At the Radcomms’ conference Anthony Gherghetta reprised his successful series of radioinfo articles in a presentation on the next generation of car radio.



He let us in on his listening habits while he drives through the Melbourne traffic (he listens to ABC774, BBC 1 and ABC Sydney’s Richard Glover) as he outlined his views on the connected car.



Here is what he said.



History

Radio and the car have a very long history. The very first car radio was introduced by Chevrolet in 1922. It cost a whopping $200, and came with an antenna that covered the entire car roof, batteries under the front seat and two mammoth speakers in the back. It was like travelling with an orchestra.



Of course, by the 1930’s the technology was already changing. Motorola had released smaller radios and these became standard features in most cars.



By the time of the transistor radio in the 1960’s the relationship between car and radio was well and truly cemented.



For 50 years AM ruled the car. There was no cassette player and certainly no CD player. Then in the 1980’s FM radio was introduced and this started to eat into the market share of AM. Of course, just a few years ago, we received DAB radio and this technology is now gaining a foothold in many new automobiles.



However the biggest change since the installation of the first car radio is only now happening. The digital dash, the connected car. For the first time what we listen to in the car will not be governed by a broadcast license. For those of you who know my history, you’ll see a little smile J



Motorists will be able to listen to any content from anywhere. Listening to BBC Radio 1 in the car will be just as easy as turning on the local FM station.



Who listens to the radio?

Radio is not the sexiest medium, it’s certainly not as sexy as digital, but boy, it’s with us everywhere. 95% of Australians listen to radio every week and, on average, Australians spend almost 16 hours a week listening to radio.



According to Roy Morgan research radio is the preferred media of choice for the majority of Australians in the morning. A lot of that radio listening, of course, takes place in the car.



Car radio

Lets look at some numbers.



Of all people 10+, 34% of radio listening takes place in the car. This compares to 48% that takes place at home and 16% that takes place at work.



However, if you change the graph and only look at the demographic of 18-39, young working people, in-car listening increases to 45% and at home listening drops significantly to 25%.



At home listening is skewed by older demographics. Retirees who listen to talk radio from morning till night. Take the retirees out of the equation and you’ll see that for the majority of working age people, most radio listening takes place in the car.



The daily commute

So how much time do we actually spend in the car? Australians who commute by car spend on average around 5 and a half hours in their vehicle each week. This doesn’t include trips on the weekend to the hardware store or ferrying kids to sport, just the commute to and from work each day.



For radio, this is a very captive audience.



As you would expect more time is spent commuting in Sydney where the roads are dreadful than in places like Perth or Adelaide. Nevertheless, the average commute is just over half an hour – an hour in the car to and from work each day.



This slide is a little more complex and shows how people commute to work. The first two columns are the most important, personal vehicles and mass transit. More people use public transport in Sydney and Melbourne than people in less dense cities such as Perth and Adelaide.



In Sydney only 66 / 67% of people travel to work by car. Sydney has the highest use of public transport at 22% and walking at 4.6%. Compare that to Adelaide where 81% of people drive to work and only 9.5% of people use public transport.



Looking at the figures nationwide, the car is still king. 75% of all people use the car to commute to work.



If we look at when our roads are busiest you’ll see that the roads in Melbourne are at almost 100% capacity during the morning and afternoon peak. What is interesting is that the utilisation of our roads continues to remain high during the day, operating at around 70% capacity.



That’s a lot of people in cars, in taxis, in trucks, listening to radio.



The connected car

For years we’ve heard the phrase ‘Internet of things’. Microwave ovens that tell you the news, fridges that automatically order the groceries. Is the connected car just another one of these ideas or is it a reality? It’s reality.



Every car manufacturer is now equipping their cars, from the most basic to the most luxurious, with connected ‘infotainment’ dashboards. Ford has sync, Holden has mylink and Toyota has entune. Lets look at some projections.



IHS automotive insights have projected that by 2025 91% of new Australian vehicles will be shipped with a connected dashboard.



You can see growth will start taking off next year and then grow steadily for the next 10 years when almost every new car will be delivered with a connected dashboard.



Of course, these figures are projections. How fast this technology grows will be governed by consumer demand. All signs right now point to demand being very high.



If you’ve been watching television over the past six months you would have noticed that almost every car ad highlights the new infotainment systems. In the eye of the consumer, the connected car is a must have.



However, when we look at the adoption of connected vehicles in Australia we have to be realistic and accept the fact that cars are getting older.



The average age of a car on Australian roads is 10 years. This is up from 6.8 years in 1971.



For most people cars are a ‘sexy whitegood’. They get upgraded every 8 to 10 years, not every 2 to 3 years like a mobile phone. People who buy new cars will obviously get the technology sooner however people who buy second hand cars may have to wait one or two cycles.



So how will this affect the market penetration of connected vehicles?



The research projects that in 20 years the majority of Australians will be driving a connected car.



Growth is really going to kick off around 2017 as more cars are sold connected. Market penetration will reach 80% in 2034 - approximately 20 years from now. The remaining cars not connected will be classics and rusted out old utes in farm paddocks.



Pretty much everyone will be driving a connected car by 2034.



The exciting time is going to be the first 10 years, the initial adoption of new technology from 2017 to 2027. This is when new concepts and new ideas will be introduced and jockeying for a dominant position on the dashboard will take place. This time will be critical for radio broadcasters and any other business looking for a presence on the car dashboard.



So where does this leave radio?



For the first time, broadcast radio is about to be challenged for its prime position on the car dashboard. The two-knob car radio experience is well and truly over.



In the United States this has already happened. Ten years ago terrestrial radio was disrupted by satellite radio and, more recently, it’s the online music radio services such as Spotify and Pandora. Audio access to the car is no longer governed by a broadcast license, the auto manufacturers themselves are now the gatekeepers.



And it’s not just new radio or new music services that existing broadcasters should be worried about. There is nothing stopping AFL media from teaming up with Telstra, their current media partner, to create an in-car application to broadcast game-day matches in competition to, or at the expense of, traditional broadcast radio.



Radio has to adapt.



Radio broadcasters, especially capital city FM broadcasters, have been very successful at driving traffic to their websites using on-air promotions and social media. However, if you look at the ‘radio’ part of these websites, the streaming audio, there is generally nothing more on offer than the existing AM/FM program stream.



Let’s be honest, while broadcast radio has spent a lot of money in the online space, the industry has not been particularly innovative. The industry has used the brute force of their existing on-air audience to drive traffic to the websites.



While newspapers and television have embraced online concepts such as time-shifting and personalisation, radio is still only producing one product to be consumed by everyone, through every medium at the exact same time. The goal of commercial radio has always been to please most of the people most of the time. This will have to change.



Music radio apps

One of the biggest threats to traditional broadcast radio in the car is the rise of music streaming services. Sensibly, three of the main radio broadcasters in Australia have entered into partnerships with the online music services – Austereo with Songl, ARN with iheartradio and DMG with Rdio.



Unfortunately, none of these music services have gained much traction in the Australian market. Spotify is clearly the biggest online music service in Australia - and itunes radio is just about to launch.



What do these services offer that radio doesn’t?



One – they’re personalized. It’s not the same song at the same time for each listener.



Two – You can skip and control the playlist. Don’t like the song currently playing, skip to the next one.



Three – They’re intelligent. They have incredible algorithms that learn listeners’ preferences over time.



Pandora has recorded billions of thumbing actions – thumb up, thumb down, since the service launched in 2005. That said, Pandora has not had anywhere near the success in Australia that it has experienced in the US.



The launch of itunes radio in the coming months will see hundreds of thousands of Australians trial online music radio, powered by algorithms, for the first time.



In the eye of the consumer, music is now very much a commodity item provided by many suppliers. It’s available on tap at little cost from many sources.



Broadcast radio apps

Now compare the technology of music radio apps to the technology of broadcast radio apps.



There is not a single broadcast radio app in Australia that offers anything more than a simulcast of the AM/FM program stream. The only selling point is being able to listen to your hometown radio station when you’re outside of the broadcast area.



Some include podcasts, others have some social features and iheartradio includes an inbuilt music service alongside the radio streams – essentially two products in the one app. None of these apps have added anything new to radio. It’s still the same content at the same time for every listener.



Can’t skip, can’t customize. No feedback, no intelligence.



Essentially it’s the free-to-air broadcast product on a mobile device.



This quote sums it up nicely. Mark Ramsey is a radio futurist who is well respected in this space.



In the digital age, radio is no longer a one-way medium. The listener can tell you instantly what they like and what they don’t like. The core of radio, the emotional connection, the companionship will remain the same. This is something the music services can’t provide.



Case study – ABC Melbourne

Let’s look at a case study to demonstrate the future direction of radio.



Getting older, I now spend more time listening to talk radio than I do music radio. In Melbourne, that normally means listening to ABC local radio.



When I get in the car I tune to 774. If I’m up early enough I can listen to Red Symonds. If I’m running a bit late I’ll listen to Jon Faine.



The problem with ABC local radio is the great big whack of 45 minutes of news right in the middle of peak hour travel. For some people, this is required listening. But for me, I’ve read most of the news on the internet the night before – I don’t need 45 minutes of hard news.



I normally get in the car just after 8am when AM is starting. Sometimes I’ll listen to that and then listen to the start of Jon Faine. But it’s not what I want to listen to. More often than not I’ll turn on spotify and just listen to music.



This is my ideal world. I’d like to get in the car in the morning, turn on ABC local radio, hear the traffic first (there’s no point in traffic half way to work), a quick news report and then Red Symonds. Perfect.



There is no reason why this service can’t be offered by the next generation of radio broadcasters. The content has already been created, it’s just time-shifting and personalizing the content to suit me, the listener.



At the App Studio in Melbourne we’re working on new products to chop-up, personalise and time-shift content for the next generation of radio. Our goal is to put more ‘internet’ into radio.



Radio broadcasters around the world produce millions of hours of spoken content each year. Most of this content vanishes as soon as it has been broadcast. We’re building new products to help ingest, manage, personalise and distribute this content.



Of course, I can’t do a presentation on car radio without talking about the elephant in the room, network coverage and network congestion.



Broadcast radio is tried and tested technology. A single transmitter on a hill can reach almost every listener in a market area with, for argument sake, 100% uptime. When was the last time you heard a broadcast transmitter go off air? Not very often.



Will mobile networks be able to cope with the oncoming demand for data in moving vehicles? Can mobile data networks provide 100% connectivity? At the moment, the answer is no.



I drive to work each day from Prahran to Doncaster using the infamous Punt Road in inner east Melbourne. It’s against the traffic so it’s not too bad.



For most of the journey I can listen to streaming radio just fine. I’ll listen to ABC radio on the way to work and on the way home I’ll listen to BBC Radio 1, BBC Radio 2 or Richard Glover from ABC radio in Sydney.



However, the second I get near Richmond station the data pipe collapses. With more than 40,000 cars using Punt Road everyday and over 300,000 passengers on the trains above, the phone networks simply cannot cope.



New online radio products, no matter how easy they are to use, will amount to nothing without robust network coverage.



There has been talk at previous conferences about 3G and 4G connectivity in airplanes. Connectivity in planes is nice, but what we really need right now is adequate data in our cars and on our trains.



As you saw from my earlier graphs the demand for data in vehicles is set to explode over the next 20 years.



The situation for public transport is even worse. Catch a peak hour train in any of our capital cities and performing the smallest of tasks, such as reading the news or checking emails, simply does not work. It pains me to watch people on the train during peak hour trying to access the internet on their mobile phones.



The car is an exciting new playground for new media. Over the coming years there is going to be a lot of disruption in this space.



Television has already experienced this disruption but radio, with its unique position in the car, has largely been sheltered. This is about to change and radio broadcasters need to embrace the new technology to stay relevant.





Anthony Gherghetta can be contacted at anthony@theappstudio.com.au

Read our other Radcomms reports at Joan Warner, Jeff Cole, Chris Chapman.