Music Business

5 Reasons The Music Industry Should Care About Driverless Cars

2Although the music industry has, historically, not always been the best at adapting profitably to tech disruptions, driverless cars could present a unique opportunity for the industry. Here we examine the likely affect of these autonomous vehicles on their pre-existing music business models.


Guest post by Cherie Hu

Are music companies ready for driverless cars?

Maybe. While it is difficult to forget its tumultuous relationship with piracy, downloads and file-sharing, the music industry is adapting more quickly with each wave of digital disruption. Streaming now accounts for most of major labels’ revenues without dangerously shrinking their profits. Emerging artists are becoming more tech-savvy, leveraging tools from chatbots to CMS to interact directly with their fans and optimize their reach to new ones.

To date, collaborations between music companies and auto manufacturers have been limited to streaming and live events. Uber made early waves in the live space by positioning ride-sharing as a crucial part of the festival experience. The recent Uber/Pandora and Spotify/Tesla partnerships have allowed users to stream in-car music wirelessly from their mobile devices, but have not fundamentally transformed media consumption on the road.

The imminent wave of autonomous vehicles will introduce a much wider range of cutting-edge technologies to the in-car media experience, including remote sensing and GPS, image recognition and other consumer-facing applications of robotics and artificial intelligence. Apart from advanced technology, these vehicles will also free billions of hours of time from drivers’ hands, one of the few examples of how innovation can actually grow the pie of available media consumption time—and advertising space.

As a myriad of auto manufacturers and ride-sharing startups are already pledging and testing their own self-driving cars (including Uber, Lyft, Fordand Kia), music companies will have to devise new roles and strategies tailored for the unique technological package that accompanies driverless commutes. Under this new paradigm, music will become not just a service, but also a fundamental automotive function.

Below is a framework for how the music industry can understand the impact of driverless cars on their business models, and how they can best prepare for this far-reaching sea change.

1. Autonomous driving will open up more time for focused media consumption—and more revenue for content creators.

To many Americans, especially professionals, driving is a necessary time suck. U.S. commuters spend an average of 42 hours in traffic annually; the daily average for time spent in cars ranges from 50 to 100 minutes.

Moreover, media consumption is traditionally a secondary activity in the car. As safety is a top priority, drivers can only listen to music, podcasts, radio and other audio formats in the background, instead of watching video directly. Passenger-oriented media is ordinarily limited to mobile devices.

Autonomous vehicles will add both time and money to this on-the-go media landscape. A fully autonomous driving world could add as many as 22 billion hours of additional daily media consumption and $20 billion in incremental revenue from video, according to EY. PricewaterhouseCoopers projectsoverall revenue from digital automobile content to grow by 204% over the next five years from €40.3 billion to €122.6 billion ($45.2 billion to 137.2 billion USD), with the market potential of in-car entertainment alone increasing by 123.3% from €6 billion to €13.4 billion ($6.7 billion to $15 billion USD).

As driverless technology becomes a more and more concrete reality, music companies should start investing in and experimenting with this growing pie of time and money to stay ahead of the curve.

2. Autonomous vehicles will be the next must-have connected mobile devices.

Just as the smartphone revolutionized media by centralizing all mobile activity into a single device, autonomous vehicles can house multiple applications and media formats, from music and video to productivity and gaming apps, onto a single, comprehensive dashboard. The car’s new status as a mobile device will also position it as a crucial player in the future of IoT.

“In the end, tech won’t seem different whether you are using it at home, at work or the time spent in the car,” predicted Thomas Müller, Audi’s engineer for developing braking, steering and driver-assistance systems, at CES 2016 last January. “Whatever you have in your living room, you will have in your ‘auto room.’”

This makes adopting a connected mobile strategy an important priority for traditional music and media companies. Even terrestrial radio stations like BBC Radio 1 are already touting an on-demand, mobile-first approach to their new content, which will likely ease their transition to autonomous driving habits more effectively than would terrestrial, live programming.

“If you look at [Netflix] and have a choice of giving yourself an hour of TV, what are you going to choose? You are going to choose the one that looks the best and has the biggest stars and money invested in it,” Ben Cooper, the controller of Radio 1 and Radio 1 Xtra, told The Guardian. “I think the same is happening with audio.”

GENEVA, SWITZERLAND – MARCH 02: The Nissan IDS concept is displayed during the Geneva Motor Show 2016 on March 2, 2016 in Geneva, Switzerland. (Photo by Harold Cunningham/Getty Images)

Extending Cooper’s argument, music companies will have to adapt their content in anticipation of the next wave of in-car streaming, which will become more interactive and even better connected to multiple devices and applications.

3. In-car ad experiences will become more immersive and more personalized.

The time and space freed up by autonomous driving has the potential to make music a more outwardly visual and physical medium. In fact, the shape of a car provides a natural 360-degree viewing experience, suggesting a lucrative new entry point and distribution channel for virtual and augmented reality as it relates to any media format. Ford patented a driverless car windshield entertainment system in March 2016 that could very soon be tested on the road.

Such immersion also makes autonomous vehicles a perfect platform for experimentation with context awareness and personalization. Cars and screens will have access to more detailed location and consumption data, allowing for targeted, dynamic media and advertising that is sensitive to the destination and duration of each trip. The financial benefits of this immersion and personalization will inevitably carry over to music, since the industry’s financial well-being is so intrinsically tied to the ad market.

“The media & entertainment business is shifting rapidly, moving via tech enablement to a place where the consumer is queen or king,” asserts John Nendick, Global Media & Entertainment Industry Leader at EY. “Meanwhile, the advertiser’s dream is to understand who their ultimate customers are.”

In this vein, autonomous driving will be one cog in the wheel of the media & entertainment IoT world’s transition from a B2B to B2C model, with media companies interacting directly with their consumers.

4. The in-car entertainment world will become even noisier, so media companies will have to hone down on their value while experimenting with pricing and bundling.

As suggested above, companies across a dizzying array of sectors—music, video, virtual reality, advertising, machine learning—will soon converge within the single device of an automobile, competing for riders’ attention.

Anyone can now watch Netflix more easily on the road, for example, which could drive consumption hours away from terrestrial radio and other music formats. While radio already boasts a robust listener base and most channels have a long tail of brand loyalty, they will have to adapt to these new technological formats that are largely on-demand, visual and, more notably, differentiated across devices.

As entertainment becomes noisier, consumers may also become even more value-conscious and exercise discretion over how much they would be willing to pay, in either time or money, for new media content. In fact, recent research has shown that car owners have high demand but relatively low willingness to pay for connected features provided by auto manufacturers.

Questions around pricing models still abound. Should the likes of GM open up to third-party, aftermarket apps and solutions, or should they stick to their own proprietary suite of digital features? Will the autonomous ride-sharing vehicle’s business model remain a standard per-ride charge, or will commuters also opt in to free ride-shares in exchange for in-car ads?

As the music industry itself is experimenting with different price points for streaming services and digital albums, it could benefit from having a voice in the pricing discussion around transportation media as well.

5. Media companies could benefit from joint ventures with tech companies and auto manufacturers.

Autonomous driving cannot be mastered alone. All of the earliest proponents of connected driverless technology have forged strategic partnerships to bring their vision to fruition. Lyft is partnering with General Motors; Ford is collaborating with several machine-learning and hardware startups; Audi isworking with Baidu, Tencent, Alibaba and other Chinese tech giants to build integrated services within its autonomous cars.

Each partner has its own clear rationale for cashing in on the hype. Auto manufacturers like GM are thinking through how they can ensure maximum car sales in the wake of driverless technology. Ride-sharing startups like Lyft are anticipating changing business models, from providing a ride-sharing program today to building a driverless network tomorrow. Adjacent tech companies like Google and Baidu are leveraging their expertise in machine learning and mapping.

In a similar manner, music and entertainment companies should aim to talk and collaborate more with autonomous vehicle manufacturers. As they learned in their quest to master streaming services and over-the-top (OTT) video players, digital disruption becomes your friend when you align with its distributors.

Spotify may already be ahead of the game, as it is already hiring an Automotive Strategic Partnership Manager in Detroit. Other streaming services and record labels would do well to follow suit.

Share on: