Last Updated May 3, 2010 3:24 PM EDT
The Web is now an on-the-go medium, and it's invaded the auto space -- even though surfing-while-driving would be a huge distraction, and is not likely anytime soon. But Web-based car listening is taking off -- in part because regular radio is in such a straitjacket.
This has huge implications for the auto industry, which has become used to gradual and evolutionary change: from the AM car radio to the addition of FM, and then the personalized music options, from eight-track tape to cassette, CD, satellite radio and iPod connectivity. Analog radio isn't going anywhere, but it no longer has American drivers as a nowhere-else-to-turn captive audience.
It's reminiscent of that moment when a plurality of Americans finally preferred horseless carriages to horses. An Arbitron/Edison Research poll surveyed the media habits of 1,750 Americans 12 and older, and found that the Internet is now the "most essential" medium for them, preferred by 42 percent compared to 37 percent for television, 14 percent for radio and a paltry five percent for newspapers.
The tube is tops for Americans over 45, but the 12 to 44 segment--the one that matters most to advertisers -- definitely prefers the Web.Automakers, particularly Ford, are beginning to catch up on the consumers' fast-moving changes in listening habits. Ford's new MyFord Touch can play your Pandora channels (which finds and plays songs reflective of your tastes) through a wireless connection to your cellphone.
This isn't just a fun application; it's bedrock for the new listener. Online radio is gaining as a medium: 70 million Americans listened to it in the past month. Of the lead offerings, Pandora swamps its Internet rivals (AOL Radio, Yahoo Music, Last.fm) in the Arbitron/Edison survey with 28 percent brand awareness (next-highest Yahoo was at nine percent).
A really interesting finding is that listeners switch to Internet radio because they want to choose the music being played (20 percent, the leading response), or want more variety (17 percent) and fewer commercials (14 percent). The technology is offering options just as traditional radio titans such as Clear Channel have consolidated control over what were once local stations, but also considerably tightened formats with reduced music choice. The Top 40 has evolved into the Top 20.
Listeners have other options, and that is hurting big radio. Clear Channel, the largest AM and FM operator, has seen a big advertising drop. It lost more than $4 billion in 2009. At parent company CC Media Holdings, revenue was down 17 percent, to $5.6 billion. Automakers have made profitable alliances with satellite radio, but perhaps the future lies more with infinitely adaptable Web-based listening solutions such as Pandora. Sirius' big draw, Howard Stern, has publicly mused about taking an offer from American Idol.
Most cars today come with an iPod jack, but the new standard includes charging and song display on the entertainment system's head end. According to media trade journal NewsPro, "When more cars are equipped with seamless integration systems, more people will listen to an iPod or an MP3 player through a car stereo system. About one in four do so currently--even though many have to deal with adapters and other barriers that can make it cumbersome."
These various services are coming together in various ways. Since last June, Sirius XM has an application for the iPhone and iPod Touch that turns each of these devices into a satellite radio, and that becomes an alternative way to get satellite into the car.
I am an example of all these trends. I do a radio show on an iconoclastic listener-supported station, WPKN-FM, which has had increasing difficulties raising money by convincing listeners that it is unique in the marketplace. One of my colleagues told me he heard my locally-broadcast-and-web-streamed show while driving in Puerto Rico -- he has Internet radio in his car.