An interesting story broke this past week from Billboard on the subject of Internet Radio and the listening habits of consumers. The news bodes well for satellite radio, or at least one can take it that way. While Internet radio is still trying to find a way to monetize (or better monetize) the model, satellite radio already has the recipe as well as the wide ranging distribution offered by standard installation in about 65% of all automobiles made.
One big advantages Internet Radio offered was customization. It is actually the feature that attracts me to services such as Slacker and MOG. That advantage may not be as big a deal as myself and others think given the recent statistics offered up by UK Internet Radio company WE7.
According to data from September 2010, of the streaming service offered by the company, 55% of tracks experienced through the site were not custom chosen by the consumer. In October that statistic jumped to 63% of all visitors and 83% of regular visitors. used the Internet radio function. All users have the option of listening to the music of their choice on-demand.
WE7 calls it "lean back" listening vs "lean forward. Lean Back listening means the consumer simply tunes into a channel without being pro-active in selecting a specific track. In the "Lean Forward" mode, the user is active in selecting what songs they hear. Satellite Radio is very "Lean Back". Programming is pre-selected and broadcast without the user having a real say in what song plays when. Sure there are request lines, and some channels have fan interaction, but for the most part you simply pick your genre and listen.
Given the WE7 statistics it would appear that consumers are content to let the programming be chosen for them. If you think deeper though, there are aspects of Internet radio that are attractive even to the lean back types. On Internet Radio you can type in the name of a band, and the services then set up a more narrowly defined channel. Thus my initial "listen would be by request, while the next few hours would be "Lean Back" listening.
Just this weekend I found myself looking for a specific Lady Antebellum song. I simply logged into my MOG ($10 per month with unlimited downloads) account and within seconds had the song streaming. While I was at it I downloaded the entire album. I followed that up by downloading the album onto my iPod. This type of activity would be impossible with Sirius XM. Thus, in the end, I think that as long as services have some aspect of customization will fare well, and that satellite radio, at least on the Internet side, should step up their efforts in this arena.
Sirius XM has a serious advantage in the wide spread availability in the car. The gap between satellite and Internet narrows with the use of smart phones, but Sirius XM offers a content line-up that will continue to deliver more and more users as each quarter passes.
The battle for consumers will still be waged. Internet Radio will not disappear or fade away. Even with cell phone carriers charging more for streaming, the facts are that the limits being imposed are hard to reach. As a smart phone user with an unlimited plan, I don't think I have ever approached the limits that are imposed on new data plans. You simply need to be streaming for hours per day to reach those limits. The battle will not be won or lost on "data limits" or legislation regarding net neutrality. The battle will be won or lost on meeting consumer demand and wide range availability.
Position - Long Sirius XM Radio