For this week’s edition of Programming To Win, Pat Welsh takes a look around at some of the latest technological trends surrounding radio. Welsh examines the music industry’s place currently in “connected” cars, streaming music models, mobile FM chips and YouTube.
By Pat Welsh, SVP Digital Content, Pollack Media Group
Periodically, I like to use this space to give an update of new trends, technologies and services that are having an effect on radio. Just a few months ago, I wrote about the latest in the Infinite Dial series presented by Edison Research and Arbitron. But things change quickly and new services and systems are emerging and maturing. These are the ones that I believe will provide terrestrial radio with its next wave of competition, opportunities, or both.
Connected Cars
Terrestrial radio still rules in cars. But even though barely a third of all people currently have connected cars, use of online radio is increasing rapidly in reach and time spent listening.
Most car companies offer some form of “connected car” feature, but the phrase refers to a hodge-podge of systems. Some are little more than docking stations for a smartphone; others are complex blue tooth-enabled systems or built-in dashboard systems that allow Internet streaming through your car’s entertainment system.
Despite the widespread availability of these systems, there are still a lot of bugs. A recent LA Times article talked about the fundamental problem: the product development cycle of cars, which moves at glacial speed compared to mobile technology. New mobile features don’t always play nice with car entertainment systems designed a few years ago.
Apple, among others, is developing its own in-car systems. First, they’ve just announced a feature of iOS 7 dubbed “Eyes Free Siri” (Excuse me as I wait for the snickering to die down some). This will permit drivers to give simple verbal commands to Siri while the vehicle is in motion. Any commands that would cause users to actually look at their phones would be ignored.
But Apple also just received a patent for a more advanced and comprehensive dashboard control system. Apple doesn’t just want to sell you a mobile device; it wants to control your car’s entertainment system. The important thing is that, once the bugs are worked out, radio will have more formidable digital competitors on its hands.
Access Music Models
Access is the word that the music industry uses for streaming services (as opposed to owning music via downloads or CDs). Most of these are subscriptions services, but some are also ad-supported. The music business sees access as the wave of the future, and two new big-name services will launch later this year.
The most talked about is Apple’s iTunes Radio, expected in the fall. Unlike Spotify, which gives users on-demand access to virtually any song, iTunes Radio will be a Pandora-like radio experience with limited on-demand features. The new service will have the advantage of seamless integration with the iTunes store, giving the music companies the best of both worlds: access and ownership. iTunes Radio will also likely tap into a user’s existing music library and use that information to make new music recommendations, threatening terrestrial radio’s leadership in music discovery.
The other new service is “Daisy,” the streaming service from Beats Electronics. Daisy will be built on the Mog platform (which Beats acquired a year ago). Think of Daisy as more of a Spotify, not a Pandora. But Beats is talking about supplying more user information to the music community, which is an enticing benefit to artists, managers and labels, if not to some privacy advocates.
On the distribution side, Beats is also reported to be aggressively courting mobile carriers to see about bundling the music service with phone and data plans. Beats gets better distribution under this scenario; the carrier gets to provide more value to customers, which they hope will reduce churn.
FM in Mobile Phones
This is a potential technological bright spot for terrestrial radio, but the jury’s still out on how much it’ll mean in the long run. Sprint has made plans to activate FM in 30 million phones (but only on Android and Windows systems only, so far). While that’s a big number, Sprint is still a distant 3rd in mobile market share in the US.
Another potential problem is that, while it seems like a good deal for consumers, how much is it worth to them? Will it tip the scales toward Sprint over bigger carriers? If Sprint can get some traction out of FM in mobile, it’s likely that other carriers will add it to, just to neutralize Sprint’s advantage.
On the other hand, AT&T just concluded a deal to acquire Leap Wireless. The primary reason was to get access to more wireless spectrum, but Leap also owns Muve Music, a subscription music service with about 1.5 million subscribers. Leap had announced plans to spin off Muve as a separate company – to make it subscriber agnostic – but AT&T hasn’t given any indication of whether it will follow through on the spin-off plans or not. AT&T may choose not to compete with itself. Owning its own music service may be enough to keep AT&T from entering into any other agreements, including adding FM to existing handsets.
YouTube Channels
YouTube is already the biggest on-demand music service through its deals with Vevo. But Google’s video service is expanding into unique, longer-form video content too, making it a lot more than just a home for cute kids and kittens. YouTube’s big push is into subscription video channels, including subsidizing some of the content creators.
Different companies (e.g. Maker Studios, Machinima, IGN, etc.) are producing video channels that attract thousands of subscribers and millions of monthly users. Now YouTube’s channel strategy includes some pay channels.
Google has even created a new state-of-the-art production facility in Los Angeles, which some producers are able to use for free. Besides the studio facilities, Google is offering expertise, training and producer-in-residence programs.
YouTube is betting on the channel strategy because it sees billions in ad revenue in the future. Much of what they produce is designed for mobile consumption, creating another on-the-go competitor for radio, one that has especially strong appeal to the youngest users.
What does this have to do with radio? One of radio’s core strengths is its emphasis on personalities. YouTube is making big investments in new talent and taking chances on people with new ideas, two of the vital things that radio has always been famous for. What are we doing to ensure a deep bench?
Each of these 4 technologies has the potential to transform our business. Terrestrial radio – the world’s last analog entertainment medium – has remained remarkably resilient through the digital revolution. We need to make sure we’re doing enough to protect our core strengths and make new technologies reinforce radio’s advantages.
Pat Welsh, Senior Vice President/Digital Content, Pollack Media Group, can be reached at 310 459-8556, fax: 310-454-5046, or at pat@pollackmedia.com
