A big guy with a big voice streaming service Tunein CEO Richard Stern made it plain early in his presentation this week at the AutoTech: Detroit trade show he’s also a radio guy—not just a radio guy, but radio-in-cars guy.
“I think radio is the car’s original killer app,” he declared. “I don’t think there’s one that’s quite replaced it. Radio is called the soul of a car for a reason. Radio as a medium is a celebration of the human voice. We connect to each other through radio.”
But radio in our vehicles has changed as technology and customer tastes have evolved. Where an AM/FM tuner, tape or CD player may have been sufficient in the past, an increasing number of drivers want a commercial-free experience and many more choices and they’re willing to pay for it, especially younger drivers.
“They don’t like AM/FM tuners and they expect a lot more sophistication in terms of how the product interacts with them,” Stern said during an interview.
First it was satellite radio and now it’s streaming either from a driver’s smartphone via apps like Android Auto or Apple
Tunein offers a free services and several levels of paid subscriptions that give the customer access to many more stations.
According to Stern Tunein has 75 million “global active listeners” and offers over 100,000 stations in over 200 countries.
After several months of testing, the company revealed Tuesday, a new arrangement with electric pickup and SUV manufacturer Rivian.
“Rivian shares a very similar philosophy to say they wanted to have a live audio experience in the vehicle that reflected the design sensibility and the advanced technology of the vehicle, so they built a beautiful experience,” explained Stern. “We power it. They’re using our APIs and our technology and access to our catalog but inside the cabin the user experience they built is probably one of the most beautiful radio experiences I’ve ever seen.”
In addition, Rivian customers will have access to additional Tunein services. While those offerings will not be exclusive to Rivian, the startup will the first to have them available.
“We came to a financial arrangement where our premium product which has a lot of exclusive content, has a lot of premium content, also has commercial free content,” said Stern. “That is in the Rivian and that’s something new Rivian drivers get out of the box so they can experience the premium version of our product.”
Rivian joins Tunein’s roster of auto partners that includes Tesla
Stern believes there will always be a place for free, advertising-supported programming but with the explosion of popularity for subscription services like satellite radio, Spotify, Pandora and the like, a certain segment of the population is willing to pay for more choices without the interruptions from ads.
Stern says younger drivers who are fine with paying five or 10 dollars a month for ad-free listening consider the cost “a fair value exchange.”
The affinity for ad-free listening starts even before teenagers are of driving age. According to study by Edison Research the percentage of time each day spent listening to ad-free services versus those supported by advertising has grown from 29% to 39% between 2015 and 2022 for those aged 13 years and above while it’s increased from 35% to 50% over the same time period for those 13-34 years old.
For automakers looking for new revenue sources this growth opens new doors, observed Stern who noted, “I think that creates an opportunity for the OEMs (automakers) to say my customer expects that radio is going to be in the car. I certainly have the commercial sponsored free version of it, but if you’re so inclined, get the commercial-free version. Get the version that has premium content in it.”
That brings us back to that “original killer app” Stern spoke about—the AM/FM radio, the “soul” of the car. Streaming and satellite services may be supplanting a lot of the popularity of broadcasts transmitted through the air, but Stern pointed to studies that showed 81% of prospective car buyers in the U.S say they would be less likely to buy a vehicle that is not equipped with built in radio tuner.
With that in mind, he warns automakers they shouldn’t dare think of depriving their customers of that “original killer app” that started it all.
“You might not get a tape player, you might not get a CD player but an AM/FM radio is something you expect,” Stern solemnly pronounced. “So I think they should hold onto that, keep it precious and we should re-invent that so it has as much value and prominence in the customer’s mind as whatever third party they might bring in as well.”