I'm often asked how our company connection to the automotive industry began. Yes, I'm from Detroit, still live there, and love cars.
But this whole thing started at Radio Ink's Convergence seven years ago. My friend, Buzz Knight, was moderating a panel about radio and cars, featuring several luminaries from the automotive industry. As the panel was wrapping up, and Buzz was giving each expert a chance to offer concluding thoughts, Thilo Koslowski (at the time, chief automotive analyst for Gartner Research) made what became a controversial statement about the life span of car manufacturers installing AM/FM radios in their vehicles.
And that's where everything got a little wiggy. To many, Thilo prognosticated that car radios were safe for several years down the road. But others heard him suggest the car radio was going to become an endangered feature in cars in just a matter of a few years.
And that's when Radio Ink‘s Eric Rhoads grabbed a mic, jumped on stage, and began to question Koslowski and the other panelists on AM/FM radio's true life expectancy in cars. That led to an alarmist blog post the next day in Radio Ink as Rhoads sounded the alarm, “A Cold Harsh Reality for Radio: AM/FM Will be removed from The Dash.”
Now back in 2013, this was heady stuff. And the fur began to fly throughout both the radio and automotive industries. It led to a number of assurances from car makers about AM/FM radio's permanent place in car dashboards, settling the issue down.
But it was that event that led us (along with Valerie Shuman) to get together with Eric and the Radio Ink team to partner on the DASH Conference in Detroit later that year, and again in 2014 and 2015.
Perhaps it's not surprising this issue has once again raised its ugly head. And now in 2020, the dashboard turbulence is coming from Elon Musk's innovative Tesla line of electric cars. There have been “wrinkles” from BMW and their electric vehicles with the elimination of AM radio in some models.
But last week, Tesla shook things up with the announcement of an optional (and expensive) software infotainment update available on older models (pre-2018). It creates a new video interface – something we saw a lot of at CES 2020 from many manufacturers and in several concept cars.
This is an expensive update – $2,500 – enabling video streaming of Netflix, Hulu, YouTube, and Twitch – as the “passenger economy” heats up. But that's not all. Another “feature” of this software update is the elimination of AM radio, FM radio, and even satellite radio.
That spurred response from several industry observers (Radio World, Radio Ink, and Inside Radio among them), including Strategy Analytics' Roger Lanctot, someone with whom I've shared the stage at several conferences these past few years. In a LinkedIn post, Roger minced few words:
“Google, Apple, and Tesla have all turned their backs on the broadcast radio industry in spite of the wide reach of radio – a reach that exceeds that of television – and the fact that it is free, localized content ideally suited to consumption in a mobile environment. Tesla’s decision likely only affects a sliver of Tesla owners given the cost of the optional upgrade and the limited in-vehicle enhancements, but it has the ominous tinge of something more sinister.”
Obviously, Tesla is anything but a mainstream automaker, frequently opting to zig while the traditional industry zags. And like Apple with its innovative and beautifully designed gadgets, Elon Musk's company is a trendsetter. The rest of the industry watches Tesla carefully to learn how their vehicles are designed, built, sold, and marketed. They'll be paying attention to this software upgrade, and its implications.
This is not the first time Tesla infotainment offerings have leaned away from broadcast and toward streaming platforms. And while this feature set only applies to Tesla owners “invited” to purchase this update, this may be their way of testing the waters.
How much pushback (if any) will they get from their owners? And will that empower Tesla to lock in this policy on new models moving forward?
And if so, what impact might that have on the rest of the auto industry, increasingly interested in being compensated for their dashboard “inventory” by media and tech companies. The historic relationship between broadcasters an automakers has been basically reciprocal…sort of.
They build the cars and have historically supplied the radio hardware (at no charge to broadcasters). In exchange, radio stations supply the entertainment and information that has provided the driving soundtrack for nearly a century. Of course, broadcasters have also done a sensational job of leveraging their in-car scale to sell billions of commercials on a local, regional, and national basis.
The automakers' and dealers' cut of that revenue? Absolutely nothing. In fact, radio has been happy to take their advertising dollars, too.
So, what does Tesla's decision portend for the future of the radio in the dashboard. Is it Eric Rhoads' nightmare coming true or is it another one-off from car makers frequently experimenting with the features in their vehicles?
I certainly don't speak for the radio broadcasting industry, but I've learned my way around this real estate over the past many years, working with, partnering with, and conducting research for the NAB, as well as the last 16 years of Techsurvey in which we've included important questions about radio's relationship with the car.
So, here are some steps radio's leadership might consider before this year gets away from us.
1. Create a newly formed automotive committee from the NAB – The departure of Steve Newberry in the next few weeks signals new directions for the radio (and TV) industry's chief trade organization. Steve was especially proactive in the intersection of radio and automotive. During his time at NAB, Steve expanded relationships and involvement with CES and a host of other automotive conferences and events. Along with smart NAB staffers like Sam Matheny, David Layer, and other members of the NAB team, radio began the process of collaboration with automakers. Don't stop now.
2. Establish a Detroit office – Our attendance at CES this past decade+ has underscored the reality the auto industry doesn't know a whole lot about radio. Most car company executives grew up listening to the radio stations that many of us created and programmed. But, it's 2020. Tell these folks you work in “radio” and they're liable to ask you if you mean Pandora or SiriusXM. Anyone who's serious about automotive and where the industry is headed has a Detroit presence. That includes all the Tier 1 and Tier 2 companies that supply gadgets, features, technology, hardware, and software to car makers. Broadcast radio needs a seat at the Motor City table.
3. Hold the Radio Show in Detroit – While cities like Orlando, Dallas, and Nashville are popular convention sites, it's time for radio to show a little love and attention to the auto industry. Convening the Radio Show in Detroit sends a message to both broadcasters and automakers about the import of cars – and their future to the radio industry in America – and around the world. It would allow for a special track of sessions, featuring some of the movers and shakers in the car industry in much the same way we brought both worlds together with DASH. As the world shifts, broadcasters and automakers have a lot on their respective plates. But sending a message that cars are still the lifeblood of radio would make a powerful statement to the car community about radio's ongoing commitment to entertaining and informing drivers – and passengers – at no cost to them.
4. Let Tesla know they're making a mistake – A survey of Tesla owners might reveal a strong level of unhappiness. Or a national survey of car owners (especially important for automakers) would be a reminder to all OEMs that Tesla's move is wrongheaded. On the PR front, pushing back on Tesla's social media outlets might be another way to make a statement about the value radio in the car. It's important the radio industry makes some noise here. Roger Lanctot doesn't work for our industry, yet was the first to step up in a meaningful way to WTF Tesla's decision.
5. It's time to reassess your mobile strategy and your stream – The latest move by Telsa should serve as a reminder to radio broadcasters about the value of their streaming assets, and especially their presence on mobile devices and on platforms like Apple CarPlay and Android Auto. Many radio stations have, at best, a mediocre mobile strategy, or they simply do little reinforcement of their apps and other ways consumers can access their streams. As radios disappear from homes and workplaces, broadcasters must ensure they have strong streaming assets, as well as communicating their presence to their audience. Other auto manufacturers may be assessing the value of a radio tuner in their dashboards. Broadcasters need to be prepared for any eventuality.
A final word about Tesla…
As Roger suggests, this software release may be their way of testing the waters. As noted, automakers receive no revenue from AM/FM radios in their cars. It might be helpful to know what Tesla is thinking on the topic.
Clearly, other electric vehicles feature conventional radio access. As we saw at CES 2020, the new Chinese car company, Byton, is working with Xperi. integrating HD Radio in their vehicles, scheduled to come to market this spring.
And make no mistake about it. The new Byton looks great side by side with any Tesla model. And its dashboard array (left) looks every bit as good as what you see in any luxury car.
While having a radio in the dash isn't likely to be a deciding factor for buyers of upscale electric vehicles, why wouldn't a luxury vehicle be able to access just about everything?
For an expensive software update, it is astonishing that while offering more video features, Tesla is forcing its legacy drivers to accept less audio entertainment and information. Shouldn't a $2,500 upgrade feature an expansion of services and options?
And after all, what's more important to the average Tesla owner?
Access to Twitch – or the ability to easily tune in their preferred local radio stations?
Perhaps we're about to find out.
You can read Roger Lanctot's piece here.
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