At a time when radio struggles with its role as the red-headed stepchild of the broadcast industry it was refreshing to discover a group of enthusiastic radio marketing executives discussing what the organizers of the event described as the arrival of the fourth golden age of radio. The discussion was occurring at the RAIN (Radio and Internet Newsletter) Summit in connection with the Radio Advertising Bureau event in Washington, DC., this week. Kurt Hanson, CEO of AccuRadio.com and Publisher of RAIN, defined the vision of the fourth golden age of radio as that period following the first (1935-55), second (1960-75 = Top 10, emergence of FM), and third (1976-99, listener fatigue, consolidation). Hanson pointed to Internet radio as a transformative force creating new value for radio advertising and content. For these executives, the hand-wringing regarding the impact (read: threat) of Internet radio is past, replaced by an intensifying embrace of a technology that is transforming the industry. Broadcasters left the event with the newfound conviction that Internet radio was a valuable tool for enhancing their influence and reinforcing their ties to listeners – and the mobile phone and the automobile are increasingly important venues via which to pursue that opportunity. For these broadcasters, the so-called fourth golden age of radio is characterized by the emergence of Internet radio and five aspects defined by the event organizer as: 1.                   Personalization and control manifested in pause, fast forward and thumbs up/thumbs down functionality; 2.                   Variety in the form of thousands of available stations targeted at all forms of regional and genre/sub-genre-based interest; 3.                   Lower spot load – ie. fewer ads – but better targeting of ads – and the corollary of more detailed and accurate metrics; 4.                   Ubiquity – Internet radio is accessible via televisions, mobile phones, standalone radios and, soon, automobiles; 5.                   Global/National reach vs. local – after all, listeners can be anywhere. Internet radio use currently stands at a 3.8% share of radio listening, according to data from Ando Media referenced at the event, representing the equivalent share of radio listening captured by FM radio in 1971. Arbitron data shows the percentage of online radio listening (% who have listened to online radio in the past week) as steady at 17% between 2009 and 2010 (equivalent to 43M listeners). Pandora, the most successful online music provider to date, showed an increase in # of listeners per average quarter hour (AQH) from 257K in January to 366K in July. At the same time the total AQH for the top 20 online radio sources was 780K and the total online radio listening figure was 1.3M. The numbers indicate that Pandora has a 28% share of all online radio listening, according to Hanson, and an overall radio listening market share of 1% - equivalent to 1% of listening in every market in the U.S. The trend, according to Pandora’s own data, continues upward with the number of hours of listening on Pandora growing from 200M in January to 275M in July. And the majority of the increase is coming from mobile users, who now account for more than half of those listening hours. Pandora’s overwhelming brand recognition in the space was reflected both in the listener data and in research presented by Coleman Insights which found Pandora, Slacker and iHeartRadio as the only brands with any significant unaided recognition. The larger message from the Coleman study was that Pandora may have strong recognition but does not yet have a dominant image in the minds of consumers – ie. the market is still fairly fragmented and an open opportunity. The implications for the automotive and mobile device markets come through loud and clear here and in Strategy Analytics’ own data where interest in and usage of Internet radio on mobile devices is on the rise. Not surprisingly, auto makers are seeking to capitalize including front runners BMW, Ford and Mercedes-Benz. Only a year ago, Internet radio in the car was greeted with skepticism and derision for a variety of reasons including: 1.                   Cost – As unlimited data plans begin to disappear, the perception is that Internet radio will become prohibitively expensive to mobile users; 2.                   Network capacity – Cell towers have limited ability to support an unlimited number of data users, which is what Internet radio users are; 3.                   User experience – Capacity and signal issues have created a listening environment carried by drop outs and lost signals. All of these objections have either been resolved or will soon be resolved: 1.                   Cost – Do the math. Taking AT&T’s tiered plan as an example, the $30 for 2.4GB likely represents MUCH more than enough time and bandwidth for all but the most out-of-control mobile listener. Cost is NOT an issue. 2.                   Network capacity – Carriers are adding smaller cells and Wi-Fi access points in major metro areas to alleviate the capacity issues. AT&T complaints have almost (I say “almost.”) completely stopped. 3.                   User experience – There will always be challenges in delivering music consistently, but the creators of these solutions are providing for caching and buffering at the receiving end while broadcasters are filtering content to lower-bandwidth alternatives at the broadcast end. The dominant mode of delivery for Internet radio in the car will be the smartphone in the short term. And with a growing population of smartphones in the marketplace, the opportunity is large and growing. But the concept of an embedded telematics infotainment system with access to Internet radio is no longer anathema in the industry. In fact, the Mercedes-Benz MyComand concept of such an embedded solution shown a year ago at Telematics Munich now looks not only doable but downright prescient. Some bumps in the road remain.  Music service-type Internet radio, such as Pandora and Slacker, will have a user experience advantage over true Internet radio platforms such as RadioTime and vTuner. Because of their personalized nature, Pandora and Slacker will have the advantage of leveraging buffering and caching to preserve the listening experience where cell connections are lost. (Slacker, of course, is primarily a caching-based service and, by definition, won’t lose connection mid-song.) Nevertheless, with carrier network improvements and the transition to LTE technology, the radio aggregators such as RadioTime and vTuner may gain the upperhand by facilitating access to a wider range of content with more creative means to manage and discover new music. RadioTime, for example, has deployed a song search feature able to locate a song being played on any of its participating radio stations. These aggregators also have the advantage of making podcasts and other non-radio content available while also integrating terrestrial sources such as analog AM/FM and HD Radio sources using location data. Competing Radio Platforms It is no coincidence that Sirius XM is making its content available via the Internet. Sirius XM clearly recognizes the competitive threat posed by Internet radio. To respond to the content searching and sorting functions of some Internet radio services and the ability to store or buffer some music, however temporarily, Sirius XM can be expected to bring content management enhancements to its Satellite Radio 2.0 platform due late in 2011. (Sirius XM has raised its subscriber guidance, forecasting 20.1M U.S. subscribers by the end of 2011.) Sirius XM already offers smartphone app functionality already widely deployed by Internet and terrestrial broadcasters. (In fact, much of the talk at RAB revolved around leveraging these apps for advertising and promotional engagement with the listener.) But with the enhancements in satellite radio requiring further hardware investments by OEMs, Sirius XM will have to continue to subsidize its OEM customers. HD Radio will continue to see widening deployment via automotive OEMs, especially since the required hardware investment is substantially less than for satellite radio. According to a recent Twice magazine report HD Radio is built into 5% of new cars sold in the U.S. reflecting deployment by 15 brands on 86 vehicle lines and as standard equipment on 36 car models. There are 2,085 converted stations and 1,226 multicast channels. More than  3M HD systems of all types have been shipped, according to iBiquity Digital, and efforts are underway to see HD Radio technology integrated in handsets. Conclusions The two challenges for OEMs will be to monetize the Internet radio opportunity and to solve the user interface challenge of accessing multiple radio sources safely in a vehicle. From a monetization standpoint, the goal will be to enable users to purchase songs and to enable access to premium content. In addition, the integration of Internet radio into embedded systems will make a powerful and positive contribution to the perceived value of telematics infotainment systems. Smartphone integration continues to advance and a variety of approaches will be tried, no single one of which is likely to dominate. As an example, BMW’s Mini Connect integration reproduces the smartphone display in the instrument cluster, while the solution in the 1 Series lets the driver use the smartphone’s interface. The latter approach is used by Mercedes in its Smart integration product. The bottom line is that Internet radio in the car is much closer to a reality than it appeared just 12 months ago, and it will likely contribute positively to convincing consumers to pay for telematics systems. http://bit.ly/c0OLhT - Consumer Implications for Smartphone-Vehicle Connectivity  - Chris Schreiner - Automotive Consumer Insights http://bit.ly/c1nvTq - Consumer Interest High for Connected Safety and Security Services - Chris Schreiner - Automotive Consumer Insights http://bit.ly/aGJHDj - Smartphone Market Evolution and the Automotive Opportunity Implications -Fitzgerald - Automotive Multimedia & Communications http://bit.ly/bD5RzL - Automotive DMB Digital Radio: Marketing Strategies an Increasing Priority - Blight - Automotive Multimedia & Communications

As an emerging low-cost platform for distributing content and services to passenger vehicles, HD Radio technology has been sneaking up on the automotive and consumer electronics industry for about six years. In that brief time, the company has created a minor sensation in spite of the fact that most of the added value elements of the technology have yet to be deployed and tier one suppliers are only now beginning to master the user interface for automotive implementations. Suffice it to say that iBiquity Digital has succeeded in spite of the limitations of early product executions. But the next wave of product promises more dramatic gains as OEMs bring their interfaces up to speed and hardware makers deliver on the enabling technology for conditional access and other value-added services. IBiquity Digital has overcome the classic chicken-and-egg quandary, simultaneously convincing device makers and broadcasters to take a leap of faith and get on board the HD Radio technology express. In the six years since beginning its campaign, iBiquity Digital has recruited thousands of radio stations and their broadcast company parents to add the HD Radio signals, convinced portable and home electronics hardware makers to bring devices to market, and drawn in more than a dozen car makers to add HD Radio technology to their line-fit options portfolios. Today, in the U.S., there are 1,967 stations broadcasting using HD Radio technology in 250 U.S. markets including 197 of the top 200, reaching 247M listeners. In addition, there are 1,128 multicasts, additional stations within the existing HD Radio bandwidth, with nearly equivalent reach. There are dozens of home and aftermarket automotive systems equipped with HD Radio technology – including an iPhone add-on and an integration on the latest Microsoft Zune. Significantly, many if not most of the aftermarket automotive systems include HD Radio technology as standard whereas competing satellite radio capabilities are typically optional. Within the automotive realm, HD Radio technology has rocketed from being available on two brands and seven models (none of them standard) in MY07 to 16 brands and 87 models (34 of them standard fit) in MY10. The outlook is for 19 brands to be offering HD Radio technology on 122 models in 2012 with 65 of those models offering the technology as standard. By now, most people in the electronics industry are painfully familiar with the extended product life cycles and correspondingly slow decision-making in the automotive industry. In this context, iBiquity’s success has extraordinary. The rapid rise, however, has spawned poorly executed user interfaces with inscrutable and non-intuitive designs. (Doubly unfortunate is the fact that some of the poorest HD Radio interfaces are offered in high-end luxury vehicles.) IBiquity provided limited user interface guidance at its inception, but has since taken more of a position in providing suggested device interfaces. Customers are still left to their own preferences, for the most part, though industry participants will be wise to heed any direction from iBiquity. In the end, if customers cannot fathom the interface the added value will be lost. As HD Radio technology moves into the next phase of its global campaign – and make no mistake that the effort is a global one – it is worth taking a look at the services that are Current services include: Program Service Data – Song, Artist, Album, Genre, Comment, Commercial HD2/HD3 Stations iTunes Tagging Album Art – Station logo, Album art, Advertising Premium Content – Data, Concerts and sports programs, Opt-in Adult content, etc. Conditional Access Additional services in development include: Program guide Music tagging Advertisement tagging As for the scope of iBiquity’s efforts and ambitions they indeed span the globe. Countries that have adopted HD Radio technology with nationwide implementation include Puerto Rico, Panama and the U.S. Countries that have adopted the technology with regional operation include Mexico and Brazil. Countries that are characterized by iBiquity as being in testing with advanced interest include Canada, Argentina, Chile, Romania, China, Vietnam, South Korea, Uruguay, Colombia, Poland and the Czech Republic. The company describes several European countries as having a strong interest in the technology. If iBiquity has had this much success with a limited offering delivered in hastily configured packages, one can only imagine the results that await the company as the second and third generation products arrive with added value services and enhanced interfaces. Among the most remarkable executions demonstrated recently at the Consumer Electronics Show was the HD Radio integration in the MyFordTouch, just a hint of what is to come.