Ever since the 1950s, when car manufacturers first introduced FM radio receivers inside their vehicles, the mainstream music industry has relied heavily on cars as a significant—if arguably old-fashioned—source of revenue.
This is because terrestrial radio still dominates consumer preferences for in-car music listening, despite drastic technological change both on and off the road. While streaming services like Spotify and Apple Music accounted for 75% of the U.S. music industry’s total revenue in the first half of 2018, only 12% of drivers and passengers cite online streaming as their primary audio source in the car, according to Edison Research’s latest Infinite Dial study. In contrast, 56% of respondents cited AM/FM radio as their preferred source.
Similarly, Nielsen’s Total Audience Report revealed that radio reached 92% of U.S. adults weekly in Q1 2018—indicating greater audience penetration than any other linear or digital platform, including TV and smartphone apps.
As a result, major record labels still regularly delegate the majority of marketing dollars behind a typical album campaign to radio promotion, hiring pluggers to pitch singles to both local and national stations. At large, AM/FM radio stations in the U.S. still generate an estimated $13.7 billion in annual revenue—in part from tapping into a national population in which the average individual spends over 293 hours driving every single year.
But newer tech trends like ridesharing, 5G and edge computing are poised to alter transportation, and its accompanying media ecosystem, as we know it. It’s no surprise that the music industry, whose financial health is tightly tethered to mobile and on-the-go media trends, wants in.