Alternative Revenue Sources
Patented Multi-tiered Overlay Technology
A patent that is held by Agere Systems Inc (Now a part of LSI Corp) that would allow Sirius XM to introduce a free version of Sirius XM radio that is (heavily) advertiser sponsored, as well as keeping the same subscription-based commercial-free version. In simple terms, commercials are inserted at certain times for non subscribers, while full subscribers get the commercial free product. Of course, not all channels will be available. Premium content such as NFL, Howard, O&A, etc would likely not be available on the advertising supported form.
Here is the way this would work… a selection of channels will be available, free to any listener who has a Satellite Radio. These are the same channels that are available to subscribers, with one key difference. Depending on the frequency chosen by the company, a commercial will be overlaid on top of the channel programming. If you are a subscriber, you will never hear that commercial. You will only here the same song you were listening to before. Nothing has changed for you. If you are not a subscriber, however, you will hear an advertisement for GM, McDonalds, Wal-Mart, etc, instead of the song. This would translate to a radio experience similar to regular terrestrial radio.
Of course, songs are notorious for not lasting an even number of seconds. Lets say a song lasted 2:39. Sirius would play a total of 2:30 seconds of advertising, and then play THEIR OWN 9 second spot, telling you how you can avoid all of these commercials for as low as $6.99 per month, or perhaps a special concert series or interview or dedicated band channel that is available to subscribers only.
A lot of people have talked about how to start getting revenue out of the 20+ million receivers out there that are dormant right now. What better way to get revenue than to turn all inactive receivers on with commercial-supported music interlaced with 3-5 spots per hour trying to get people to subscribe. This can potentially increase subscriber revenue, but the real money may be in the ad revenue that this type of offering will bring as well. Combining the 18.5 million subscribers today with the 20+ million dead receivers, that means that advertisers will potentially have an audience of nearly 40 million listeners nation-wide listening to their broadcast. What would that be worth to them?
This technology has the possibility of being an industry changer, though I admit that I do not know what all it would take to get this implemented. To discuss further, please visit the SiriusBuzz forums and post.
Position: Long SIRI
I noticed some of these patents a while ago. I actually expected this offering post merger. The thought I had was: Will SiriusXM be bound by decency and profanity laws if providing a free service? The DJ’s drop the occasional f bomb and talk about some racy topics. I guess they did it with O&A but it will add a layer of complexity to manage every station.
That’s all fine and dandy, but it does not address the problem that the company faces right now, which is rasing cash prior to the Feb converts coming due. You started your article off by referencing Tyler’s article, yet your piece does nothing to address the problem that he was trying to address.
This is exactly what they should do. Furthermore, they should take a page from Microsoft’s play book and pre-announce what they intend to do now even if it takes 6-12 months to implement it. When wall street realizes that their will be advertising dollars flowing they will come on board in droves to be in on the graound floor.
Does anyone remember what cable TV was supposed to be? Commercial free! That didn’t last very long and neither should this. I love the idea of two levels! A real teaser! If Mel picks up on this and does it. We will own clear channel in 5 years, then we can offer regular programing on one channel and premium on the other with clear signals everywhere!!
I have heard of the commercial overlay technology before, but I’m even more excited about the idea now that you have laid out an excellent way to implement it.
I hope Sirius/XM reads this and acts on it. I think it would help increase revenue and also public knowledge of Satellite radio in general (just think of the free publicity as is announced on the evening news and in the newspapers). There are some people that would never sign up for a subscription, but would listen to the commercial version for free.
Just as with Sirius Backseat TV (which itself is a modulation overlaid on the existing service), new hardware would be required to decode the new overlay. When you look at the patent, you see that receivers must be compatible with the new “commercial service tier”–the receiver must be able to recognize the new broadcast overlay with commercials in order to play them. This looks like it would rule out compatibility with existing radios.
Reversing the scheme (where the new overlay is dedicated to commercial-free music so that today’s radios could receive the first tier, with commercials) wouldn’t make the 20 million existing subscribers too happy, either. The only way I could see this “commercial service tier” working is to introduce it into new radios, with the new tier carrying the commercials. Maybe these radios could default to the new commercial tier until they’re activated.
Below is an email I had sent to IR back in June 2007. I hope I can get a piece of the pie.
As per our earlier discussion, I would like to offer a suggestion to Mel.
Offer free satellite radio service to every available sat radio device. The free service comes with ads. Then offer your regular service as a premium upgrade, with no ads, and include sports and talk. Similar to what Slacker is offering. This will assure you of steady huge ad revenue. It will also be the demise of terrestrial radio, as we know it. Sat radio would then be the dominate listening service in this country.
Tesla, as I said in the article, I am not sure if current technology has the capabilities of doing this.
Not sure if the existing radios would be able to be updates to use this technology via a firmware or software update sent via sats or if it would require new hardware all together. If it would require new hardware, then perhaps as Sirius XM puts out their Interopperable recievers, they will add this technology to maximize revenue. Of course if this is the case, there will be no short term boost. =(
> In simple terms, commercials are inserted at certain times for non subscribers, while full subscribers get the commercial free product. <
Seems very plausible. Basically, the commercials would be sent via some sort of forward and store technology via Ancillary Data Links. Then at a given time, the data is played out on the local receiver. This type of technology would provide the ability to present “localized or regionalized commercial content”. Which is, of course, prohibited by their licenses. But, we will avoid discussing that pitfall and assume that the commercials would be a national content nature. So you take one “stream” of data, and locally inject an “overlay” source of data that has been stored on the local receiver. So in effect, you would have what they would call a “commercial free” stream, and the same “commercial free” stream with stored data injected at a “cued” point in-time for non-subscribers that access the content.
So my question is. What transpires on the “commercial-free” stream whilst the “commercial insert” is being injected on the “non-subscriber” accessible feed.
Do they just play the commercial over the commercial-free music as it returns from commercial break? Or do they inject other “non-commercial content” into the “non-commercial music stream.
In other words. Do they play, let say, “promo’s for other SIRIXM channels”, or PSA’s on the commercial-free stream whilst a commercial is playing on the non-subscriber feed?
I guess it all depends on what you consider “commercial-free”? Personally, I consider “promo’s for other channels” as being “commercial content”. You pay for “commercial free” channels, but still get a bunch of “Promos” like terrestrial radio.
So I guess my viewpoint is that IF this is how the concept would work. The “commercial-free” channels would still be technically “commercial-free”, but the amount of music you would actually hear would decrease, and the amount of “Promo’s/PSA’s” per hour would increase to make way for commercial overlay’s on the non-subscriber channels.
In other words. Welcome to terrestrial radio again.
I mean, I hear Promo’s for HD Radio on my local CBS station about 3X an hour. But, these are not commercials. They are promos. But, they are still annoying. I would hate to be paying $13 a month to hear that many Promo’s on my paid commercial free radio.
Does anyone have a more in depth knowledge on how this would actually be implemented.
And so it goes,
PCSTEL
PCSTEL, you are way off! This is how I see it:
Lets say you are a subscriber, and I am not.
On the feed, the next song to play is 3 Doors Down Away from the Sun. That song is 3:51 seconds long.
When it is time for that song to start, since you are a subscriber, you hear the song. Great! It is your favorite!
I am not a subscriber. In place of that song, I will get advertising. I will get exactly 3:45 worth of national advertising, along with a 6 second blurb for Sirius XM radio, or perhaps 3:30 worth of advertising, along with 21 second DJ speak of upcoming specials or what ever.
The process would have to be seamless, to make it seem like each listener (the subscriber and non-subscriber alike) has a complete listening experience, even though the non-subscriber is actually listing to commercials while the subscriber is getting a song.
As a subscriber, YOUR experience would not change one bit. As a NONsubscriber, you could now listen to Sirius XM radio nation-wide where you could not before, but you would be listening to commercials as well.
Get it?