09/15

The Danger to Terrestrial Radio posed by Internet Radio in Cars

One third of radio listeners would listen less to local radio if they had easy access to Internet Radio built into their cars.

That’s one of the alarming statistics from a recent national study I conducted in conjunction with VIP Research.

In the study, which was a national survey of more than 2,000 radio listeners covering 22 markets, I asked this question:

If tomorrow you could get Internet access from the dashboard of your car and you could listen to thousands of radio stations from all over the world through an Internet receiver on your dash as easy to use as your radio, would you…
a.  Listen less to my local radio stations as I explore new ones online
b.  Listen just as much to my local radio stations no matter what’s online

And here is the bottom line:

Now I know that predictions of future behavior are sketchy, but it’s notable that such a large fraction of listeners are ready to share their listening with Internet Radio simply because its easy and accessible with no knowledge of what, exactly, might be lurking there ready to entertain them.

And to those of you who say “yeah, but more folks say they’d keep listening just as much,” I must remind you that this notion of Internet Radio is cannibalizing a third of your audience sight unseen and sound unheard.  Just imagine what will happen once trial occurs (ask somebody who has sampled Pandora or Slacker about that).

And what’s also notable is that this fraction varies by format.  For example, among Alternative fans fully 50% say they would listen less to local radio!

I asked another question:

Which would you rather have, a radio in your iPod or mp3 player or an Internet radio and access to thousands of stations in your car?
a.  radio in iPod/mp3 player
b.  Internet radio in car
c.  Not applicable
d.  Don’t know

And the results were equally startling, with 61% preferring in-dash Internet Radio over 28% who preferred radio built into their iPods.

One of the reasons for Internet Radio’s advantage here, I suspect, is that some fraction of the listening base has no interest in mp3 players, whether or not those devices contain FM receivers.  As an industry we need to recognize that while mp3 players surely cannibalize radio usage, they are not perfect substitutes for the radio experience for that portion of the audience who wants to take a purely passive role in entertainment consumption.

So what these statistics add up to is profound:

Internet Radio in cars has a significant value proposition.  I’m not talking here about the kind of Internet radio we get today via a rather clunky cable linking a mobile device to a dashboard.  My question paints the picture of an inevitable integration and personalization of the car dashboard where Internet-enabled audio is as easy and convenient and accessible as the over-the-air broadcasts which currently dominate the in-car experience.

What these numbers suggest is that our obsession to get receivers on mobile devices may be misplaced.  Indeed, we need to worry about long-term relevance in that most mobile of devices:  The car.

The auto dashboard of tomorrow will not look like today’s.  It will be connected and customizable and personalizable to us. It will take on the flavor of the person behind the wheel.  That is a technology game, not an FM chip game.  It is an IP-driven game.

And if I were you I’d make sure I’m a part of it.

[Note: Look here for an overview of these questions, including breakdowns by age, sex, and format preference]

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  • http://twitter.com/GuyAllen Guy Allen

    I highly doubt this is an issue, as a subscriber to Siruis/XM for 9 years now, I'm so addicted that I listen to it through my blackberry at the gym. I've tried Pandora and Slacker, and frankly I like the DJ and talk radio interaction.

    Terrestrial radio in my car hasn't happened for those whole 9 years, and will NEVER come back.

  • http://twitter.com/GuyAllen Guy Allen

    I should really re-think this. Until internet radio gets to the quality of programming as Sirius/XM then my previous statement will not stand. But there are still miles and miles of roadway where the internet cannot be reached. I'd say at least 10-15 years.

  • http://www.markramseymedia.com Mark Ramsey

    This is a big priority with Detroit, Guy. And it will be driven by consumers, big-time. Dashboard technology is one of the main reasons people choose their cars nowadays. Amazing, really.

  • http://www.markramseymedia.com Mark Ramsey

    You are a satellite apostle. You were once a radio fan. And that kind of transition – from radio to something else – is exactly what we're talking about here. But probably on a scale that's more rapid than satellite's encroachment into radio's sphere.

  • http://twitter.com/GuyAllen Guy Allen

    And the reason I purchased my last car, built in XM and a USB port.

  • http://www.facebook.com/profile.php?id=671703454 Steve Varholy

    Mark, you are spot on. What is driving this whole trend is a failure by the industry as a whole to provide compelling content people want to hear and that makes them want to stick around or return again and again.

    Compelling radio provides a sense of place and time, among other things. While I cannot tell you exactly what the solutions are, I can say with great confidence that voicetracking and news hubs is probably not it.

  • Dennis

    You know I fully respect your thinking, Mark. There is no question that in-dash access to the all things web is inevitable. But regarding the research you've done I have a question. As you accurately stated, predicting future behavior is extremely difficult (just as it is in standard market research for radio stations). That said, isn't it entirely possible that the 34% of these respondents who answered that they would listen less to radio say so because they “think” that's how they would react given a new toy to play with? In reality, with thousands of internet options available (read: entertainment/information overload), is it not feasible that they could eventually revert back to listening to local radio? For example, I subscribe to satellite radio but only use a handful of favorite channels, just as I access only a handful of local radio stations on a regular basis (my two excluded, of course!). I submit the same would hold true of internet options.

    Of course, the key here – regardless of source – is relevance. If local radio provides that important connection then we remain one of the options. Conversely, if a consumer is able to find it somewhere other than their local radio stations, then shame on us. There is no question that if local radio wants to hold on to ears we have no choice but to get better at doing so.

  • http://www.markramseymedia.com Mark Ramsey

    Dennis, I'm not trying to predict the future, only reflect the thinking about the future of people in the present.

    The scenario you suggest – that folks overstate the attrition because there's a new, shiny toy to play with – could be countered with an equally likely alternate scenario – that folks understate the attrition because they can't imagine the value proposition of what will exist until they actually experience it for the first time.

    You say you have only a handful of favorite channels on satellite. That, I should tell you, is the norm. But every one of those favorites constitutes lost potential terrestrial radio listening time, which is my point.

    The “relevance” you talk about regarding local radio I would translate instead as “value.” Historically, a big chunk of radio's value proposition was that it was the only dynamic and in-the-moment entertainment in the car.

    Not for much longer.

    The key to “getting better” is to get better along dimensions suited to audience appetites and enabled by technology. One will no longer exist without the other.

    Thanks for the great comment!

  • Just Me

    Would you welcome the thoughts of someone who works for VIP Research and who conducted a handful of the survey's reflected in these statistics?

  • Greg

    Ever listen to musicradio77 WABC Satrday Night Oldies, http://www.musicradio77.com/, or post on their social message board? That's what is missing from radio – great DJs like Mark Simone, great music from the past, and social interaction. I know, I grew up with it, but it is gone. Radio, bring something like this back to the future, and you would have a winner. This kind of stuff, one would never find on an iPod.

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  • Mark Kausch

    The key variable in the survey question as posed: “… an internet receiver on your dash AS EASY TO USE AS YOUR RADIO…” The audio and web tech industry will get to this level of ease of use, perhaps (probably…?) wirelessly linked to the laptop or desktop in the kitchen or den but … how soon will this level of ease be available across the full range of vehicles (BMW 7 series through Toyota Yaris or the like)? And from that moment looking forward how quickly will consumers make the transition en masse to the new car with the new in-dash entertainment gear? The transition is inevitalbe, the rate of transition is variable.

  • http://www.markramseymedia.com Mark Ramsey

    Yes, that phrasing was deliberate on my part because I believe as you do that simplicity and ease of use will be recognized as a design priority.

  • http://twitter.com/thevezt18 thevez

    This only means that internet will not only invade our lives but also our cars :P