These days, the biggest stories from the worlds of business and technology often seem to revolve around our cars. For an industry that was once thought to be rather sedentary – especially compared to consumer electronics – the auto sector has been heating up these past few years. And the implications for radio are enormous. Already this week, three different news stories about cars have captivated the attention of the radio industry – or at least they should.
Here’s the auto trifecta, along with some color commentary about how radio might be impacted.
1. Are car dealerships next for Amazon?
It’s only speculative at this point, but given Amazon’s recent foray into brick and mortar, coupled with its purchase of Whole Foods, you never know.
The source for the story isn’t the Drudge Report or a “fake news” site – it’s Automotive News. In an article titled “Could the Amazon of auto retail be Amazon itself?” writer Katie Burke wonders out loud whether the planet’s largest e-retailer wouldn’t try to capture the car dealership space.
Noting that Amazon has launched its own car buying research site – Amazon Vehicles – Burke reminds us Alexa is already in cars, while Amazon is already selling autos in Italy.
And she reasons that Amazon’s expertise with digital advertising is the perfect entryway into lead generation with special incentives via Amazon Prime. And while building a dealership network would be a daunting task, University of Michigan business professor, Erik Gordon, points out that “when we get to the highest level of what Amazon does, Amazon disrupts.”
Clearly, there’s a pattern of disruption afoot by Jeff Bezos’ innovative company. And if this story has a kernel of truth, it would signal a seismic change beyond the auto industry. Radio could be similarly disrupted because so much of its revenue continues to come from the car dealership category.
2. Saudi Arabian women finally allowed to drive
The surprise story broke this week when the Saudi Foreign ministry issued a royal decree allowing women behind the wheel starting in June of next year.
As Prince Khaled bin Salman pointed out, “This is a historic big day in our kingdom.” Did pressure from equal right activists motivate this decision?
Actually, many observers believe it’s more about economics. Saudi women cannot contribute to a stagnant economy if they can’t drive a car.
But perhaps there’s another potential impact that’s gone unnoticed. For Saudi radio stations, this could end up being a game changer. All these years, women have been confined to the passenger seat. It’s logical to assume the man doing the driving was also controlling the radio.
Given how much radio listening takes place in cars, Saudi female drivers could trigger a ratings shakeup. Next year, Saudi women not only will be able to get behind the wheel, they’ll be able to listen to Adele, Hootie & the Blowfish, Michael Bolton, or whatever they like.
Are you listening Alan Burns, Dan Vallie, and Gary Berkowitz? There’s a consulting opportunity in the kingdom.
3. Tesla nearly creates a radio panic
Tom Taylor broke the news Tuesday morning suggesting the new Tesla Model 3 would not feature an AM/FM radio. It turned out this story – covered in both The Verge and The Drive – is false.
(Interestingly, The Drive provided the update below at the top of its article, although the story itself has not been corrected. The Verge has not corrected its story, but Tom Taylor did.)
In fact, these new more affordable Tesla’s will come standard with FM radio. But AM will not be available. This can’t be good news for stalwarts like WGN, WJR, and this year’s winner of the Marconi Award for “Legendary Station,” the venerable WCBS-AM in New York. Chairman Pai cannot be happy either.
If this sounds familiar, remember that BMW dumped AM in its i3 and i8 cars, claiming the electric motor created interference problems. In Tesla’s case, you’d like to believe the company working toward facilitating easier space travel and missions to Mars could overcome an AM radio reception issue.
A former Tesla employee remarked the conversation about eliminating broadcast radio has been on-again-off-again at the company for years.
And it’s a reminder that just four years ago, Radio Ink‘s Eric Rhoads jumped on stage at his Convergence conference to question an apparent statement made by Gartner’s Thilo Koslowski panelist that AM/FM radio could be endangered in cars in just a few short years.
This Tesla news suggests the radio industry needs to move full-force toward engendering stronger relationships with the automakers and their Tier One suppliers, as well as ensure its streams are top-notch, and its dashboard displays are state of the art.
Below is the video The Verge ran in the story that fueled this speculation. About a third of the way in, you’ll hear the customer and the alleged Tesla rep discussing whether radio is available in the car.
Not a day goes by without compelling car stories – like these. For the radio industry, the implications are obvious. And it’s more fodder that strongly suggests the paramount importance of automotive to radio’s future.
Buckle up.
Jacobs Media has consistently walked the walk in the digital space, providing insights and guidance through its well-read national Techsurveys.
In 2008, jacapps was launched - a mobile apps company that has designed and built more than 1,300 apps for both the Apple and Android platforms. In 2013, the DASH Conference was created - a mashup of radio and automotive, designed to foster better understanding of the "connected car" and its impact.
Along with providing the creative and intellectual direction for the company, Fred consults many of Jacobs Media's commercial and public radio clients, in addition to media brands looking to thrive in the rapidly changing tech environment.
Fred was inducted into the Radio Hall of Fame in 2018.
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Fred, Which has more listeners, ratings, sponsors and receivers:
A) AM
B) HD
What happened to the All-Channel bill?
Clark, Boston
Well, someone might want to make that case to Tesla (and BMW).
Thanks for including me in your tweet. A couple of thoughts.
1.) Amazon. I’ve had dealers tell me the reason they are fighting direct sales from Tesla is they fear larger direct sales from future Chinese carmakers. I think they would welcome Amazon if they work through dealerships, and–if they don’t—fight them with all their might.
2.) Saudi Arabia. Had a great discussion a few months ago with an auto analyst–a woman–who had recently spent a year in Saudi Arabia. She was very encouraged about women getting the right to drive, but said there’s still a long way to go.
As far as being an auto market, it’s small overall, but very important to high end brands.
3.) Removing AM-FM radio from cars. Those who make electric vehicles and hybrids have to do a lot of shielding to put in AM receivers. BMW I3 also doesn’t have AM. It does have HD FM…but it’s not the same.
I had to drive in to Detroit from Lansing this morning, on I-96…had a European brand (I won’t name it–test drive vehicle) that had a terrible AM radio. That was a major problem as I knew there was a big traffic issue on I-96…and couldn’t even pick up the most powerful AM signals from Detroit–that are easily received on most AM radios.
I think most carmakers understand the importance of having both AM and FM for emergencies, like the recent hurricanes. FM is needed to get through the interference during the storm—AM is needed to cover great distances. The radio in your car is an important part of your safety system.
Thanks for letting me have a few thoughts…happy to discuss them at length at any time.
Jeff, these are great comments and great insights. For those who may not be aware, Jeff Gilbert is THE Auto Beat reporter here in Detroit at WWJ Radio (CBS). He has also been a guest panelist/moderator at our DASH Conferences. Thanks for taking the time.
Fred-
After 40 years in radio/Network/Syndication, I’m working as a Product Specialist now for a BMW dealer here in Denver. Add the 330e, 530e, 740e and X5 40e (all plug-in Hybrids) to the list of current BMW models without AM radios. There will be more of these soon. While very few Buyers of these car’s have asked where the AM radio is, I don’t necessarily buy the argument regarding shielding. Of course this can be overcome! In the end, the consumer will win. But consumers of these vehicles aren’t clamoring for the AM radio. That’s the real reason they aren’t there.
Phil, thanks for weighing in. It’s market by market, of course. In places like NYC, Boston, and a handful of others, AM is still viable. But in many other markets, it’s a veritable ghost town with just a station or two doing meaningful radio. Even a nice store isn’t going to survive if it’s in a mall in a bad part of town.
You are right – this isn’t a technical issue. I’ve interviewed enough OEMs and Tier 1s over the years to know they build what consumers want. The demand has to be there.