Comment by Steve Ahern

Citi analyst David Kaynes appears to have lost his way in an analysis of the radio industry’s next challenge – digital disruption in cars.

Perhaps he is using an old street directory, instead of a mapping app, because his analysis seems way out of date and fails to take into account many of the things the radio industry has already done to prepare for digital disruption in cars.

Kaynes’ premise, in an analyst industry note reported in the SMH, is that a lot of the cars on Australia’s roads are old and so do not have digital dashboards. He is correct in this assertion, but he does not delve deeply enough to examine some of the more subtle nuances of in-car media usage.

“Drivers in older cars cannot access digital radio, or connect a smartphone to play alternative audio through the car’s stereo,” Kaynes said in a research note.

“We suspect that radio is the next in line to be disrupted by online advertising, with rising take-up of streaming services as well as the proliferation of digital radio diluting the audience for radio… While we don’t expect radio to show the rate of decline being seen in TV anytime soon, it’s worth recognising that this is a risk in the medium term.”

It is true that the average age of Australia’s cars is around ten years old and those at the older end of that spectrum were not manufactured with up-to-date media dashboards. However many of those between five and ten years old were made with Aux inputs, and other more recent models also have USB phone interfaces and bluetooth, so drivers have already learned to attach their phones to their in-car audio systems and use apps and music streaming services through their phones. It is also the case that many after-market additions have been added to more recent models.

The Australian radio industry has been very active in developing and promoting digital radios to the auto industry. Over the last eight years since the introduction of digital radio, more and more manufacturers have been convinced to install digital radios as standard. More than 307,500 new cars were sold with DAB+ digital radio installed in 2015, up from 98,400 a year earlier, as more vehicle manufacturers upgraded the in-car entertainment systems offered in their new models. Projections by PwC show that nearly 60% of new vehicles sold in Australia by 2021 will be fitted with a DAB+ digital radio.  These stats appear not to have been considered by Kaynes in his report.  

Digital radio is only one of the multiple initiatives that the Australian industry has taken to combat digital disruption, in cars and on all listening platforms.

Of course, the radio industry knows that it is facing massive competition from audio apps on phones. This is not news. Radio companies have been working together and individually for years to confront the challenges of new technology and to present the Ad Industry with contemporary advertising initiatives. The commercial radio industry has developed an app that streams most of Australia’s commercial stations, the ABC has developed the ground breaking ‘Listen’ App and the community radio industry has the (now outdated) ‘Dial’ App. The commercial and ABC apps are ready to offer app driven functionality which can be integrated into connected car dashboards to deliver replays, live streams and podcasts.  As well as collective industry initiatives, most networks have also developed their own apps, with more levels of functionality and interactivity. Stations also offer their streams to third party audio apps such as TuneIn.

We know that music streaming services are a big disruptor for radio, but the radio industry has been studying these trends for years now and adapting to them. Music streaming presents the biggest challenge to ‘jukebox’ radio formats, which is why many networks have changed their programming strategies to move from just automated playlist music to more actively hosted shows, and have continued to invest in new personality talent, to offer listers something they cannot get from streaming services. In fact, the longer streaming services operate in Australia, the trends seem to show that they are replacing record and CD collection discretionary listening time, rather than replacing radio listening time. Studies such as the Infinite Dial in the USA and in Australia have contributed significant research to anticipating audience needs in the disrupted car environment.

Australia’s radio industry is not complacent, and is not resting on its good performance so far, it is prepared and actively challenging the threats posed by the new digital disruptors, so much so that streaming service Pandora pulled out of the Australian market because, unlike in America, it could not get traction against the success of the Australian radio industry.

Kaynes’ analysis says that radio is the next to face digital disruption. Perhaps he has not read the pages of radioinfo, that have chronicled the fact that radio was one of the first industries to face digital disruption in the first round of multi media innovation on the internet, online streaming. Australian radio did not bury its head in the sand, it tried to anticipate the way audiences would react to the new technology and successfully responded to entice audiences to stay with radio. We have been writing and debating  about this here on radioinfo for years, prodding the industry to think ahead and be ready to confront disruption as it happened.

Kaynes’ analysis is lacking in depth. Perhaps he does not read radioinfo.

That is not to say there is not more to be done.

What do we need to know in 2018, for radio to continue to adapt to the new technology environment?

One of the big things we will need to know is how listeners are using their apps. We know the overall demographics of who is listening, but we need to know more as an industry about how they are listening. How long do they listen to podcasts, when do they switch over to another station, when do they increase and decrease the volume, how long do they listen in one stretch, what are the most popular listening times on apps? How much time shifting is happening? What other in-app functions do audiences use: message contacts with the station, competition entries, more information, search, advertisement interactions, social media sharing?

There is a lot of information being gathered from individual apps for individual stations, but it has not yet been collated into an industry wide study – this should be a priority for 2018. The data is there: Triton digital, Acast, AIM, iHeartRadio, ABC Listen and other industry providers are all collecting this info, but it has not yet been collated to provide an industry wide snapshot of new listening habits and related online and social media interaction. It will be another important step forward for programmers and advertisers when this information is available.

About the Author
 

Steve Ahern is a former commercial, community and public service broadcaster, programmer, senior executive and trainer who now runs his own company Ahern Media & Training Pty Ltd. He is a regular writer and speaker about future trends in media.

He was previously Director of Radio at the Australian Film Television and Radio School and is currently a board member of Australia’s Community Broadcasting Foundation. He also sits on the boards of various media services companies in Australian and internationally.

Steve is the founding editor of this website.