The long-term future of the auto industry is clearly in the hands of young adults. Their first purchases and later loyalty are the keys to business longevity. Because both Gen X and Gen Y individuals love MP3-formatted music, cell phones, and other technologies, auto manufacturers are seeking how to equip their entry-level vehicles to appeal to such interests. Radio, in particular, has been extremely important to young drivers. Technologies are now maturing that could obsolete the traditional radio model. A new medium could offer extraordinarily more flexibility and customization to the listener. Furthermore, it could bypass severe problems with radio that impact its sister entertainment industry, the music business. Indeed, partnership opportunities between vehicle manufacturers and music companies could help both industries through today’s tough times and skirt the bottleneck of today’s radio.

A look at the current radio industry and model illustrates their limitations and why new models could emerge. Today’s radio is based on having a single signal broadcast to a large geographical area. All vehicles get the same signal and play it in real time. The radio spectrum, furthermore, is severely limited both to listeners and those that provide it with content. The typical listener has no more than a few dozen choices of radio stations. Radio’s main content provider, the music industry, isn’t particularly happy with radio. The radio business today is concentrated into the hands of a few companies. For instance, Clear Channel Communications (San Antonio, TX) owns 1,200 radio stations. Clear Channel also dominates the concert promotion business as well. This leaves the music labels with few alternatives to reach their market.

The Internet has undisputedly showed the tremendous advantage in using distributed networks over the old-fashion, “broadcast” technologies in some contexts. Relying on thousands of nodes, packet switching, and digital storage, the Internet created not just a new medium but a new marketplace as well. The radio business is ripe for such a transformation.

Three technologies could be integrated together to offer a highly flexible, distributed, network able to replace radio as we now know it. These are:

• Broadband wireless
• Large, on-board digital storage
• Ad-hoc, distributed networks.

Through their combination it is possible to recreate the radio listening experience but without using traditional radio towers or scarce AM and FM spectrum. Indeed, the new system could far surpass the capabilities of either traditional land-based or satellite-based radio.

The way it could operate would be simply to have some vehicles act as giant, rolling, jukeboxes. They interact with neighboring vehicles by transmitting music, news, ads and other content. Those vehicles would receive the signals and store digitized audio off line. These sounds are re-assembled from memory of the on-board storage device in the listener vehicle. That is, the seamless stream of audio is formed from packets previously received, thereby recreating the traditional radio experience. The listener’s vehicle, meanwhile, also tracks listener usage. It would transmit back to collector vehicles information on the music and ads that were heard. In this way, advertising revenue could be generated. It would also provide extremely detailed listener data necessary to determine compensation for the music-copyright holders. Such a system would enable breakthrough capabilities. Examples include customized radio, tailored to the listener’s specific preferences. It could also include only ads targeted to that kind of listener. That could include location-specific advertisements. News programming could be highly tailored and adjusted to near real-time listening patterns.

Major business and technical challenges must be overcome, however, before this medium could be realized. For instance, the music industry is extremely concerned about unauthorized (i.e., Napster-style) music playback. Security measures and assurances that bootlegging isn’t possible would have to be provided before the music industry would participate. Likewise, new royalty licensing agreements would have to be negotiated. This could be a major stumbling block as Internet radio stations have discovered. Standards do not exist for creating such wireless networks. A substantial number of vehicles would also need to be equipped with appropriate equipment. Only after achieving a critical mass of vehicles would transmission and relaying (“multi-hopping”) be possible. Other challenges remain, as well.

Still the technology components are available today. For instance, Delphi has demonstrated that broadband wireless, such as 802.11, can transmit a three-minute song to a vehicle in seconds. In 2002, Santa Clara, CA-based SonicBlue was already selling its Rio Car, a stereo able to hold 1,000 hours of audio on a 60-GB hard disc. Multiples of that capacity are now available for vehicles. MeshNetworks of Maitland, FL, sells ad-hoc network gear already in pilot operation in Orlando.

Meanwhile, business forces are ripe. Radio advertising revenue is not insignificant. For instance, in the metropolitan Detroit area alone it is about $250 million/year. Indeed, the pieces and business forces are in place for a disruptive change here. Dramatic technology breakthroughs will continue despite the burst of the Internet bubble. Look for entertainment and communications applications to lead the way, especially those targeting the most aggressive, early-technology-adopters: young adults.