Sonos enters the content business with a new radio streaming service

April 21, 2020, 1:00 PM UTC

Sonos, the wireless home-audio company, is getting into the content game. The company on Tuesday announced the launch of Sonos Radio, a free, ad-supported radio streaming service now available worldwide via an update to the Sonos app.

The radio service marks the Santa Barbara company’s first foray into original programming. (Streaming services like Spotify, iHeartRadio, and Amazon Music remain accessible on the Sonos app.) Sonos describes its own service as a “holistic and cohesive way to explore radio” that features more than 60,000 radio stations. Among them are 30-plus genre stations based on popularity with Sonos listeners; an ad-free Sonos Sound System station “featuring new and well-known music, behind-the-scenes stories, and guest artist radio hours”; and ad-free artist stations curated by musicians like Radiohead’s Thom Yorke, Alabama Shakes’ Brittany Howard, and Talking Heads’ David Byrne.

Sonos says nearly half of listening time on its devices—which are in 10 million homes globally—is spent on radio. “This is just a beginning as we work to deliver services that provide our customers a better experience, and provide our music streaming service partners an opportunity to highlight their best content,” CEO Patrick Spence said in a statement.

Hardware is hard

Since its founding in 2002, Sonos has built a reputation for making premium wireless speakers with high-quality sound, sleek design, and multi-room support. But the company’s position has been challenged by increased competition as tech giants Amazon, Google, and Apple expand deeper into the market with voice-activated “smart” speakers.

Consider: At the time of its initial public offering in mid 2018, Sonos had sold more than 19 million units. About six months later, Amazon revealed that more than 100 million Alexa-powered devices had been sold—just four years after the introduction of its first Echo smart speaker. An eMarketer report from February 2020 found that nearly 70% of all U.S. smart speaker owners own an Amazon Echo device; the closest competitor is Google, with about 32% of market share. (Another 18% use one of the “other” brands: Apple HomePod, Sonos One, or Harman Kardon Invoke. The percentage tops 100% because some smart speaker owners have more than one brand, the report said.)

The stiff competition in home audio has battered Sonos’ stock price. Since August 2018, its share value has dropped 58% from $20.95 a share to about $8.70. (Sonos continues to deliver strong financial results, though. In its first fiscal quarter 2020, the company reported record revenues of $562 million, beating estimates.) Various analysts have warned of the company’s competing interest with frenemies—Amazon’s Alexa and Google Assistant are built into some Sonos products—as well as general market volatility and the occasional public relations blunder.

Content isn’t much easier

At first blush, Sonos’ entry into radio puts it in competition with its vast collection of content partners. Apple Music, Spotify, Amazon Music, Audible, Deezer, Pandora, TuneIn, iHeartRadio, Google Play Music, and YouTube Music all vie for listeners’ attention on Sonos devices. What’s more, many of those services are more cheaply acquired elsewhere: Amazon’s third-generation Echo Dot and Google’s Home Mini each retail for $40; the lowest-priced Sonos model, called One SL, sells for $129.

But Sonos—which has never targeted occasional audio fans and has long appealed to audiophiles and upmarket consumers who delighted in the company’s easy-to-use multi-room audio support—isn’t quite turning into an overnight media company. When Sonos filed its Form S-1 with the U.S. Securities and Exchange Commission in 2018, it declared: “Our system is not—and never will be—an entry gate into a walled garden. We’re deeply committed to keeping Sonos open to every voice assistant, streaming service, and company that wants to build on our platform.”

That may be why Sonos’ new radio service aims to feature partner content. But it doesn’t quite explain the company’s push into original programming generated “by a team of curators, DJs, and artists.” (Its signature Sonos Sound System station is recorded in a newly built studio in its flagship retail store in New York City.) Does Sonos believe it can out-Spotify Spotify? It’s unlikely. But a premium listening experience may help the company justify its relatively lofty pricing.

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