09/29

The New Auto Dashboard Isn’t as Scary as Radio Thinks

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Every time there’s some new innovation out there which enhances the choice set available to consumers who want to hear audio entertainment or information, a chill runs up the spine of every broadcaster, because with such a large fraction of listening, radio seems to stand more to lose than to gain from the expansion of choice.

Without question, new choices squeeze existing options. Indeed, given the growing number of distractions available to consumers across every platform – audio, video, and more, it’s exceedingly unlikely that the pie of audio listening is actually growing so long as there remain only 24 hours in a day. That means every tradeoff comes at the expense of the core business in some established industry. The more ways I can entertain myself, the less I will listen to you.

But there’s a difference between erosion at the edges and a death spiral. And given the volume of radio listening that happens in cars and the growing complexity and options in the auto dashboard, it’s important to know what the future holds for radio: How bad will it be? Is the newfangled dashboard to radio what the horseless carriage was to the reliable horse and buggy?

On the surface, it seems when you give people new choices they tend to use them.

Except they don’t.

Not always, anyway. And maybe not even usually.

Take the supermarket shelf: Coke is still number one, despite what feel like millions of competitors, new and old. Meanwhile 70 – 80% of new food products fail.

So if you’re a Coke fan you’re probably still drinking Coke. If you’re a Nike fan you’re probably still wearing Nikes. If you’re a Corn Flakes fan you’re probably still eating Corn Flakes.

In the US, TV ad revenues will grow from 71.1 billion U.S. dollars in 2015 to 81 billion in 2019. Not too bad for an industry challenged with all-you-can-watch video on every front and every device.

What about music? For all the bounty delivered by Spotify and Pandora and Apple Music and the rest, the biggest stars most heard on the radio are still the biggest sellers. Do you think Taylor Swift fears choice? I don’t. In the first week of album sales for her latest, 1989, Taylor sold nearly 25% of all albums in the US. What, me worry?

About to start up a Cable News Channel? Do you think Fox News fears you? Don’t count on it. This will be the 14th year of Fox’s News Channel dominance.

Afraid you’re losing listening to podcasting? Probably, but how much, really? It seems to me that there’s more enthusiasm about podcasting from podcast makers than from consumers. According to data from Libsyn, a large podcast hosting company, the number of podcasts hosted on that platform almost doubled between 2012 and 2014. Yet, Edison Research estimates that the fraction of America listening to a podcast in a given month rose during that same period from 14 to 15%, or essentially not at all. Even in 2015 the number is 17% – nothing to sneeze at and modestly higher, but it appears that podcast production is growing much faster than podcast consumption as measured by reach.It appears that podcast production is growing much faster than podcast consumption Click To Tweet This means more shows chasing fewer ears, doesn’t it?

Certainly there will be erosion to radio listening as a result of new choices on the dashboard. But this will be erosion at the edges – erosion that impacts the weakest radio brands most and the strongest radio brands least. Isn’t the lesson to be a strong radio brand?

In the driving environment where distraction can be deadly, listeners will continue to embrace content which is “lean back,” varied, unpredictable, entertaining, informative, relevant, familiar, and easy to use. That’s radio. Faced with complexity and the “work” of learning, setting up, and operating new systems, listeners will fall back on their habits, tuned with years of button-punching practice.

Now I’m not arguing you should rest on your proverbial laurels and sleep easy, come what may. What I’m saying is that the presence of new choices does not necessarily predict the decline of existing players unless those players doom themselves.

And for those broadcasters who put content and consumers first – the ones who are determined to make their stations worth seeking out no matter what the dashboard looks like or how it functions – the sky remains the limit.

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  • Don Keith

    “For those broadcasters who put content and consumers first – the ones who are determined to make their stations worth seeking out no matter what the dashboard looks like or how it functions – the sky remains the limit.”

    Couldn’t agree more, Mark. But I’m afraid that is not most stations. I’m not so doom-and-gloom that I think over-the-air radio is going away anytime soon. But when you have had monster groups paying way too much for stations to fill out their allotment in markets, any erosion of numbers will eventually prove problematic as debt overcomes billing. One PPM toter who now spends her time on the mobile phone or listening to the Elvis channel on satellite on the morning commute instead of listening to the Mutt and Jeff in the Morning Show costs the station significant money. That will especially be true when so-called programmatic buying becomes the norm for agencies and the only thing that counts are the numbers–mostly rates and ratings–and not the quality or response of a station’s accumulated audience.

    There is hope. One local Ford dealership is running an ad for a position to make appointments to show new customers how to use that big digital screen in the middle of the dash.

    But if most stations continue to stream music and eschew innovation and creativity, that erosion at the edges will be a massive landslide. And it could take some great radio stations down with it.