NEWS: USB PORTS IN CAR DASHBOARDS THREATEN INCAR BROADCAST RADIO STATION LISTENING by GRANT GODDARD

www.grantgoddard.co.uk October 2006

Newly available car audio entertainment systems that include a facia USB port for connection to an MP3 player pose a direct threat to in-car radio listening, presently a significant proportion of most stations’ audiences. A new survey found that 54% of consumers would like the ability to play audio files in their next car, if the technology could be made available for around £50. Amongst iPod owners, 60% said they would be willing to pay £80 to be able to connect their iPod to their next car’s audio system. Larry Wu, senior director of automotive product & quality research at JD Power & Associates, who conducted the research, said: “[Car] manufacturers should anticipate a heightened interest and desirability for technologies such as MP3 and USB connectivity options, since portable digital music players have become so popular. Employing these technologies in new vehicles could help auto manufacturers in their efforts to attract and maintain younger buyers.” Apple CEO Steve Jobs said at a recent conference that 70% of new cars sold in the US will offer iPod connectivity as an option by the end of 2007. In a report entitled 'Is The iPod Driving Radio Away?', Lehman Brothers analyst Anthony DiClemente warned this week that "while traditional listening to CDs and cassettes was always a competitor to radio for listeners' ears, the robust nature of iPod integration amplifies the differentiation." He explained: "The concern to broadcasters is that iPod integration into automobile manufacturing could fragment an audience that, until now, has had few alternatives to radio in the car, especially during 'Morning Drive' and 'Afternoon Drive.' An estimated 74% of MP3 owners are between ages 18-54. In conjunction with slowdowns in car listenership among this targeted group for advertisers, the predominant ownership of iPods in this demographic could signal a shift in listening patterns that would translate to the car with this newly introduced iPod functionality." DiClemente concluded: "If ratings prove to show declines at a more accelerated rate than they are already doing and car listenership begins to show declining trends, terrestrial radio may find itself losing market share in a space where radio has traditionally achieved its highest rates for advertising, and as a result, may find that advertisers are less likely to pay premiums for spots in these time slots, thereby having a negative impact on revenues for radio broadcasters." Eric Benderoff, a writer for the 'Chicago Tribune' newspaper, recently reported that he asked a local garage to install a JVC car stereo with a USB port as a Father’s Day present in his 2002 Ford. He explained: “I can plug an iPod, or a thumb drive filled with MP3 files, directly into the USB port. The songs play through the car stereo, and I can control the volume and song selection directly through the unit, not the iPod. When my iPod is plugged in, the car stereo charges the music player as it plays. And the song information scrolls across the stereo's screen, telling me the artist, song name and album title.” Benderoff enthused: “The possibilities with a USB port in a car seem limitless. With this technology, I could power up a DVD player, a laptop or a mobile
News: USB Ports In Car Dashboards Threaten In-Car Broadcast Radio Station Listening ©2006 Grant Goddard page 2

phone. And perhaps, one day, a USB-based Wi-Fi setup could turn my Ford into a rolling hot spot.” The cost was £106 plus installation charge. The garage manager said that about 90% of car audio equipment he sold now included iPod or satellite radio capabilities, both substantial threats to traditional AM/FM radio stations. Research by Arbitron in 2003 found that 18% of radio listening took place incar in the UK, compared to 13% in the Netherlands and 16% in Germany. At that time, 86% of those who had driven or ridden in a car during the last month had used the in-car radio, compared to 50% who used the cassette player, 42% who used the CD player and only 1% who used an MP3 player. The rapid uptake of MP3 players since then, combined with the availability of dash board USB ports, could impact those figures significantly during the next few years.

[Submitted to 'The Radio Magazine', unpublished]

Grant Goddard is a media analyst / radio specialist / radio consultant with thirty years of experience in the broadcasting industry, having held senior management and consultancy roles within the commercial media sector in the United Kingdom, Europe and Asia. Details at http://www.grantgoddard.co.uk

News: USB Ports In Car Dashboards Threaten In-Car Broadcast Radio Station Listening ©2006 Grant Goddard

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