Until technology catches up, ‘Keep the Radio On’

Automakers and analysts alike admit uncertainty about the form and function of car radios even a few years from now but they concur that it will still be a key component.

After all, cars and radios have been inextricably linked and the relationship romanticised since the first Motorola radio (short for motorised Victrola) was installed in a Studebaker back in 1930. The key accessory added ambience or some company on long or late-night drives. The radio has come a long ways over the past 85 years in both form and function.

AM radio gave way to FM’s dominance, especially for popular music, while the 8-track, cassette, compact disc and, ultimately, MP3s allowed for customising the cockpit. Satellite literally opened up a new spectrum on the dial while streaming expanded those possibilities.

And in an age of ego-casting where people can program days of music on their phone or device of choice and play it back in the car, it is somewhat surprising that Nielsen finds radio is still the number one source of music discovery in the US.

Turn Up the Radio

The company’s Music 360 2015 report, Nielsen’s fourth annual study of US music listeners, found that 61% of respondents credit terrestrial broadcasters or satellite radio for music discovery. That number actually rose by 7% from the 2014 report.

But the future of radio itself is uncertain given the dominance of streaming – that same Nielsen report showed Americans streamed 164Bn on-demand tracks on audio and video platforms in 2014, up from 106Bn the prior year. And the ubiquity of services such as Pandora built into the console or through a device has created a consumer agnostic about the source of entertainment.

“It doesn’t matter where it’s coming from,” asserts Anna Buettner, senior analyst with IHS Automotive, adding, “we’ve done some surveys on app integration, you don’t have to look at what kind of app it is.”

Buettner says there is one thing the consumer does care about: “[The entertainment] has to be intuitive and seamless – the playlist on my smartphone in an ideal world shows up in the car. If it doesn’t, that’s what consumers get frustrated with.”

And she says there are other regional differences. “In Europe it’s pricing. People are not as willing to pay an additional fee on top of a cell phone data package so if you add additional costs, they would expect them to be handled by a carmaker or service provider. There’s no interest in paying more if you’re already paying for Apple Music or Pandora.”

Carmakers say they’ve taken notice of high-profile surveys, including one released by Nielsen-SBD at the TU-Automotive Detroit conference, that indicate customers have widely ignored tech features and designers are trying to take that into consideration when reimagining the radio.

“Before we put Bluetooth or Blu-ray into a car because we could,” admits Matt Jones, head of future infotainment for Jaguar Land Rover, adding, “now we’re looking at what does the driver or passenger want to do. We’re focusing on what the customer needs or wants to do and then finding the right technology. You end up with a different system that way.”

As an example, Jones says: “People say, ‘I want Bluetooth in the car’. But what you really want to do is make a safe call without putting a cable in the car… the technology is not the feature, the ability to use the phone is the feature. Bluetooth is the enabling technology that makes that happen.”

Custom Job

Clearly complete consumer customisation is the destination carmakers are trying to reach.

And the ongoing battle for the console is heating up between manufacturers and software makers trying to create that seamless transition from your digital audio world to your digital auto world. “Before everything was BMW-ish, there was a lot of money going into HMI. Now if you see a screenshot of iTunes in the car, Apple is proud of the interface but carmakers are feeling like they are losing their identity. They don’t want you to get into a BMW and say, ‘Oh, this is iTunes’. Customisation is in the interest of the manufacturers.”

She notes that Volkswagen Group is using a modular approach that uses the same hardware across nameplates with software upgrading the interface so that Audi drivers have a different experience than piloting a Skoda.

Buettner says customisation is going beyond comfort and feel. “It started with the vehicle knowing who is driving and remembering the seats and radio stations. That will expand to targeted advertising. We don’t see a lot now because we have to keep distraction in mind. But coupons, especially when you’re parked, and maybe a Groupon or something pops up, that is something that will happen.”

Carmakers don’t like to tip their hands until the plans are in action. Jones, from Jaguar Land Rover, notes: “We’re already seeing slight revenue streams to North American manufacturers from Sirius (Satellite Radio), and to a lesser extent from streaming radio. I see that stream may apply to other manufacturers. We’re not looking at the moment, but it’s a possibility in the future.”

Peder Fast, senior manager, connected products and services for Volvo, said the automaker “does not have any current plans for advertising or engagement through this channel”.

But Fast adds the company does see a “clear increase in internet radio and other internet-based services…so digital radio is an important part of our strategy.”

He also says digital radio’s technology makes it less than optimal. “It’s difficult to deal with different and changing standards like HD-Radio, DAB, DAB+, DMG, etc. It’s also a challenge to update used cars and it will be particularly difficult to deal with this situation if FM radio should stop broadcasting.”

“Those Days Are Gone Forever…” – Don Henley

Buettner says there are opportunities for Sirius and others but they must stand out for consumers to pay up for them. “Radio isn’t going to cut it anymore. You have to bring other services into the car. You have to be a differentiator, it has to be different from Apple’s iPhone, it must be embedded, or be more reliable.”

And there’s the rub for streaming services, which has left a window of opportunity for satellite and terrestrial broadcasters, at least until there’s better mobile coverage.

“We’re a long way from having 100% data service everywhere,” Jaguar Land Rover’s Jones says: “You can’t make a call in some places on the way from LA to Las Vegas, so there’s no chance you have streaming. Radio does work.”


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