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How The Car Industry Has Driven Audio Consumption Trends

According to the New York Times, 2015 will be the biggest new car sales year in the history of America. The average American is driving an 11-year-old car, and those will need to be replaced. Car companies are counting on this boom, which some predict could have a whopping 60 percent of Americans buying new cars that year.

Will this new-car boom affect the radio broadcasting industry? One can assume it will impact car dealer spending as they compete to be chosen as the place to purchase a new car. But how does it affect radio listening?

Enter The Connected Car
If you haven't yet heard the term "the connected car," it's all about your car being connected to the Internet and to your smartphone. Every new car today has connected-car strategies, and the level of sophisticated integration for 2015 new car releases is way beyond what you'll see in most cars today. If you read my recent missive about the Tesla, you'll get a better idea of what to expect. Your car becomes a portal to all your entertainment preferences, all the apps on your tablet or phone, and connectivity to everything you need as you drive, including much more sophisticated integration of weather, traffic, and GPS.  

Audiotainment: The New Buzz
The new buzzword in Detroit is "audiotainment," the part of the dash radio currently dominates. In most cars today, the audiotainment is AM, FM, maybe SiriusXM, and your own music source, either a CD player or a link to your phone or MP3 player (unless you're driving a fairly late model). New cars are all about audiotainment, and Detroit has discovered that the audio choices in a car, and how seamlessly they can be integrated into the driver's life, can be a major factor in a consumer's decision to buy one brand over another. Automakers have hired several thousand high-tech people, because the battle for the car comes down to its tech features, many of which are dedicated to audiotainment. Every car company has a different theory about which approach will be best embraced, and they are spending deeply to make sure you pick their system. If you have not seen this promotional video for Cadillac's CUE, watch it and see if you can count how many times you see AM or FM and how many times you see iHeart or Pandora.

 

Audio Has A Historic Role In The Car
Audio has mattered in the car since 1932, when Blaupunkt installed the first radio in a Studebaker. Cosby made the first factory-fitted car radio in 1933. In the 1950s Ford came out with a radio called the Town and Country that had a switch for listening in town or at a distance, in the country -- it actually moved a rotor on the tuner to let it receive distant AM signals. In 1955 Chrysler was the first with an all-transistor radio (a $150 option), and in 1956 Chrysler introduced an in-car record player that played 16 2/3 rpm discs known as "Highway Hi-Fi." Later in 1959, the automaker introduced an in-car 45 rpm record player.

In the 1960s, the 4-track tape was introduced, and later the 8-track was launched, to compete with the 1964 Phillips launch of the Compact Cassette. The first car in which FM was a standard feature was the 1972 Lincoln Continental, which also had an in-dash 8-track.

Most car buyers wanting FM had to use an Audiovox FM converter, a receiver that connected and played through the AM radio -- early FM rock stations gave them away as promotional items. It was not until about 1983, however, that the car market was 100 percent saturated with FM radios (new and used car market) -- and FM listening shares surpassed AM shares for the first time in 1985. Most of the first new car models that had new XM or Sirius receivers built in are now in the used-car market.

 

Unintended Consequences
Until recently, I never really stopped to think about how the decisions made by Detroit impact the history of the radio broadcasting industry. Yet when you read about the history of radio in the car, you start to understand that the car companies have always used audio devices as a selling point or point of differentiation. Ultimately, the car companies are a major distributor of radios, and they are seeking new and exciting things to talk about. Their decisions today will affect the future of the radio broadcasting business.

What do they say about history? Yes, you need to understand it so you don't repeat it. As you know, I wrote a piece last spring after hearing auto company representatives talk about a possible world of cars without AM/FM receivers, cars that could get radio only over the Internet. Our industry jumped on the issue, and Radio Ink was able to get at least two major brands to issue statements that AM/FM receivers will remain in their cars. I was pleased to see the new Tesla will be home to AM and FM as well. Yet Detroit has a mind of its own, and automakers are going to do what they think will sell the most cars. They want to provide consumers what they want, and they hope to be ahead of their wishes to offer cool things they didn't know they want or could get in their car. As I mentioned in an earlier note, the car is the new home to AM, FM, SiriusXM, plus TuneIn, iHeart, Pandora, Spotify, and pretty much any other audiotainment app you prefer.

 

Your Role In Radio History

You could be the ostrich with your head buried in denial, thinking you can prevent things from changing by talking to your local car dealer and telling them how much consumers embrace radio so they feed it back to Detroit. And no, I don't think AM and FM will disappear from the dash anytime soon. But most of the "car people" we've encountered don't have the same passion you and I have for broadcast radio, and some are not convinced by the arguments about the benefits of radio in an emergency, the reach of a signal when Internet is down, or the ability to listen to radio when there is no wireless connection available. Most just want cool stuff consumers will embrace, and many feel that if they can't hear radio for part of their drive they'll just listen to their iTunes playlists. Of course, this is where you say that consumers embrace radio, and recite all the statistics. But does Detroit believe it? This is where you come in.

 

You live and breathe radio. You know your audiences, how they respond, how they listen, and the impact radio has on their lives. You know their statistics. You are on fire about radio. Detroit is not. Maybe you can help change that. Not only should you consider attending our DASH conference in Detroit so you can hear about all the cool things that are about to happen to car audio, but you can hear how car companies are going to address audiotainment, and you can hear about their studies of consumers and how they embrace radio. Chances are the research expenditures by the big three car companies exceeds the total spend on research for the entire radio industry. You may hear things you don't like. But you need to hear it.

 

The most important reason radio needs a show of strength is to have enough strong radio soldiers there to network and have one-on-one meetings with automotive executives so they can hear the power of your story. Car dealers from around the country are expected to attend, and major auto brand decisionmakers, from the "C-suite" to those making technical decisions about the dashboard. The only question is whether or not you will take a day and a half (two days out of the office) to travel to a Detroit airport hotel (you never have to leave the airport) to play an important role in the future direction of audiotainment.

 

Open To Change

During the process of visiting with automotive executives and carrying on a dialogue about radio's role in the dash, I have found them to be open to fresh ideas and suggestions. One big surprise, though, is that many believe the press clippings about high-tech online audio trends, but are not seeing the hard facts about how consumers continue to embrace broadcast radio. These executives only want to sell cars, and if they sense for a moment that the loss of broadcast receivers in the car will impact consumer choice, they will choose to continue with AM and FM. Your personal presence will make a difference, whether you're a market manager, a station owner, a group executive, or someone playing a role in another part of radio.

 

Serving A Purpose

Following the news that came out of our Convergence conference last spring I could not sleep. I was tossing and turning about the news I'd heard and its impact on our business. Though it turned out that we cemented commitment to radio from major car brands as a result of that dialogue and radio's future continues to look bright on the car dash, I also know that decisions are being made now, and some are being made in a vacuum. I could not stand by and just write about it, I felt we needed to serve a bigger purpose by inserting radio into the conversation to create a dialogue between radio and the automotive world. The result was creating the DASH audiotainment conference, partnering with Jacobs Media and Shuman Consulting Group, both deeply involved in the audiotainment world in the car.

Though the connected car will be a part of every conference dialogue at every possible event in our industry for the foreseeable future, this conference has attracted commitment from the automotive industry for a true industry-to-industry dialogue. I hope you'll attend.

DASH Conference
October 23-24
Westin Detroit Metropolitan Airport
www.dashconference.com.  

 

How Tesla Changes Radio

Elon Musk, the founder of Tesla, is the new Steve Jobs. Like Jobs, he is driven to reinvent the way things are done, with the perspective of an industry outsider. Musk is redefining cool, and his Tesla is a very hot brand and currently the cool car on the market. They can't keep them in stock. Some even wish Musk were running Apple, which some feel is losing its shine, becoming more like Microsoft as it changes how it operates and treats its customers -- and Apple's lame new television campaign shows nothing of its former cutting edge.

I'm always intrigued with innovators, and Tesla is currently high on my list. I recently had dinner with one of the company's top executives to learn more about why Tesla is different, and how they think differently. I learned that Musk, like Jobs, is obsessed with quality even when it cannot be seen, is driven to change the world, and expects exceptional, innovative performance from his key people.
Innovators always meet with resistance, and I would imagine lots of traditional car makers in Detroit are explaining all the reasons Tesla can't succeed and all the things Musk is doing wrong. Yet because Musk does not come from the automotive industry, he's finding ways to do things those within the industry were sure couldn't be done.

I assumed that Tesla had some innovations for the radio dash as well -- things that may lead others to emulate its direction. So last week I visited Tesla to learn more about its digital dashboard, radio and audio.  Here's what I learned.

The Tesla center console dash media player is like a giant, 17-inch iPad. AM and FM radio comes standard with the car -- which is great news -- and the touchscreen allows you to scroll the dial with the touch of a finger, much like turning pages on an iPad. Of course, you can also set your favorites. The Internet radio interface is a game-changer, allowing you to search by artist and find all the stations playing that artist, including Internet-only stations.

There's voice search as well: A simple "Find a station playing Lady Gaga" will bring the listener to any station in the world playing her music. And with just a touch, you can find stations from around the world and set them as your favorites. I scrolled through and found NRJ, my favorite station in Paris. Of course Pandora, iHeart, and SiriusXM are also available, giving consumers lots of options.

For years there has been an argument that, considering road and engine noise, it's not necessary for cars to have really great audio. But in the Tesla, you'll instantly notice a difference: With little or no engine noise, you can fully enjoy the stellar sound system. If electric vehicles continue to catch on, sound quality in the car will be increasingly important.

So why does Tesla matter to radio? After all, the car is very expensive, and unlikely to appeal to the average car buyer who is listening to your radio station. It matters because Tesla's innovative ideas will be copied by others. It's also important because the way consumers use audio in an automotive environment is changing quickly. The reality is that, in our study of automotive dashboards as they relate to radio, we found that the way audio and radio are presented has changed on almost all new car models. Though everyone is approaching audio differently, almost all car companies have changed the listening experience. As Internet radio is becoming universally available in the car, radio broadcasters no longer have the exclusive "radio" franchise on the dash.

Though the fear of losing AM/FM's position on the dash has been lessened by assurances from some automakers that they plan to keep it around, we must be very aware of how the listening environment has changed. Unless you've driven in one of these vehicles with these new audio entertainment options, you cannot possibly relate to the challenges they bring for those of us within the industry. Imagine the impact of voice search for stations or songs. Imagine how having all the stations in the world available at the driver's whim can impact how people listen to your station.

Most in our industry are responding like any industry that's challenged: defending the status quo and finding all the reasons consumers won't change. And it might even be true, in radio's case. But how likely is that? The questions all radio broadcasters need to be asking themselves now is how they can develop listener loyalty and cement their brands so deeply that listeners will seek out their favorite stations even when they have a choice of 75,000 stations from all around the world. Though you'll still be available on the local AM FM dial, you need to assume people embracing online radio may only seek out stations in an online environment.

I hate to admit it, but since moving to Austin four years ago, I'm not sure I can remember the names or frequencies of more than three AM or FM stations. (And I'm a radio person.) I have come to rely on my scan button until I find something interesting. Though I have a couple of favorites, my five presets are not filled. What matters most to me as a listener is finding something I love, something entertaining, something that scratches my itch. On the TuneIn app on my phone and iPad, presets are few -- stations I grew up listening to in my hometown, stations I've found around the world that I like, and a couple of local stations. All the more reason branding and station loyalty are critical.

If you're operating a station, I encourage you to go sit in a Tesla and experience AM/FM radio in the Tesla's new media center. I encourage you to visit car dealers and ask to see all the latest ways the different car companies are reinventing in-car audio. If you've not seen it, how can your station properly reflect how consumers are using their cars? Every GM and programmer needs to deeply understand the new in-car dash, whether it's from Tesla, Ford, GM, or other automakers. Every one of them is approaching audio differently. Each needs to be seen and understood.

Though Tesla will remain just a dream car for most, its innovations will be adopted by others. The radio experience in a Tesla is one of the best I've seen yet, and my visit to the company was an eye-opener. Everyone running radio stations today needs to study the way the car dash has changed in order to find a way to continue radio's dominance in the car. If the 50 percent of listening that takes place in the car gets divided up among other entertainment sources, your job will get a lot more difficult. By understanding it now, you can still find ways to keep your listeners engaged and seeking out your stations.

Eric Rhoads

PS: In 25-plus years of writing at Radio Ink, no subject spread more widely or received more response than a recent editorial about the future of radio and its presence on the automotive dash. It cut deeply and resulted in statements assuring radio's future in the dash from major automotive companies, had radio companies concerned, and had local and national advertisers wanting to learn more. The considerable response made me even more certain that the automotive dash is critical to everyone involved. It's for that reason that Radio Ink has partnered with Jacobs Media and with Shuman Consulting Group to create the very first event designed to get the automotive and radio industries in a dialogue to understand how we can be working together, and to help radio understand what car companies are planning and thinking.

We may look back on this event as a major milestone for both industries. People are attending from most major car companies, from Internet radio, digital audio apps, radio groups, radio stations, advertising agencies, and even car dealers. This is an area important to them all. I invite and encourage you to attend on October 23-24 in Detroit. It's a day and a half that may help you reinvent the way you do business and create and deepen the relationships between audio, radio, advertising, and the car companies. To learn more, visit www.dashconference.com.