March 19, 2015 – By Richard Morgan – New York Post
Video didn’t kill the radio star, but Sirius XM and streaming services like Pandora are taking it apart piece by piece.
Terrestrial radio, after years of maintaining its vise-like grip as the dominant in-car entertainment provider, will soon see thousands of motorists turn it off, a Wall Street report on Wednesday forecasted.
While terrestrial radio still owns an 80 percent share of car listenership, it will start to lose up to 1.5 percentage points a year of that market share as streamers like Pandora enter the market, the report said.
Connected cars — meaning those equipped with 4G wireless broadband technology — are expected to account for 39 percent of US vehicles shipped this fall.
But they’ll account for 60 percent by 2018.
Radio’s endgame, according to the report by analyst Amy Yong of Macquarie Capital (USA), will be to appeal to increasingly smaller markets.
The large markets will eventually belong to Sirius and Pandora, as well as other digital players with strong urban sales teams.
Pandora, for instance, currently accounts for just 2 percent of listenership in the car. But its number of active users doubled in 2014 to 9 million.
Sixty percent of all radio consumption is in the car, according to Parks Associates.
And that makes it prime real estate for all audio entertainment companies — especially those looking for growth outside the home.
Yong’s report predicts that Sirius, which already owns about 11 percent of the car-listenership market, will at least maintain if not grow its share through “its exclusive content, commercial-free appeal and sticky subscription-based model.”
This means any gains by Sirius — as well as those by Pandora and other streaming services that develop relationships with automakers — will come out of terrestrial radio companies like Cumulus Media and iHeartMedia.
Further tuning out the car radio will be what Yong calls “the entry of new deep-pocketed players like Apple CarPlay and Android Auto.”
iHeartMedia shares have fallen 36 percent in the last year. Cumulus is off 53 percent over the same period. Pandora has fallen 54 percent over the 12 months.