The Strategist

Music streaming services are fighting with radio and CDs in cars

04/17/2018 - 14:30

Streaming audio has already become a common thing. However, research shows that car owners prefer listening music via radio receivers or even CD players, and not via Internet. To expand their presence, streaming audio services are entering into agreements with automakers. They are discussing installation of special equipment and are looking for ways to convince users to download their applications.

StockSnap via flickr
StockSnap via flickr
Edison Research’s latest study among those, who drive a car or often travel as a passenger, shows that 56% of the surveyed are most likely to listen to radio channels in a car. Thus, users are ignoring development of technology and streaming audio services such as Spotify, Pandora etc. Only 12% of respondents switch a streaming music on in a car. Even CD sounds in cars more often than streaming audio does. This can partly be explained by that cars do not have the appropriate functionality. Indeed, as studies show, the number of people who still at least occasionally listen to streaming audio in cars is crawling up - from 26% to 44% over the past five years. The market is now struggling for these percentages.

Billboard newspaper notes that streaming audio and podcast services are now actively entering into partnerships with automakers. So, 50 million users of Spotify (or 31% of the total number of service users) listen Spotify in a car. The service agreed to integrate its platform into Cadillac's built-in infotainment system. In addition, since the middle of last year, Spotify has been testing a new interface specifically for using the service while driving, excluding the need to be distracted by equipment. Since autumn, the service has been integrated with the navigation application Waze.

The music streaming service Pandora also entered into agreements with automakers. Already, the service is available to be managed directly through the dashboard in almost 200 car models. Tidal audio streaming service is cooperating with Mercedes. Alexa voice assistant, developed by Amazon, is integrated into Ford cars since early 2017; the SoundHound application has been installed on some Hyundai models since the end of 2017, and the music identifier Shazam has entered into an agreement with the Spanish car manufacturer SEAT. 

Last year, the Drivemode smartphone app analyzed preferences of more than 109,000 US users listening to music, podcasts or audiobooks in cars on its platform, revealing the most popular streaming audio services. They found that Spotify and Google Play Music are the most popular at the national level. Each of the services has a 24.7% share of plays on the Drivemode platform. The third place is taken by Pandora with 14.3%. Next come Amazon Music (8.3%) and Samsung Music (3.6%). 

Interestingly, Pandora is more widely known in the US among the other streaming audio services, but this is not enough for leadership. Spotify has different offline functions, which are convenient to use while driving, for example, download playlists. The same applies to Google Play Music, which technical capabilities allow the use of MP3 format, convenient for offline listening. In addition, this application is preinstalled on devices with Android.

But, Billboard notes, regardless of what service is in the lead, streaming audio in cars still lags behind the popularity of radio. "The problem for streaming audio services is that they want to get into cars as soon as possible, but it takes two to three years to develop and launch a car with a service integrated into it," explains Yo Koga , CEO of Drivemode.  - The task for streaming audio services is to move in two directions: to work directly with automakers in the issue of integrating services into car systems and at the same time to think through new ways how to preserve existing users, regardless of automakers."

According to SEAT’s digital director Fabian Simmer, a car of the future will be a "smartphone on four wheels." But, judging by the current pace of integration of services into car systems, it may take years to achieve this goal. Edison Research study shows that the percentage of car owners who have built-in infotainment systems with the ability to use the functionality of streaming audio services is growing very slowly - from 8% in 2014 to 15% in 2018.