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Radio’s Last Fortress Under Siege

Internet Radio Invaded the Workplace, Then The Home, the Handheld and Now — the Car

Radio broadcasting serves its audience quite reliably via three variations in its receiver states: fixed, mobile and portable. As a result, radio listening in the United States is pretty evenly spread across three environments: home, work and car.

Traditionally — at least since the 1960s, anyway — this seemed to be such a given that broadcasters never gave it much thought. Yet more recently broadcasters have realized that there was competitive value to this arrangement, because it was not necessarily enjoyed by its emerging competitors.

First there was satellite radio, which initially targeted only the car; and while it ultimately serviced this environment well, it was not quite as successful in accessing fixed receivers at home or (especially) in office-building workspaces, or in consistently serving portable devices.

Even in the car, however, satellite radio’s subscription model still gave terrestrial radio some differentiation, and nearly all automotive satellite receivers include AM/FM receivers. Thus terrestrial radio has managed to hold its own against this first wave of new competition.

Then came the Internet radio Webcasters, who could potentially compete more directly with terrestrial radio, given their generally free service. Initially, however, terrestrial radio enjoyed a huge lead in service availability, given that Webcasting was quite limited to the tethered reaches of the Internet.

The Internet radio invasion is now nearly complete, with no broadcast venue — including this one — spared from its presence. ©iStockphoto/Anthony Douanne But Internet radio gradually has chipped away at this advantage, increasingly encroaching on the space once occupied solely by terrestrial radio. Of course, a key component of this was substantial growth in deployment and penetration of residential broadband Internet access, which allowed greatly increased use of Internet radio at home, rather than limiting listening to the workplace as was often the case. Importantly, Internet radio listening typically took place on a device and/or in an environment where an AM/FM receiver was not present alongside. People spend an increasing amount of time in front of PCs, which almost always include Internet radio capability but rarely incorporate broadcast receivers.

Next, Wi-Fi gave Webcasting a bit of terrestrial radio-like mobility in and around home, work and other commercial spaces, and dedicated Internet radio “appliances” began to turn up in substantial numbers.

Now broadband wireless WANs — like the various 3G services and their popular associated devices currently being deployed in the U.S. — make Internet radio truly portable for the first time. The last step in this process is the extension of this portability into the car, which has already begun.

Fast track

Most radio professionals — and many consumers — may think this final element will take awhile to develop, as new in-dash hardware units are developed that add wireless broadband functionality to the car audio system.

While that probably will take place, and at the typically slow pace of car-technology development (possibly made even slower by current economic conditions that have hit the auto industry especially hard), it’s not the only route to bringing Internet radio to the car.

A much shorter path is via the iPod/iPhone dock, which quickly is becoming a standard offering in new cars and is an easy add for car makers — not to mention one that’s in high demand by the coveted market of younger purchasers.

And one of the updates included in the recent iPhone 3G S makes it easier to listen to Internet radio through the device while using it for other purposes simultaneously. This indicates that the iPhone’s use for Internet radio listening is not considered a fringe feature.

Note also that unlike satellite radio in the car, the iPhone dock approach means that the Internet radio is received on a device without an AM/FM radio alongside.

(Yes, the iPod/iPhone dock is usually provided as an input to the car audio system that does have a radio, but this does not put terrestrial radio at the same level of parity it would have on a single, multi-band device like a satellite radio, or presumably, even an in-dash Internet radio. Further, there are a number of low-end autos targeted at young drivers that are now offered without radios, but with iPod docks and sound systems.)

Thus the Internet radio invasion is now nearly complete, with no broadcast venue spared from its presence. Internet radio now goes wherever broadcast radio goes — and with flat-rate wireless broadband service plans you can listen all day (or until the battery runs out) to any online radio service in the world, essentially for free.

If you believe the Internet destroyed the newspaper business model, you’ve got to wonder if this isn’t starting to look pretty similar for radio.

Plus, this has all happened in nearly the blink of an eye, relative to the “normal” pace of radio’s technology development. So terrestrial broadcasters quickly need to start competing purely on the basis of content in every quarter, and not simply coast along on the coattails of their delivery technology’s greater service availability. That traditional advantage is essentially evaporating before our eyes.

Coping skills

While all this may sound dire, it could actually be just the wake-up call radio needs. Competition is good, and it has already pushed broadcasters to new heights. Witness HD Radio multicasting, which would probably not have been included in the format were it not for satellite radio’s emergence near the end of IBOC’s standardization process.

A more widespread example is the retooling of RBDS for presentation of title and artist data — again a process stimulated by satellite radio, in reaction to its popular metadata service. Most recently we can point to the development of rich radio-station Web sites and mobile apps, which likely would not have come along as they have were it not for Internet radio’s presence.

While the car is clearly the next (and last) venue in play for radio, there are potentially a number of ways that broadcasters can still leverage their intrinsic assets to generate sustainability in this new environment, and learn to coexist with nontraditional competitors on all platforms. More about that next time.

Skip Pizzi is contributing editor of Radio World. Follow him on Twitter @skippizzi.