car to get support (video walk-through here), with the Mustang reportedly up next (here).
TOYOTA: Entune
Connection: Smartphone / Bluetooth
Available? No, coming later this year
Toyota’s Entune system, debuted at CES 2011 (here) includes support for Pandora and iHeartRadio. Like Ford, Toyota’s system connects to the web via a smartphone and playback can be controlled through voice commands.
BMW: BMW Connected
Connection: Smartphone / Bluetooth
Available? App yes; compatible models in March 2011
BMW has released its own Internet radio aggregator smartphone app (built on RadioTime’s TuneIn Radio) which will interact with new models (like the one pictured) coming in March 2011. BMW is also working with AT&T on an “always-connected” car, which wouldn’t need a smartphone to access the web (here).
MINI: Mini Connected
Connection: Smartphone / Bluetooth
Available? Yes
Mini takes a similar approach to in-car Net radio as owner BMW. The company released its own Net radio aggregator app (RAIN coverage here) which connects to the 2011 Mini Countryman. Pandora and other smartphone apps can also be controlled via a gorgeous dashboard screen and stick-shift-like joystick. Tim Westergren demos the system here.
SMART: Smart Drive
Connection: iPhone + dock
Available? Yes
Car maker Smart released a $10 iPhone app and $300 car dock in August 2010 which included, among many features, Internet radio streaming. RAIN coverage here.
HYUNDAI: Pandora integration
Connection: Smartphone / Bluetooth / USB
Available? No, coming in 2012 Veloster
Hyundai’s 2012 Veloster will come with dashboard support for Pandora, along with a strange third door (RAIN coverage here).
GM: MyLink
Connection: Smartphone / Bluetooth
Available? Later this year
GM’s MyLink service, a part of its OnStar platform, will use a smartphone to stream Pandora and other web services. The service is coming to all 2011 OnStar-equipped GM models, starting with the Chevy Volt (RAIN coverage here).
MERCEDES-BENZ: Pandora integration + Terminal Mode
Connection: Smartphone
Available? No, 2012 models
Mercedes-Benz’s 2012 models will come equipped with Nokia’s Terminal Mode system, which links up with a smartphone to pull down web content like Internet radio (more here). Additionally, Pandora CEO Joe Kennedy announced in October 2010 that the service would be included in upcoming Mercedes models (RAIN coverage here).
CHRYSLER: UConnect
Connection: In-car Wi-Fi hotspot
Available? Yes, since 2009
Back in 2009 Chrysler began offering in-car Wi-Fi service called UConnect. Though the service includes a monthly fee, it requires no smartphone to access the web. So any Wi-Fi device could get online and stream Net radio. RAIN coverage here.
VOLKSWAGEN: Net-connected dashboard
Connection: ?
Available: No, testing reportedly this year
In August 2010 Jennifer Lane reported VW was working on a Net-connected dashboard system, with an emphasis on “Hybrid Radio.” Testing reportedly would begin in 2011 (more coverage here).
This list doesn’t even touch third-party sellers like Pioneer, Alpine, Kenwood and others that offer dozens of car stereos with Internet radio support.
We’d also like to point out that most, if not all, in-car Internet radio systems use Bluetooth to stream music from a smartphone to the car stereo. This means ANY Net radio app can easily be played on the dashboard, though you won’t be able to control playback with touchscreen buttons, fancy joysticks or voice commands. — MS
John Gehron, chair of Merlin Media Advisory Board, has a legendary background as a programmer and corporate leader in radio and is now COO of Accuradio, a leader in music streaming and other digital services to the radio business. At this year’s Future of Radio Conference he will report the latest information about the progress music streaming companies have made capturing listeners and why they have had such incredible success in the last few years. He’ll also lay out how terrestrial stations can compete against these formidable companies that are taking listeners away from radio. John will report specific case histories of what some radio operators have done to protect their brand and generate revenue.
To reserve your space for this year’s conference, complete the form on the registration page and indicate your desire to participate. Participation is limited to 35 attendees. Fees for attending are shared among all participants and range from $350 – $500 plus accommodations and meals.