Lynch Steers Auto Push For Pandora

by Erik Sass , March 8, 2010

In another sign of intensifying competition between various forms of digital audio, Pandora hired George Lynch, previously vice president of automotive partnerships at satellite radio broadcaster Sirius-XM, to serve as vice president of automotive business development. The move is part of a larger initiative to expand Pandora's distribution capabilities for Internet audio into automobiles through more deals with carmakers.

Lynch began working for XM Satellite Radio in 1999 as director of original equipment manufacturer accounts (meaning deals with carmakers) and was promoted to XM's vice president of automotive accounts in 2004.

During his tenure at XM and Sirius-XM, formed by a merger in 2008, Lynch managed partnerships with Toyota, Lexus, Honda, Acura, and Hyundai.

Over that time, the satcasters have posted impressive gains in their factory-installed penetration of the new car market, both separately and in combination.

At the beginning of 2010, Sirius-XM had deals to install radio receivers in 60% of all new cars, up from 50% in 2009 and 44% in 2008. The satcaster expects to add about 500,000 subscribers via factory-installed OEM partnerships in 2010.

But now Sirius-XM faces competition from several new players.

In January, Pandora announced a deal with electronics manufacturer Pioneer Corp. that will allow consumers to bring Pandora's personalized audio content to their automobiles. Pioneer is manufacturing a multipurpose navigation and media device, priced at $1,200, that will allow customers with iPhones to stream the online music service to their car stereos via the mobile devices -- after they download a new app that lets the devices link up.

The Pandora audio play is also identified in a text display on the Pioneer device's screen, which allows the driver to interact with various media options and view a GPS display of their route, among other capabilities.

In announcing the Lynch hire, Pandora Senior Vice President Jessica Steel made the company's ambitions in the auto arena clear. "Delivering Pandora's personalized internet radio to our 48 million listeners in their vehicles is a key focus of our company this year."

Both Pandora and Sirius-XM have to contend with a third player: HD radio broadcasters and manufacturers that are also moving to increase penetration of the OEM market.

In December 2009, Ford became the first carmaker to offer HD radio sets with iTunes tagging (which allows users to mark songs they like during digital broadcasts for later purchase via Apple's iTunes store) pre-installed in some models, beginning in 2010.

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2 comments about "Lynch Steers Auto Push For Pandora".

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Pocket Radio from CSC, March 8, 2010 at 7:35 p.m.
HD Radio is a farce!
http://hdradiofarce.blogspot.com
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Roger Lawndale from Lawndale Group, March 10, 2010 at 3:01 p.m.

Pandora needs to partner with a wireless carrier for lower cost monthly 3G service and get auto manufacturers to build the audio streaming capability into the car.

Buying a $1200 aftermarket receiver, then hooking an iPhone with a $70/month subscription to it, plus paying the Pandora subscription fee is just not going to work. They're smoking something good over at Pandora!

Also, you can already stream from the iPhone into a car's audio system via Bluetooth or via an audio cable, so what is the whole appeal of the Pioneer receiver?

The problem with Pandora (or other internet audio streaming) into the mobile space is that it's limited to those users that are willing to a) pay a hefty monthly fee for unlimited 3G data, and b) always have their 3G phone plugged into their vehicle's audio system, and c) pay Pandora, d) only want to listen to Internet radio in areas with wireless 2G, 3G, or 4G coverage (so forget about music on long drives that take you outside urban areas).

Pandora will suffer from the same misreading of the market that XM and Sirius suffered from. At $5-8 a month or so, XM/Sirius could probably sign up a hundred million subscribers, but they're terrified of dropping the price because their installed base is happy paying $15/month. Similarly, if Pandora could cut a deal with Verizon or AT&T for low cost data, they could make a go of it.

HD Radio has had a slow start, but so did FM radio back in the early days. The huge advantage of HD Radio is that there's no monthly subscription cost.

In-car entertainment has split into two sources: 1) Music stored on an iPod, iPhone, or other MP3 player connected to the vehicle's sound system via Bluetooth or a cable, and 2) Terrestrial broadcasting, especially HD Radio. Satellite radio, and Internet radio remain far too costly to become pervasive at this time.