Power

Looking beyond hardware, Sonos launches its first streaming service

Sonos Radio marks the company's first foray into advertising, just as advertising is in crisis.

Sonos speakers

Sonos is moving into the streaming business with its new Sonos Radio service.

Photo: Gabby Jones/Bloomberg via Getty Images

Sonos launched its first audio service Tuesday, called Sonos Radio. It promises free and exclusive music programming across a few dozen stations. Many of these stations will be supported by advertising — a new business for Sonos, which the company is entering at a time when the ad business is feeling the pressure of an evolving economic downturn.

However, for Sonos, the radio service also represents a new opportunity to lean more heavily into product partnerships like its existing relationship with Ikea, and expand to new product categories, including automotive. As such, it's an interesting example for a consumer electronics company using services not only to generate revenue but also as a way to expand its core business.

Sonos Radio: 33 stations, most with ads

Sonos Radio is launching as a new section within the existing Sonos mobile app Tuesday. The section offers consumers access to existing radio streams from terrestrial and internet broadcasters, while also highlighting Sonos-exclusive stations. These include the company's flagship station, dubbed Sonos Sound System, as well as a few select artist stations curated by musicians like Radiohead's Thom Yorke and Talking Heads legend David Byrne.

The company's signature stations are being complemented by around 30 genre stations programmed by Sonos staffers, with titles like "Reggae Roots," " R&B Collective" and "New Lords of Metal." These genre stations will feature some ad breaks, while Sonos Sound System and the company's dedicated artist stations will be presented without advertising.

Sonos Radio General Manager Ryan Taylor told Protocol that the company first began sketching out plans for the new service some 18 months ago. It struck a partnership with online music veteran Napster to power the catalog and streaming technology, but Sonos is doing all of the programming in-house. Taylor stressed that the company wasn't using any algorithms to compile its radio stations and promised a radiolike experience, complete with artists and hosts talking about new releases. "They're not playlists, they're actually radio stations," he said.

Sonos doesn't make much money with Ikea speakers — yet

Founded in 2002, Sonos has exclusively focused on audio hardware for most of its existence. In recent months, the company signaled that it was looking to expand into services, with Sonos CEO Patrick Spence telling Protocol in February: "There's great opportunity there. We're excited."

One reason that Sonos is expanding into services now is its partnership with Ikea. The furniture giant began selling Sonos-powered speakers in its stores last summer. Those products aren't just cheaper than traditional Sonos speakers, they're also made by Ikea, with Sonos only supplying some of the electronics to power the streaming experience. As a result, the company gets a lot less money per speaker sold. In its fiscal first quarter, Sonos generated $562 million by selling its own hardware products but received less than $34 million from Ikea and other companies paying for the use of its technology.

On the flip side, partnerships like the one with Ikea have the potential to grow Sonos' customer base massively beyond the 10 million households that currently own Sonos speakers. Thanks to Sonos Radio, the company now has a way to monetize that customer base for years after they purchase speakers, and also benefit from a trend of radio advertisers shifting their ad dollars from terrestrial to digital audio. Media research company Borrell Associates predicted last year that traditional radio advertising would decline by 4.4% in 2020, whereas digital radio ad spend would grow by a whopping 27%.

Sonos' bet on advertising is similar to the strategy employed by Roku. The company is best known for its streaming devices but makes most of its money from advertising. However, Roku was also recently forced to withdraw its 2020 financial guidance in light of the COVID-19 crisis. Sonos' Taylor freely admitted that it was not the best time to launch an ad-supported service. The advertising market is under heavy pressure from the COVID-19 shutdowns, with travel, automotive and other key advertisers pulling back just as the usage of ad-supported services is up.

Even so, Sonos seems committed to these services in the long run. The company retooled its New York retail location, adding a radio studio, to become the operations center for Sonos Radio. And while Sonos Radio currently doesn't include any podcasts, it may down the road launch its own dedicated podcast offering as well. "This is a first step for us," Taylor said.

Transitioning from home to everywhere

Beyond providing a much-needed additional revenue stream for Sonos, the new radio offering also serves another function for the company: A free signature service like Sonos Radio makes it easier for new users to get value from a Sonos speaker right out of the box, making the company's products more approachable to casual listeners who may not yet pay for a premium music service.


Get in touch with us: Share information securely with Protocol via encrypted Signal or WhatsApp message, at 415-214-4715 or through our anonymous SecureDrop.


That, in turn, may be important for taking Sonos to the next level. Company executives have long talked about their desire to expand Sonos beyond the home, and there have been reports that Sonos could partner with a headphone maker, or even a car manufacturer, to power streaming on the go. Especially in an automotive context, Sonos may encounter consumers who are unfamiliar not only with the company but with music streaming in general. Having free, curated content ready to go when that hypothetical Sonos-powered car stereo turns on could be key to making such partnerships work.

Without commenting on specifics, Taylor reiterated that the company was still committed to expansion. "We are transitioning from home to everywhere," he said.

Google’s latest plans for Chromecast are all about free TV

The company is in talks to add dozens of free linear channels to its newest streaming dongle.

Google launched its new Google TV service a year ago. Now, the company wants to add free TV channels to it.

Photo: Google

Google is looking to make its Chromecast streaming device more appealing to cord cutters. The company has plans to add free TV channels to Google TV, the Android-based smart TV platform that powers Chromecast as well as select smart TVs from companies including Sony and TCL, Protocol has learned.

To achieve this, Google has held talks with companies distributing so-called FAST (free, ad-supported streaming television) channels, according to multiple industry insiders. These channels have the look and feel of traditional linear TV networks, complete with ad breaks and on-screen graphics. Free streaming channels could launch on Google TV as early as this fall, but the company may also wait to announce the initiative in conjunction with its smart TV partners in early 2022.

Keep Reading Show less
Janko Roettgers

Janko Roettgers (@jank0) is a senior reporter at Protocol, reporting on the shifting power dynamics between tech, media, and entertainment, including the impact of new technologies. Previously, Janko was Variety's first-ever technology writer in San Francisco, where he covered big tech and emerging technologies. He has reported for Gigaom, Frankfurter Rundschau, Berliner Zeitung, and ORF, among others. He has written three books on consumer cord-cutting and online music and co-edited an anthology on internet subcultures. He lives with his family in Oakland.

While it's easy to get lost in the operational and technical side of a transaction, it's important to remember the third component of a payment. That is, the human behind the screen.

Over the last two years, many retailers have seen the benefit of investing in new, flexible payments. Ones that reflect the changing lifestyles of younger spenders, who are increasingly holding onto their cash — despite reports to the contrary. This means it's more important than ever for merchants to take note of the latest payment innovations so they can tap into the savings of the COVID-19 generation.

Keep Reading Show less
Antoine Nougue,Checkout.com

Antoine Nougue is Head of Europe at Checkout.com. He works with ambitious enterprise businesses to help them scale and grow their operations through payment processing services. He is responsible for leading the European sales, customer success, engineering & implementation teams and is based out of London, U.K.

Protocol | Policy

Iris scans for food in Jordanian refugee camps

More than 80% of the refugees in Jordanian camps now use iris scans to pay for their groceries. Refugee advocates say this is a huge future privacy problem.

A refugee uses their iris to access their account.

Photo: KHALIL MAZRAAWI/AFP via Getty Images

Every day, tens of thousands of refugees in the two main camps in Jordan pay for their groceries and withdraw their cash not with a card, but with a scan of their eye.

Nowhere in the United States can someone pay for groceries with an iris scan (though the Department of Homeland Security is considering collecting iris scans from U.S. immigrants, and Clear uses iris scans to verify identities for paying customers at airports) — but in the Jordanian refugee camps, biometric scanners are an everyday sight at grocery stores and ATMs. More than 80% of the 33,000-plus refugees who receive cash assistance and (most of them Syrian) and live in these camps use the United Nations' Refugee Agency iris-scanning system, which verifies identity through eye scans in order to distribute cash and food refugee assistance. Refugees can opt out of the program, but verifying identity without it is so complex that most do not.

Keep Reading Show less
Anna Kramer

Anna Kramer is a reporter at Protocol (Twitter: @ anna_c_kramer, email: akramer@protocol.com), where she writes about labor and workplace issues. Prior to joining the team, she covered tech and small business for the San Francisco Chronicle and privacy for Bloomberg Law. She is a recent graduate of Brown University, where she studied International Relations and Arabic and wrote her senior thesis about surveillance tools and technological development in the Middle East.

Protocol | China

Weibo is muzzling users for discussing a landmark #metoo case

A number of accounts have been suspended, even deleted, after voicing support for the plaintiff.

Photo: Photo by Kevin Frayer/Getty Images

As a Beijing court dismissed China's landmark sexual harassment case on Tuesday, Weibo censors acted to muzzle a number of accounts that voiced support for the accuser, or even simply discussed the trial beforehand.

In 2018, the plaintiff Zhou Xiaoxuan, better known by the nickname Xianzi, filed a high-profile #MeToo case against Zhu Jun, a renowned state broadcast show host. Zhou claimed that Zhu sexually harassed her while she was an intern on Zhu's show in 2014. Chinese web users have closely followed the civil suit, which has also drawn international media attention.

Keep Reading Show less
Shen Lu

Shen Lu is a reporter with Protocol | China. Her writing has appeared in Foreign Policy, The New York Times and POLITICO, among other publications. She can be reached at shenlu@protocol.com.

Protocol | Enterprise

Take that, Slack: ServiceNow gets a little closer to Microsoft Teams

ServiceNow is expanding its decade-long partnership with Microsoft as both companies intensify their rivalry with Salesforce.

Microsoft and ServiceNow's "coopetition" is aimed at a higher goal: undermining Salesforce, which is fast becoming the main rival for both vendors.

Photo: Uwe Anspach/Getty Images

For ServiceNow, Microsoft is the lesser of two evils compared to Salesforce.

After ditching Slack for Teams following the Salesforce acquisition, ServiceNow is deepening its decade-long partnership with Microsoft, promising co-development of new products and fresh integration capabilities within Teams, it plans to announce Thursday.

Keep Reading Show less
Joe Williams

Joe Williams is a senior reporter at Protocol covering enterprise software, including industry giants like Salesforce, Microsoft, IBM and Oracle. He previously covered emerging technology for Business Insider. Joe can be reached at JWilliams@Protocol.com. To share information confidentially, he can also be contacted on a non-work device via Signal (+1-309-265-6120) or JPW53189@protonmail.com.

Latest Stories