In my years of covering the digital radio space I have had the great fortune to speak to many analysts, writers, company executives and investors. One such writer is “Crunching Numbers” who analyzes SiriusXM on Seeking Alpha. Yesterday I received a call from Crunching Numbers asking me if I had seen the new SiriusXM plan that was about $50 per year. I had not. Mr. Numbers told me that he wrote a piece about it and submitted it to Seeking Alpha, but figured I would want to cover it. I told him that I would wait until after his piece published before covering it here. After all…He was the eagle eye that found the story. His article, “Sirius Comes Out With Lower Tier Subscription Offering” is well worth your attention.
Without stealing the thunder of Crunching Numbers, the bottom line is this. SiriusXM is offering a “Basic Plus” subscription package that allows consumers to access a limited yet robust selection of SiriusXM channels for only $5.99 per month and includes Internet Radio access. Those that want to save even more can by a one year subscription to the Basic Plus plan for just $49.95.
The strategy is probably quite simple. SiriusXM still gains many subscribers, but conversion rates are dipping a bit. A lower priced tier that meets the needs of a consumer may well keep them on board rather than leaving. A lower cost solution allows the satellite radio provider to keep more subscribers that will help (even if more modestly than higher tier plans) the revenue stream. Simply stated, it is better to get some revenue than no revenue. It is a no-brainer of sorts. It improves conversion rates, improves churn rates, helps with the overall subscriber numbers, helps with getting advertising on appropriate channels, and could help spread the word. The downside is that ARPU (average revenue per user) may take a small hit, but the revenue garnered should offset that situation. It can also help the company compete with services like Spotify and Pandora on pricing.
If you have a $50 bill, you can have a years worth of SiriusXM. Stay Tuned!