Friday, May 27, 2011

The Future of Radio & the Web

Automobiles have been mobile radios for decades.

More radio listening occurs in our vehicles than any other place.

We are a captive audience.

Tape players, CD players, MP players... none have made the car radio obsolete.

But now, in 2011 there are several new vehciles that offer the internet as a listening option.

The changes will take years as explained in the following interview:

Online Radio's Big Frontier: The Automobile

Study Finds That 14 Percent of Listeners Already Stream

People have been streaming radio on their computers for years, with sites such as Pandora, LastFM, AOL Radio and more drawing millions of subscribers for hundreds of stations. The next frontier for streaming radio is in cars, and in fact it's a frontier that a surprising number of people have already traversed.

A new study from knowDigital, a Lafayette Hill, Pa.-based digital media research firm, finds that 14 percent of Americans listen to streaming radio in their cars on a regular basis. What's interesting about the study is that it also concludes that streaming radio actually does not constitute a threat to traditional radio in either the short or long term. These early adopters are heavy consumers of audio media, and they listen to terrestrial stations as well as streaming ones. Also of note: In-car streamers aren't necessarily heading for Pandora when they connect. Many are using their cell phones to plug into the Internet and stream, say, their hometown radio stations, and they're doing so even when they're many miles away from home.

Sam Milkman, president at knowDigital, talks to
Media Life about the challenges to in-car radio streaming, who these early adopters are, and what this study means to media buyers and planners.

What did you find most interesting or most surprising about this study?

I guess that people are already doing this. People are already streaming in their car and the future is now.

Even though we had seen it before, it's the level at which they're doing it. Even though there are obstacles, there's really a halo over this activity, and they forgive the fact that you have to go through some hoops to get it done.

What's the most important thing media buyers and planners can take from it?

The other interesting point is that despite an endless number of choices online, when asked to program a new digital dashboard with 10 pre-sets, most streamers could only think of four or five sources they wanted to program. That includes their phone, one or two FM radio stations, their digital library and perhaps one other source.

If media planners and buyers want to find a mass audience they will need to continue to focus on the big brands in the radio space.

I'm wondering whether there's any evidence that they were using streaming to avoid commercials. Some of that is going on, but it's clear to these consumers that there are commercials in the stream.

What are the perceived difficulties to in-car radio streaming, and how are in-car streamers working around them? What's the most common way to stream (smartphone, USB port, etc.)?

First there's the connection. They're plugging [their phone] into a USB port on their dashboard, or they have a fancier Bluetooth or some accessory that is transmitting a signal to the FM receiver.

The problem then is to make [channel] choices requires that they fiddle with their telephone and use the phone's battery and data plan. They don't like that this phone is in a cup holder or seat or that they're looking down to play with it and make changes. So they're not necessarily plugging in for a short trip, which suggests to us that if a solution was there they'd use it more often.

The smartphone, probably wired to the dashboard at this point, is the most common way to stream.

Is in-car streaming more or less popular than you expected? Why?

I think that it is more popular. We thought a smaller group was doing it, but we were surprised that a good number is doing it a least a few times during the week. It suggests 14 percent of Americans are streaming at least 5 minutes per week in the car.

What sort of characteristics do in-car streamers share, beyond presumably being early adopters? Do they listen to traditional or satellite radio as well, or mostly streaming?

They definitely listen to other forms of radio. They all reported starting their drives with FM radio. The study revealed a lot of reasons why they still turn to traditional radio. There's certainly a lot of reasons why they rely upon traditional broadcasters.

Some have satellite radio -- these are people who are interested in audio media in the car in general, or just audio media in general. So it didn't surprise us a lot had satellite radio.

Also, they're commuters, they spend more time than most people in the car. They're highly interested in audio of all kinds. And beyond that they probably are looking for something different, some variety and customization, all the characteristics that apply to streamers in general.

Are there cars that stream audio without connecting to a phone or other device?

What I got out of these sessions is people don't want the car to have its own Internet connection. They want the car to pick up their phone's Internet connection, and that'll be by Bluetooth or otherwise. That's in the near future. I guess the real challenge here is how many people are going to turn over their cars and buy new ones.

How does the quality of streaming compare to traditional radio? Will this be an issue for future adoption?

They think the quality is better, that's the funny part of the whole thing. They perceive the quality to be better, and they forgive the technical limitations. So if it cuts out or buffers, they understand how often that happens and they're not bothered by it.

How much of a short-term and long-term threat to terrestrial radio is in-car streaming radio?

I think the two are compatible. They see a value in over-the-air radio and they see a value in streaming. And they seem to use the two in tandem.

Certainly in that more crowded dashboard, someone will get elbowed out. But the funny thing is, a lot of the streaming was of radio signals, it wasn't like they were turning to another source. I think in the long term the two media will learn to live together.

Over-the-air begins to adopt some principles from streaming, and streaming will incorporate elements from over-the-air, and the two come together at some point.

How long until in-car streaming becomes mainstream? What percentage of the population does it now?

I think it has to do with the cycle of car purchasing. And it's probably two generations of cars because 35-year-olds have to buy the cars that have the capabilities, and then the 18-year-olds get the used cars. So it may be as far as 14 years off.

There are certainly car radios you can buy now that will bring your phone into the dashboard via Bluetooth. And there are certainly a number of aftermarket suppliers looking to create something more than bringing the phone to an unused FM position. They want to get to a place where you can control your phone with a dashboard and not worry about messing with the phone anymore.

What are the long-term challenges to in-car streaming radio?

You know, it's the car turnover rate, and also, does the population really want more out of radio? Are they happy with what's provided to them already? To that point there have always been other sources of audio in the car -- CDs, iPods, tapes, 8-track tapes, etc., and none of those things killed radio.

This may be more interesting because it actually is radio in some ways, but in the end I think broadcasters will collect themselves and focus and meet the challenge.

There's also data plan problems and capacity problems. I heard from some that said their data plan is limited and if they stream in the car they'll rack up charges, and they don't want to do that. And there's probably a whole host of capacity issues lurking if everyone started doing this.

(Source: Diego Vasquez, Media Life, 04/28/11)

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