As a radio broadcaster with over four decades under my belt, it might be hard to imagine that I'd be excited about Apple radio. But as a radio junkie, I love to see anything new in radio. I'm also an Apple junkie, and they usually find a new twist on old technologies and make them better. Will that happen with iRadio? It might. Do I think Apple radio will steal radio listeners and destroy our deep bond with radio listeners? It's hard to say till I see what they've come up with, but I don't think that's as big a concern for radio today as it is for those in Internet radio.
We don't know yet exactly what Apple will do. Apple's track record of doing things right means they may reinvent radio, just like they reinvented computers, smartphones, and music sales. And Apple has a giant advantage coming in, with a huge base of account holders and a few hundred million credit cards already on file. And -- with its deep relationship with labels and the clout that comes from iTunes -- Apple has the even bigger advantage of potentially overcoming the music royalties problem that plagues most of Internet radio. And if Apple negotiates licensing rates to its own advantage, that disadvantages everyone else's online radio business model. Apple also has some patents that may reveal unanticipated new forms of music delivery. We'll just have to wait and see.
But frankly, if anyone should be quaking in their boots, it should be Pandora and Spotify, not broadcast radio. Pandora's stock took a dive yesterday at the word that iRadio is imminent, which says to me that people don't believe Pandora can stack up against an Apple service, despite its current dominance in the online radio space.
In Internet years, Pandora is already old school (as is Apple). But unless the people at Pandora have some slick tricks up their sleeves and are ready to reinvent, they are in a vulnerable position. Pandora currently has 74 percent of all Internet radio listening, and tremendous distribution deals and adoption. But Apple has the potential to match that quickly, and the mighty Pandora could take a fall. (Can you say MySpace?)
At the moment, the iRadio threat appears to be more of a battle for the online radio and music space. Though radio broadcasters must consider that Apple may at any time invent a game-changer that will drive terrestrial radio listeners to iRadio, the soon-to-launch service is probably more about establishing a foothold in the Internet radio frontier -- which, frankly, radio should own by now.
Radio has the advantage of 95 percent of Americans' 15 hours a week of listening, an average of five radio receivers per household, and a radio in every car. That advantage should last a while -- but you should always be reinforcing your listener bond and never assume our way is the only way. Every iPhone and other smartphone can access digital audio entertainment today, and my guess is that every new car will have an in-dash Internet audio receiver by about 2015, and that Internet-enabled cars will make up the majority on the road by 2020. In the meantime, 68 percent of all Pandora listening is taking place on mobile phones, and the mobile market is booming. Your listeners don't need an in-dash unit to listen in their cars.
You need to be thinking like Silicon Valley and understand that ubiquity is what matters -- meaning you need to be everywhere audio can be found so your listeners don't replace their favorite station with something else because they can't find you on their smartphone, Internet audio device, or dashboard. That is why relationships with TuneIn and iHeart matter now.*
Internet radio is in about the same place FM was in 1980. It's not brand-new anymore, it's established, everyone is aware of it, and it's starting to get some tremendous traction, after starting with youth adoption and migrating to adults. We must not forget that it was 1985 when FM overtook AM in listening for the first time, something most broadcasters said would never happen. Internet radio adoption continues to be on the rise -- and remember, Internet radio in the dash has the ability to capture real listening information and other data, which is tremendously attractive to advertisers. Currently, 33 percent of Americans are using online radio every week (though that doesn't necessarily mean they are using it in lieu of broadcast radio).
Though I'm confident that radio broadcasters will hold on to their listener relationships over the short term, it's important that you not get overly confident, because it is that arrogance that destroys industries. The moment you assume you're untouchable is when you're most vulnerable. Radio broadcasters should assume someone will eventually figure out how to steal our audiences and advertisers, and we must never get comfortable or lazy. Radio broadcasters need to be on our "A" game at all times, looking for our vulnerabilities and willing to embrace new ideas even if they seem at first glance like they won't work. We should be the ones to reinvent radio and cannibalize ourselves. As radio managers, you should study online radio. You should know more about it than anyone.
I'm a radio junkie. New ideas are always welcome, so I'm excited to see what Apple comes up with because they usually surprise us. Meanwhile, steady as she goes.
*Note: The author is an adviser to and shareholder in TuneIn.