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The decline of radio(s)

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FreeImages.com/Griszka Niewiadomski

Radio listening has kept its reach during this time of digital disruption. As measured and documented by Nielsen, broadcast radio touches over 90% of all age groups. Young people touch it for less time than older groups, but the reach is nonetheless mighty.

One interesting fact in yesterday’s Infinite Dial 2016 revelation was that radio ownership among consumers has seriously decreased. From 2008, the percentage of Americans who don’t own a radio has grown from 4% to 21%. Narrow it down to the 18-34 group, and the non-ownership of a radio is 32%.

Turning it On

There are three main ways to listen to radio:

  1. Turn a radio on. (This is the part which is challenged by not having a radio.)
  2. Turn a car radio on.
  3. Listen through an online app.

Listening to radio station webcasts (#3) is part of the marching growth of webcast listening in the Infinite Dial data, which says that 50% of Americans now listen to online radio (defined as radio station webcasts plus Internet-only options like Pandora) every week. But we know from the monthly Triton Digital Top-20 Ranker that most online radio listening is piled into the Internet pureplays, by a large margin — consistently 85% over the last twelve months. (See the January report here.)

In-car listening (#2 above) is certainly a driver of radio’s reach — a presumption supported by yesterday’s Infinite Dial, which showed AM/FM the most-used source of audio in the cockpit:

infinite dial 2016 in-car listening four years

In-car listening sources. (The Infinite Dial 2016, Edison Research and Triton Digital)

Radio’s reach in the car is holding steady in the mid-80 percentages across the last four years.

But…

Infinite Dial revealed a corresponding statistic: Only 12% of cars have online listening built into the dashboard. So, despite the relatively low 21% reach of online radio in the car for 2015 and 2016 (see the above chart), the flip side is that a lot of people created a listening option that doesn’t natively exist in their cars. That’s 67-million people listening to in-car streams, based on a total population of 319-million people (U.S. Census Bureau, 2014).

Let’s dig in a bit further. There are 253-million cars on U.S. roads (L.A. Times, June, 2014). If 12% of them have an “In-Dash Information and Entertainment System” (as labeled by Infinite Dial), that means 30-million cars are equipped with an online radio option (according to the 12% in Infinite Dial). So, of the 67-million people who listen to online radio in the car, 37-million fashioned their own “online radio” to do that, presumably by plugging a phone into the dashboard in most cases.

Note: These calculations are a bit warped because the population and automobile statistics are from 2014, and the Infinite Dial survey was conducted in early 2016. But the point remains — it’s easy to turn on a radio that sits in the middle of the dashboard. Especially when it’s the only practical choice. It takes more motivation to “turn on” online radio when it doesn’t exist in the dashboard. Millions of people are doing that.

An Easy Prediction

Here it is: Radio ownership will disappear in the car, too.

The time will gradually come when turning on the car radio won’t be as easy as it is today in most cars. As that reality inches into automobile use, radio’s reach in the car will be challenged by loss of ease and dashboard presence. Even today in new cars, turning on the radio can be a baffling and intimidating exercise in technology use. Usability might improve, but the years of push-button radio dominating the head unit are numbered.

The American road fleet is 11.4 years old. The average car is a 2004-2005 model. The iPhone was introduced in 2007. The Infinite Dial lays out the correlation between online radio listening and smartphone ownership:

infinite dial 2016 correlation of smartphone and online radio listening

The Infinite Dial 2016, Edison Research & Triton Digital

Adoption of online radio in the average car (2004-2005 model) is not a mainstream option, even though millions of people manage it (see above), and online radio is a weekly habit for 50% of Americans according to Edison Research.

The Road Map

As American cars modernize year by year, more drivers will be enabled to easily bring their online radio preferences into the car. Year by year, an increasing percentage of Americans will have online radio habits as adoption spreads. Year by year the familiar radio will vanish from the car and AM/FM lovers will have to choose radio from an array of apps on a screen.

It’s a rare thing when technology disruption advances slowly, steadily, in bright daylight, and with absolute predictability. That is what is happening now with cars and digital dashboards. We know what the future looks like for in-car listening because today’s new cars are leaning into it. The churn rate of cars is so slow and incremental that nobody can be surprised by what will happen. The road is mapped. In 11.4 years, today’s average car dashboard will have been replaced by some version of the digitized dashes in production today — probably even more advanced and connected to online audio sources.

To clarify the prediction: Radio will not exit the car. Radios will. The challenge for the radio industry is to thrive as a screen app, not as the primary piece of hardware in the dashboard. As Edison VP Tom Webster said in yesterday’s Infinite Dial webinar: “The radio industry need to concern themselves with not just the software of their business, but also the hardware.” In the car, as in the home, that means disappearing hardware.

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Brad Hill