Radio and even CDs still top streaming when it comes to in-car listening.
But there remains one key physical distribution channel for music where streaming services fall far behind other, arguably outdated modes of consumption: the car.
In Edison Research’s 2018 Infinite Dial study, 56 percent of respondents cite AM/FM radio as the audio source they use most often on the road. In contrast, only 12 percent cite online streaming as the most-used source. Even CDs are still more popular than streaming, claiming dominance over 15 percent of respondents -- a helpful reminder about the staying power of physical and digital file formats in certain contexts, in an era where music companies seem to be hailing the death of the MP3 left and right.
Nonetheless, the proportion of respondents who have used online streaming at least once in the car has grown over the last five years, from 26 percent to 44 percent. In response, streaming services are pouncing on automotive partnerships and integrations at an accelerating pace, fighting for market share over this relatively small demographic.
During its first-ever investor day on Mar. 15, Spotify claimed that 30 percent of its users listen to music regularly in the car, and that the company was dedicated to securing more auto partnerships in the future. Indeed, less than a week after the investor day, Spotify announced a native integration with Cadillac’s in-car infotainment system that preserves the Spotify’s UX (even the font), updates both hand-curated and personalized playlists as normal and even allows drivers to set certain playlists and artists as preset stations alongside other playback options -- including AM/FM radio.
Rumors have also been spreading that Spotify’s imminent hardware play will be a circular playback device for the car, bundled with a Premium subscription for $12.99 a month or $155 annually. (Spotify declined to comment.)
Importantly, these aren’t Spotify’s first ventures into the auto and navigation space: the service was testing a distraction-free “driving mode” as early as July 2017, and has been integrated with Waze since September 2017.
What’s more, the company faces intensifying competition from rival services, some of which have been in the game for much longer. As of press time, Pandora can be controlled directly through the dashboards of nearly 200 car models. Tidal has been offering a complimentary year of Tidal HiFi to Mercedes customers since Sep. 2017. Amazon’s Alexa service announced a landmark integration with Ford in Jan. 2017; SoundHound Inc. quickly followed suit, launching its own voice-driven integration with Hyundai.
Just a few months after getting acquired by Apple, Shazam also announced its first-ever direct car integration, with Spanish auto manufacturer SEAT -- a natural and long-overdue fit, as up to 80 percent of Shazams are reportedly made at 30 km/h or faster. (Shazam did not respond to a request for comment by press time.)
Yet, beyond direct integrations with in-car entertainment systems, many drivers still listen to music simply by plugging aux cords into their mobile phones -- and the music industry already knows that first-mover advantages in mobile are largely nonexistent.
In a recent study, Android driving app Drivemode analyzed 1.6 million music listening sessions on its platform among more than 109,000 unique users over the course of 2017, and found some compelling regional and demographic differences in the types of music services that come out on top.
On a national level, Spotify and Google Play Music were neck-and-neck, each accounting for around 24.7 percent of music sessions on Drivemode (and collectively comprising almost half of all music listening activity overall). Pandora was a relatively distant third, accounting for 14.3 percent of sessions, followed by Amazon Music at 8.3 percent and Samsung Music at 3.6 percent. Apple Music and Tidal were both much lower down on the list (the former still in the top 10, the latter in the top 20).
The rankings of Pandora and Samsung Music are particularly surprising, albeit for opposite reasons. One might have expected Pandora to be further ahead: the company was by far the earliest player in integrated auto partnerships, first hiring a vp of automotive business development (George Lynch) in 2010. In contrast, Spotify didn’t hire its analogous exec (Jonathan Tarlton) until 2014, and no car company before SEAT had even thought to reach out to Shazam.
But as Drivemode’s study suggests, Pandora has since lost its first-mover advantage and relinquished leadership to Spotify and Google Play Music, at least among Android drivers. Even though the Infinite Dial study found that Pandora has the strongest brand recognition of any streaming service in the U.S., Spotify has a handful of offline features that are friendlier to drivers, such as the ability to download playlists. Google Play also includes a local MP3-player functionality suitable for offline listening, and evidently has the advantage of coming pre-installed on Android devices.
This is where Samsung Music -- which has no online streaming component, but rather supports digital file formats like MP3, WMA, AAC and FLAC -- comes in as a surprising winner among Android users. According to the Drivemode study, not only did Samsung Music place fifth overall in 2017, but the app was also the second most-popular app in Alaska and Vermont, beating out the majority of streaming-focused incumbents in those states.
“Samsung’s MP3 offering was available before Google Play Music launched, and there are still a lot of people sticking with that product,” Yo Koga, CEO of Drivemode, tells Billboard. “Those users tend to be older, and haven’t quite made the move to streaming. Another theoretical regional factor is that music players with local-MP3 functionality, such as Google Play and Samsung, can be more popular in areas where mobile coverage is weak.”
Other purportedly smaller services emerged in the top five in certain regions of the U.S.: Audible placed in the top five in Alabama, Connecticut, Oklahoma, and Utah, while LG’s hi-fi Music Flow Player app was ranked fifth in Indiana, Louisiana and Virginia.
Even Spotify and Google Play Music, which were tied for first on a national level, exhibited significant regional variations across the country. While Spotify was the top music service in eight out of thirteen Western states, Google Play Music beat Spotify to the punch in nine out of twelve states in the Midwest. Pandora actually had a slight edge in the Northeast, ranking most popular in three out of nine states in that region.
Regardless of any regional variations, however, the fact still remains that streaming is far behind terrestrial radio when it comes to mediating drivers' music experiences -- in part because of the longer development lifecycles for cars.
“The struggle for streaming services is that they want to get into the car as soon as possible, but it takes two to three years to ship an automobile product with their service integrated, so they can't grab the attention of their driving users as quickly,” says Koga. “The OEMs also aren’t manufacturing a lot of units: usually we’re talking around 50,000 units on average per model, which isn’t a big number compared to how many millions of users Spotify has. The challenge for streaming services is to push in both directions: working directly with automakers on integrations to maximize coverage, while also figuring out new ways to have existing users engage with the app independent of what the automakers can do.”
While the product lifecycle for cars themselves can take years, software-level integration lifecycles tend to be much shorter. The SEAT-Shazam integration took around two months to put together, while the Spotify-Cadillac integration went from early iteration to final code in only around four weeks. SEAT’s digital officer Fabian Simmer envisions the car of the future as “a smartphone on four wheels” that can be updated and upgraded on a regular basis.
Nonetheless, according to Edison’s Infinite Dial study, the percentage of car owners who have a working in-dash entertainment system -- and who can actually use the native integrations in which all of these streaming services are investing -- is growing at a sloth’s pace, from 8 percent in 2014 to 15 percent in 2018. It may take several years, perhaps over a decade, before Simmer’s “smartphone on four wheels” becomes the norm.
As for the native, in-car streaming experiences that do exist today, there is still much more room for innovation, from more sophisticated voice assistants to more personalized, context-aware listening experiences overall.
“We expect to see voice control of audio in the car as intuitive, responsive and accurate as it has become in the home,” Tarlton said in Mar. 2017. As with smart speakers writ large, Amazon may have a significant first-mover advantage in the arena of voice-enabled car experiences -- if Spotify doesn’t forge ahead sooner with its own native voice-search tests. (Amazon did not respond to a request for comment by press time.)
Another crucial development to watch for Spotify will be how they incorporate the full, freemium experience into the car. As of now, only Spotify Premium subscribers can use the Cadillac integration, essentially alienating over half of the service's monthly active user base. Flipping the switch on its free tier may be one of Spotify's final straws for outpacing rival music services for good -- and for becoming truly competitive with terrestrial radio.