The Connected Car: Can It Drive the Industry Forward?

Connected Car Keynote Presenters, from left,  Eric McClellan and Nicholas Oliver from Team Detroit, Mitch Bainwol, President of the Alliance of Automobile Manufacturers. Credit: National Association of Recording Merchandisers.

Imagine a day when you can sidle into your car, tell it where to go and, as the car drives itself to your chosen destination, catch up on your Facebook feeds as you enjoy a playlist that's personalized for whatever mood you happen to be in.

That connected car experience, while a highly promising zscenario for the music business, still faces many obstacles on the road to becoming a mainstream reality, according to panelists who participated in a town hall session on Tuesday at the annual Music Biz conference run by the National Association of Recording Merchandisers (NARM).

Among the challenges facing companies trying to build businesses in the connected car ecosystem:

  • Product development cycles take anywhere from 3 to 7 years from design stage to dealer lots. This compares to cell phones, which are replaced every year or two.

  • Replacement cycles are even longer, with consumers hanging on to their vehicles for 7 to 11 years before buying a new car, further delaying broad adoption of any new technology.

  • Safety concerns limit how much interaction drivers should have with new technologies being built within car dashboards. The National Traffic Highway Safety Administration recently weighed in on the topic, issuing recommended guidelines that could easily become regulations if car manufacturers and app developers go too far.

  • Fragmented platforms, resulting from each auto manufacturer creating their own proprietary technologies, can crank up development costs.

  • Consumer reluctance to try new technologies will also slow down adoption.

These factors combined mean that widespread use of in-dash infotainment options is likely to be anywhere from five to 10 years away.

That means broadcast radio companies such as Clear Channel Communications and Sirius XM Radio will have plenty of time to plot their next play in the connected car era. Even then, few panelists see the two completely going away. Early anecdotal data from owners of the Tesla S suggest, however, that when streaming music is just as easy to turn on as AM/FM radio and satellite radio, listeners not only prefer the streaming option, but will end up more than doubling the amount of music they listen to, according to a survey by Slacker Radio.

The prospect of a connected car is especially alluring to the music industry largely because it remains the one place where few other media can compete. "Cars and music are like peanut butter and jelly," said Mitch Bainwol, the former head of the Recording Industry Assn. of America and now president of the Alliance of Automobile Manufacturers. "They are made for each other."

Some envision a day when consumers will have a "seamless life experience" when listening to music as they move from location to location, Bainwol said. Later in the day Slacker's senior VP of development Steve Cotter said the content should follow the listener around from home to car to airport to rental car, with the cloud keeping track of what you are listening to.

Nowadays, however, Bainwol quoted a survey that found that currently about 67% of drivers listen to the radio, 16% listen to SiriusXM, 2% to Pandora and 7% play CDs.

Those ratios will change as the car upgrades its connectivity, panelist said. Already, cars integration of Sirious XM radio has helped grow that service so eventually as new cars roll off the lot, they will introduce people to streaming services, although that process might be a little tricker than getting them to convert to satellite radio, said Warner Music Group senior VP and senior strategist Howie Singer

Once it becomes as easy to listen to music in the connected car,  the driver will be liberated and they won't be a hostage to radio anymore. On the other hand, once the connected car reaches its full evolution, music's monopoly in the car environment may go away as other forms of entertainment find their way into the car, he added.

Until the marketplace sorts out whether there will be a standard platform or if each car company will continue down its own road, Eric McClellen of Team Detroit, Ford's advertising agency says the mobile phone will continue to e the intermediary for the connected car. Consequently, he suggests, that the user's connectivity experience will be upgraded with each mobile iteration.

Likewise, for the time being Pandora will continue to invest in phone-based solutions for the car while all the questions about embedded connectivity still need answers. "It remains to be seen what will  happen but we are excited to see what opportunities emerge," said Pandora's director of automotive business Geoff Snyder.

While a number of the panelists predicted that radio will be the loser as the connected car creates a better listening experience, MediaNet executive VP/GM Larry Miller reminded the panel that radio is almost 100 years old and is a $16 billion industry with more than half of that coming from music programming. Even with all the possibilities being discussed currently for the car listening experience, radio "doesn't seem worried."

Radio has time in its favor because the time it will take for the connected car experience to become a dominant force in the marketplace could take 5 to 10 years. Besides, cars will always have radio chips because you need it for the local news.