CES- RADIO DASHBOARD FRAGMENTATION (PART II)

As discussed in my prior post the technical side of car integration for Internet radio is difficult due to the many car companies, their suppliers and in dash systems.  Pandora, Tunein, NPR and iHeart radio have an amazing lead on the terrestrial radio industry for real estate on the car entertainment systems.  Pandora was integrated with every car company we visited at CES and claims to be integrated with 1,000 different devices.  These integrated applications appear prominently as listening options.  The rest of terrestrial radio streaming is for the  most part not represented except as embedded in Tunein, Aha or iHeart.  This is a major factor as to why many other radio stations have agreed to be included in the Tunein and iHeart platforms as it give them access to these distribution systems which also have in car access.  However, in a point I made in an earlier post they are lost in a multitude of options.

Yes there is still a radio button in the car and this will not disappear any time soon.  However, it is now just one of a multitude of choices.  As we know people typically have about 6 presets (their favorites) and scroll among them.  How will terrestrial radio compete in a fragmented dashboard.  In my view it will not be based on music but other unique and local content.  Unfortunately radio has reduced its investment over the last several years in its product.  Very little programming is local and unique.  Competition for other information such as news and weather is readily available from other sources.  Those that do invest and have a multi-pronged distribution approach will be the winners.

Tunein – Developing a Revenue Model

  Tunein is perhaps one of the largest directories of Internet radio stations with over 50,000 stations listed with most available to be      streamed.  The company has been signing up stations to be part of their directory although we do not know the business terms of these deals.  I think it is safe to assume that they are not exclusive.  Tunein was created by the merger of RadioTime (on line station guide) and TuneIn (mobile Internet radio app).  While Tunein provides information about radio programs and can stream your favorite station, for many years they allowed users to connect to a station’s stream through their guide without having the station’s explicit approval.  Some radio station companies such as CBS have asked Tunein not to carry their streams.  Although obtaining a $6 Million investment from Sequoia, they struggled for many years on how to monetize the service.  Since they did not have a relationship with the underlying station they had no way to insert audio ads.  The revenue component could only come from preroll ads (audio or video), display ads, and featured listings.  Even preroll ads are questionable as many stations insert preroll video so Tunein would have to insert a preroll video ad in front of another preroll video ad,  something that would not make for a great user experience.  They appear to be running only ad network display ads.  There were preroll videos in front of some streams but again these are most likely the ones inserted by the stations themselves.

While no public data exists on the size of the Tunein network in a press release dated 3/22/12 announcing the carriage of The Wall Street Journal Radio Network, Tunein claimed to have 30 million listeners and be in the top five in Apple’s App Store’s music category.  It would be great if Tunein would release more audience metrics but I can only surmise that they need to develop their business model first by entering into an agreement with stations whereby they can obtain part of the ad inventory or solidify premium placement for accessing streams.  Any measurement would a duplicate of that also measured at the individual station level but at least we would have a better feeling for the use of the Tunein platform.  Tunein is a great service and one that we watched the founder, Bill Moore, develop and where we came close to investing on several occasions.  Whether we made the right decision or not remains to be seen.