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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