As Internet radio and streaming music services battle it out with AM/FM and satellite radio for dominance in the car, drivers will be the ultimate winners.
The popular Internet radio service Pandora has more than 2.5 million people using its onboard car apps unique listeners in new cars. In total, Pandora is fitted on more than 100 car models from 23 automakers and the head units of eight aftermarket car audio manufacturers. This is impressive growth for a company that has been serving the automotive industry for only three years, and it's a testament to how a first-mover can quickly establish dominance.
Pandora has moved aggressively to sign up automakers for its service. This strategy has proved especially important considering that it takes car companies several years to implement a feature and get it from concept into production, since the industry has traditionally been behind the consumer technology curve.
While AM and FM aren’t going anywhere soon, and SiriusXM satellite radio has established a strong foothold, these forms of car radio should be looking over their shoulders as Pandora gains ground. And there are plenty of other Internet radio providers already in the dash or waiting in the wings to ride shotgun in your car.
In just the last few months, we’ve seen a proliferation of new Internet radio services come to the dashboard, from both start-ups and already-established media and technology companies.
At the Consumer Electronics Show in Las Vegas in January, Ford launched six new Internet radio services, ranging from feeds for regional radio stations to headlines from USA Today. This added to several Internet radio apps, including Pandora, that Ford’s AppLink system already supports. The automaker also launched the popular music streaming service Spotify in February.
In April, BMW added TuneIn, Rhapsody and Audible to its ConnectedDrive system. Aha Radio, which includes everything from Facebook feeds to terrestrial radio streams and audio books, recently launched in vehicles from Ford, Honda, Mazda, Porsche, Scion and Subaru.
Ford and General Motors are also actively reaching out to third-party app developers. This will likely help accelerate the development of in-car apps -- and not just for music, but for audio content in general. As with smartphone apps, what will be available is limited only to developers’ imaginations and automakers’ limitations.
For this reason, I believe we’re seeing just the beginning of what will be a wide range of cloud-connected Internet radio services in the car that will provide content catering to everything from specific sports (cricket scores from India, anyone?) to mood-specific music that provides the perfect soundtrack for your drive.
Terrestrial radio and SiriusXM are not taking this lying down, and they're innovating as well. Broadcast giant Clear Channel has its own smartphone app, iHeartRadio, that’s integrated into infotainment systems from Ford and Lexus. And two weeks ago Sirius XM released its own smartphone app specifically for Ford Sync AppLink.
But as large as it’s grown, Pandora is still David standing under the Goliath of AM, FM and satellite radio. According to CNET, Pandora's share of the total U.S. radio listening market is a little over 7 percent, with traditional waves taking up most of the market, and Sirius XM scoopig up the majority of the rest. SiriusXM is also way ahead in sales, with $3.4 billion in revenue in 2012, compared with Pandora's $427.1 million in a fiscal year that ended a month later in January.
It will take years for the industry to shake out and to determine which content providers will be the winners and losers. But regardless, it will be a win-win situation for drivers, since they’ll have more and more content to keep them entertained and informed behind the wheel.
Doug Newcomb has been covering car technology for more than 20 years for outlets ranging from Rolling Stone to Edmunds.com. In 2008, he published his first book, "Car Audio for Dummies" (Wiley). He lives and drives in Hood River, Ore., with his wife and two kids, who share his passion for cars and car technology, especially driving and listening to music.
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