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06/30

The New Auto Dashboard: Is Radio Screwed?

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Last week, Google announced Android Auto, which – like Apple’s CarPlay – aims to fully fulfill the promise of the so-called connected car.

Watch this video to see an illustration of how the platform integrates music, both from Google Play and from third party apps like Pandora or iHeartRadio:

So what does this mean for radio?

Well let’s take a step back.

Broadcasters have been obsessed over the dashboard lately because they smell big trouble. But the trouble is much bigger than whatever you’re sniffing, gang.

Here is my assessment of where we are and where we’re heading. Check back in five to ten years and see if I’m as right about this as I was about HD radio nine years ago.

1. Automakers are clueless when it comes to their own infotainment systems.

Not only are there numerous standards of widely varied quality, but even the most recent iterations are leaving critics cold. Consider this in an otherwise glowing review of the new 2014 Honda Civic SI:

It simply shouldn’t be difficult, or require more than one movement, to access and operate a common feature, such as navigation or phone pairing. Honda’s guys must get paid according to the number of times you have to push or slide a control to actually reach the function you want. The best phone-pairing systems begin the handshake the minute you start the car, thus requiring little rigmarole on your part to complete the process. Honda is an engineering-oriented company, so we remain baffled about the company’s inelegant approach to electronics.

The mediocre mish-mash of competing infotainment systems resembles nothing so much as the state of the mp3 player industry right before Apple’s iPod exploded onto the scene and simplified everything with an elegant, effective, and user-oriented platform.

I think the automakers just can’t compete here. They just can’t do what Apple and Google can do with so much flair, efficiency, and style. And they certainly can’t do it within the common ecosystems consumers prefer and are accustomed to: The ones on the mobile devices in their pockets today.

Invariably, they will partner with Apple and Google on both technology and perhaps revenue, eventually preempting or rendering insignificant their own infotainment platforms. And they will do this not because they want to but because consumers will demand it. Who among you has watched the demonstration videos for CarPlay or Android Auto and not wanted that built into your car here, now, today?

2. A car connected to CarPlay or Android Auto will not be a car connected to terrestrial radio

Sure, the radio is still built into the car so in that sense it’s literally “connected,” but the “connected car” is not about connection to technology, it’s about connection to the lives of consumers.

Understand what’s happening here:

Today’s auto entertainment platform is about to be replaced or made obsolete by the entertainment platform connected directly to your mobile phone.

Think of the Radio / CD industrial complex (i.e., the historical car entertainment dashboard) as an entertainment platform with consumers habituated to it over the years. Those habits are sticky because there is no simple, easy, elegant, and superior disruptive force breaking those habits. And using many of the latest infotainment systems is like deciphering hieroglyphics – more work than they’re worth. Sure you can hook up your mobile device via a cable or bluetooth for a jerry-rigged experience which is clunky and distracting and will potentially earn you a traffic ticket (I personally was warned by a motorcycle cop at a stoplight as I was scrolling through my Stitcher shows). Wouldn’t it just be easier to listen to the radio? You bet it would be.

Enter CarPlay and Android Auto. Entirely new platforms, not simply new feature sets. Platforms which enable access to all the essential information and entertainment consumers use during the hours when they are not in their cars, which include most hours in the day. Platforms which feature substitutes for radio (Pandora, etc.) or independent radio mini-platforms where station alternatives number in the thousands (TuneIn, iHeartRadio, etc.). Plus – and this is important – functionality to solve location-specific problems every driver faces: Navigation, traffic, the location of the nearest gas station or restaurant, reminders to pick up your dry cleaning, etc.

These new platforms do not supplement the old one which featured a radio dial and a CD player, they replace them. They replace them because they provide much of the functionality of the old platform plus so much more. And when a platform better connected to the lives of consumers today shoves aside the one that has been historically sticky because there has been no better alternative, that legacy behavior gets unstuck.

3. But there’s stuff on the radio that is only on the radio? What about the exclusive content?

You bet there is, and that’s clearly radio’s best hope to sustain usage into the future. But when it comes to what matters to consumers, there’s less exclusive content on the radio than we like to imagine.

There’s a difference between being exclusive and being exclusive and meaningful to consumers.

What’s meaningful to consumers? Stuff they will search out because they crave it: Traffic on the 8′s, the Kidd Kraddick Morning Show, Dan Patrick, Rush Limbaugh, emergency information in the rare event of an emergency, etc.

What’s not meaningful to consumers? The voices they don’t know and don’t care about, the heavy commercial load that may not be relevant to them, the me-too morning show, the music mix that isn’t better than the one Pandora or Spotify provides.

Why did SiriusXM want Howard Stern? Why did Netflix want Chelsea Handler? Because in both cases this content carried with it an audience which was willing to seek it out, no matter what.

Invariably, that content has more to do with people – real talent – and less to do with catchy slogans, mediocre chat-fests, and finely tuned music mixes.

Want to safeguard your future? Be worth listening to. Go big or go home.

4. But radio is on the new dashboard too – via the platforms of TuneIn or iHeartRadio or even our own proprietary apps

True enough. But when you take a product that exists in a competitive space of 30 or 40 meaningful stations and drop it into a platform of 1,000 or more stations it’s like moving a grocery item from the high profile endcap to the middle of a long aisle on the bottom row. Making a brand harder to find in a mix of many more competing brands may put it on the platform, but it becomes much harder to listen to amid many more quality alternatives. This is how brands suffocate.

The new “stations” on the new platforms are not radio stations in the traditional sense, they’re apps like TuneIn or iTunes Radio or Google Play or iHeartRadio or Pandora or Spotify. Rather than choosing between the five to seven radio stations that Nielsen tells us folks listen to under PPM, we will choose between five to seven apps, focusing especially on those apps with which we have a preexisting relationship, thanks to our mobile device.

This will invariably crowd out traditional radio listening, even for those stations on those apps.

What about your own proprietary app? Well, does your brand have enough must-hear power to sit beside Spotify and Stitcher and iHeartRadio and Pandora? Can you make the cut for my personal top five to seven? Maybe if you’re NPR or ESPN you can, but who else?

5. Traditional radio will be harder than ever to use

If you are using Android Auto or CarPlay, can you be listening to terrestrial radio via FM or AM at the same time?

I doubt it very much. It will probably be either one or the other. Just as you can’t listen to a CD and FM at the same time today.

This is because it will be in the interest of these platforms to drive consumption to the platform. And the preexisting habit of FM and AM radio usage will only block that consumption. Thus Apple and Google have a built-in incentive to discourage the use of alternative platforms while consumers are engaged with their own.

The platform makers will also argue that fewer things happening simultaneously on the dash will minimize driving distractions – and they will not be wrong.

What will that mean? It will mean that these new platforms will go out of their way to break old consumer habits. You will listen to less radio because it will be harder and more inconvenient to listen to more radio.

6. Traditional Nielsen Radio measurement will be less and less relevant

The less radio an audience listens to, the less meaningful it is to evaluate shares that add to 100%.

100% of what? Certainly not of all listening, let alone all of the entertainment/information experiences consumers have in or out of their cars.

The more alternatives there are to radio – including usage to online radio versions of terrestrial brands and their alternatives – the less stock agencies will place in Nielsen’s increasingly hollow measures, especially when they see videos like this one from 2011:

This is particularly true as the in-car experience evolves to create new ways to reach consumers with messages. Will there be, for example, a way to create audio messaging in the context of a navigation experience? Sure, why not! We will see audio-based advertising appear for entertainment and information assets which today are not even thought of as “radio” or “audio.” Because in an in-car environment, audio is the single best and least distracting way for an advertiser to connect with consumers – even in the context of a platform which is not inherently audio-specific.

In other words, the market for audio advertising will extend to maps and location-specific assets and will move away from the idea of a 30-second spot in the middle of a long music sweep.

And Nielsen doesn’t need to measure all that stuff because Apple and Google and Triton already do.

7. Habits may change quicker than you think, but a new car is not an iPad

Think habits take a long time to break?

As of January, Starbucks reported that mobile payments via their app accounted for 30% of all in-store purchases less than one year after the launch of the app which made this functionality possible.

One year!

The good news for broadcasters is that the new auto dashboard will materialize only as fast as new dashboards in new cars materialize. At a rate of 15 million new cars sold per year, a total of 247 million cars on the road, and with the average American driver keeping their car for 11 years, it will take a good long time for these new platforms to be fundamentally disruptive. I’m guessing five to ten years.

But every year you will see more and more relevance of the traditional radio dial chipped away, never to return.

8. The diminishing importance of FM

While radio content has a bright future, the future of legacy distribution channels – AM and FM – isn’t so bright.

The new auto dashboard will gradually convert consumers away from AM and FM in the location where most people listen to the most radio – their cars. This will begin to break the FM radio habit, just as the AM radio habit has been breaking for the past few years.

And this is particularly true among younger consumers who didn’t grow up with a rich and meaningful memory of radio: The future 25-54 audience.

9. The big brands on the new auto dashboard will sound more and more like the best of “radio”

Just as Netflix achieved a certain scale and realized that it needed to invest in the “big, unique, meaningful, star-filled content everywhere” called House of Cards to differentiate itself from look-alike competitors and create more reasons to tune-in to Netflix specifically, it’s only a matter of time before iTunes Radio and Google Play and Pandora and Spotify do the same. Already iTunes Radio carries NPR content – and that’s only the beginning.

I fully expect to get a call within the next year or two from one of these players that goes like this: “We want your help to create proprietary, premium, real-time audio content that leverages our scale and creates a meaningful point of difference that generates buzz and tune-in and cements user habits to our brand during the morning and afternoon drive times, when they are most apt to be in their cars.” And I will reply, “I’ve been waiting for your call, let’s talk business!”

10. And what about radio? It is in the midst of an innovation crisis

The one thing that can protect a brand from competition is being worth consuming in spite of that competition. It’s being not just different but meaningfully different. It’s being ground zero for, as I put it, “big, unique, meaningful, star-filled things everywhere.”

This is more than a tagline. It’s a strategy to innovate and experiment and generate buzz and tune-in no matter what Apple or Google or Spotify do. And it’s something that too many (but certainly not all) radio brands do little or not at all.

To resist innovation, to avoid risks, to not offer a new generation of consumers something fresh to experience, to continue to place bets on stars of generations past, to turn our backs on what’s next because it’s less safe than what was – all of this is a recipe for disaster and a guarantee that your radio brand will fade into obscurity, one listener at a time.

Howard Stern continues to generate fresh, original content, but when his channel runs a best-of episode from 1989 with guests who have long since died, how is this any more compelling or buzz-worthy than enduring an old episode of Family Ties?

I had a high-level broadcaster complain to me that if he re-ran a year-old Sean Hannity show he doesn’t think any listener would even notice. Not because listeners are not paying attention, but because the show has remained fundamentally unchanged over the years. How’s that for innovation?

Again consider Starbucks: On their menu today is the Refresher, a drink which didn’t exist two years ago. And what about Starbucks’ new “handcrafted sodas”drinks that didn’t exist six weeks ago!

Thanks to the introduction of new programming like Breaking Bad and the Walking Dead, AMC is now a top ten cable TV network, rather than the also-ran network that carries “TV for movie people” or the incarnation that gave the network its letters: “American Movie Classics.” And it’s all because of their focus on innovation and risk-taking.

Compare your own brand’s innovations with the innovations of Starbucks or AMC. How do they stack up?

Are you working every day to be a top brand in the broadly defined category which now includes Pandora and Spotify and the rest? Or are you going on your fourth decade of being “American Movie Classics”?

Attention and interest will follow what’s new, what’s fresh, what’s compelling – particularly for younger audiences hungry for content that is all their own and not born of their parents or grandparents.

11. So here’s the bottom line…

Radio is not screwed because of the new auto dashboard, but it could be.

We have a window to make a difference that lasts.

Or we will watch our advantages wither away.

I see broadcasters gather to pointlessly discuss the dashboard and their place on it. I hear pithy cliches like “we have to be where consumers are.” Duh. That’s strategy strictly from the broadcaster’s point of view, not the consumers’.

I would argue the challenge is not simply to be where consumers are, but to be what consumers dream.

Bigger, bolder, better than ever. Tuned to new generations for new reasons. Every bit as important to my life, maybe more so, than Spotify or Pandora or the rest.

That’s how you earn prime shelf space on the new auto dashboard. That’s what makes consumers seek you out, even if you’re behind a pay wall.

Be worth hearing. Be worth seeking out.

Be what I dream.

* = required field
  • http://jeff-schmidt.com Jeff Schmidt

    Love this – excellent expansion of your Hivio talk, Mark.

    Rather than invest and innovate on the product side – I fully expect Big Radio will follow your advice from a bit ago – pay for premium placement on these new platforms.

    Nothing has been more powerful in cementing Radio’s resilience than the fact that when each of those 247 Million cars are started twice each day – a Radio magically comes on. Investing whatever it takes to preserve that advantage will likely be a priority over investing in content designed to connect in an “Infinite Dial” universe. Hope I’m wrong.

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

    Yes, I did suggest that some time ago, Jeff!

    And that, I presume, is exactly what CC is doing with iHeartRadio – but I could easily be wrong.
    That said, this is prime real estate – Android Auto and CarPlay, and I would question whether very much of it is for sale at ANY price.
    Thanks for the note!

  • Ken Dardis

    Mark:

    Two quick points on an excellent article.

    1) There is not a big difference in years between what you describe and the transition from horse to vehicle.

    2) You only briefly touched on this due to length constraint, but go to http://www.radioadvertisers.com – it redirects to Apple’s TuneIn Radio.

    Broadcasters speak of how many people radio reaches. New competition tell advertisers how to get the best ROI. I am not aware of a single radio industry web site that instructs advertisers “how” to best use radio for maximizing a campaign.

    Besides “Radio.com,” which CBS Radio picked up with its purchase of CNET, the radio industry owns no domains which speak to advertisers – such as “radio(fill_in_the_blank).com.”

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

    That domain resolves to http://radioadvertising.com before further resolving to Apple. How is it that they own these domains? They must have bought them from squatters!
    At the very least is shows commitment. And what industry do you think a company is in when it seeks to monetize a site called “radioadvertising.com”?
    Now let me bring my horse around for a gallop across the countryside.

    Thanks Ken. Glad you liked the piece. I spent a bunch of time on this one.

  • http://profiles.google.com/dave.martin Dave Martin

    Bravos, Mark. Good post. All the makings of another back to the future moment – VCRs flashing 12:00.

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

    Hey thanks Dave!

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  • Everett

    TeeVee transitioned to digital FIVE whole years ago. Radio should probably just wait another 45-90 years to do it. Y’know, because stuff.

  • Jim Stewart

    I’m just a radio listener and I just wanted to post my two cents. Radio has always
    been about content. I’m old enough to remember music on AM and while
    many stations played the same hits I would seek out WLS after sunset
    because WLS had the best jocks, ie content. That is content that is sadly lacking in today’s automated, voice-tracked formats. Radio seemingly wants to be
    like Pandora only with a 16 minute commercial load. No thank you.

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

    Thanks for the comment!

    Mark Ramsey

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  • johnofsparta

    broadcast radio has already lost my son’s generation,
    just as Major League Baseball has lost his as well.
    three examples of each……
    radio: 33 minutes of programming during an hour slot.
    MLB: starting games at 8:35PMEDT on a school night.
    radio: faceless jocks. he’s never seen anyone anywhere.
    MLB: what active MLB player has a National ad contract?
    radio: essentially….you have 20 seconds to be good or be gone.
    MLB: there is an average of 27 seconds between pitches.

    in my opinion, radio should operate in 5-second blocks.
    a spot that lasts more than 15 seconds is dead air.

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  • seandemery

    New habits.
    I do enjoy your writing and taking the time to explain the ins and outs but you could save time by simply writing, “new habits” and nothing more. Anybody want to buy a transmitter and tower? Only if you’re a scrap metal dealer.
    Whatever is easiest, shiny and fills the void where silence and actually thinking about one’s decrepit life wins. The end.
    New habits.
    From this point on and by the time you’ve purchased your next two new cars, that should pretty well do it.
    Now let’s talk Google car and the demise of audio only programming (of any kind) all together! LOL

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

    Google car is far enough in the future that it doesn’t worry me, Sean!
    By that time we should be able to transport ourselves without a lowly car!
    Thanks for the dead-on comments!

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