In-Car Apps Will Threaten Conventional Radio

Most ad-supported music stations aren’t worth listening to. I say most — not all. So the advent of smartphone apps in the car (and specifically Pandora) may turn out to have a profound impact on what only two years ago was called “terrestrial radio” to distinguish it from its supposed “killer,” satellite radio.

Satellite was supposed to be the undoing of conventional or “terrestrial” radio but that hasn’t happened for a number of reasons. The real undoing (or partial undoing more likely) could come at the hands of smartphone apps that can be accessed in the car. A piece last week in the NY Times captures the movement toward integrating the smartphone into the car:

The most prevalent trend this season involves smartphones and apps. For example, Carbonga, a $4.99 iPhone program, works with a $99 cable to connect the phone to a car’s diagnostics port (the OBD II plug under the dash that mechanics use). Plug in the phone, and Carbonga will tell you why the check engine light came on and why it is or is not a problem.

More important, automakers themselves have discovered the potential of smartphone-based apps. Mazda offers a roadside assistance app, for example, with the free assistance provided under the warranty period (36 months or 36,000 miles). The program automatically tells the tow truck where you are and estimates when help will arrive.

The car is becoming a rolling hotspot and Internet access point. The convergence of sophisticated in-dash technology and smartphones will give more and more people access to alternative sources of content in their cars vs. commercial radio. This has been true for a long time in a sense with iPods or DVD players and “tape decks” before them. So what’s different now?

I can’t give you quantitative “empirical support” for this assertion but things are different now and the popularity of apps like Pandora, as well as the growing capacity to access it cross platform, will make the “drive time” radio near future different than the immediate past.

Earlier this year Pandora and Ford announced a deal. According to the NY Times (March, 2010):

In January, Pandora announced a deal with Ford to include Pandora in its voice-activated Sync system, so drivers will be able to say, “Launch my Lady Gaga station” to play their personalized station based on the music of that performer. Consumer electronics companies like Samsung, Vizio and Sonos are also integrating Pandora into their Blu-ray players, TVs and music systems.

The open questions are the following:

  • How widely deployed will the new in-dash systems be and how expensive? (Ford is making a big bet here to differentiate so my guess is pretty standard and mainstream)
  • How deeply penetrated will smartphones be? (We’re closing in on 50 million smartphones among US adults; that number will likely double in several years)

For comparison purposes, Clear Channel Radio claims 110 million weekly listeners in the US.

There are several contingencies that may delay or prevent what I’m projecting here (the decline of traditional radio at the hands of the smartphone). Satellite radio has largely flopped as a consumer experience and so perhaps Internet radio won’t take over. But I think Pandora in particular is in a pretty strong position. But many other smartphone apps will undoubtedly succeed in the car too.

Traditional broadcasters are trying to develop cross-platform strategies where radio in the car is just one platform or access point. (They’re also trying to force FM tuners into smartphones, but that won’t matter ultimately.) Broadcasters’ models will have to change dramatically before they can effectively compete with the likes of Pandora, however. If I have a credible alternative I’m simply not going to listen to commercial radio in the car. And if I have a personalized alternative that I can access almost anywhere I’m more likely to turn to that than third party programmed content that I can’t control.

It’s a version of how on-demand and DVRs changed TV. Talk and public radio are in a different category and not quite as susceptible to substitution. Regardless, seven to 10 years from today the radio landscape will look radically different. In the interim the audience for traditional commercial radio will likely witness the same declines that print newspapers have seen.

Do you agree with me or do you think radio will survive the arrival of the smartphone in the car or smartphone apps in-dash?

You can follow any responses to this entry through the comments feed.

2 Responses to “In-Car Apps Will Threaten Conventional Radio”

  1. Rocky says at

    I love the idea and use my phone in the car for similar purposes. NPR pledge drive? No problem, just stream Marketplace from marketplace,org.

    A big challenge is availability of spectrum. Terrestrial and satellite radio are spectrum efficient. If I listen to a radio station, it doesn’t take away from anyone else.

    Every listener to Pandora is competing with every other listener as well as everyone checking email, playing games, watching video, etc. There just isn’t enough spectrum for everyone in a car to listen during drive time. Bandwidth caps are how the carriers are addressing this. But that still doesn’t solve the problem of peaks — drive time would have the highest demand. 

    Qualcomm tried to solve this on the video side with Flo TV. (Which bombed.) 

    If the record labels would let Pandora cache, it’s possible that you could generate 60 minutes of music that would be stored locally when you’re connected to Wifi. 

  2. Greg Sterling says at

    Fair points re the spectrum. I wasn’t thinking technical limitations and network demand. Maybe “white spaces” to the rescue? But the spectrum issues could “save” conventional radio.

Leave a Reply