Quote Originally Posted by john View Post
Actually just one part of it. I take issue with the part of Tylers (Spence Osborne) article that deals with ARPU. Was the royalty fee included in ARPU yes that is correct.

1) Is that wrong to do?????

NO, and I for one was expecting it to happen sooner if not right from the beginning.

2) Should that take away in anyway from the ARPU number?????

Once again NO it should not. That number includes what they are getting in average revenue from each subscriber. That includes Fees (especially fees they once were not getting but still paying for on their own).

3) So is it really important to split it up into different sections and say, opps this part of it went down. Did anyone HERE really do that before????

Once again NO,

4) So what makes this different then before????

I say nothing what so ever, ARPU is ARPU no matter were it comes from.

Not to be to hard on Tyler, I can see what he was trying to do (by showing SIRIXM was giving more deals to keep subscribers). But really dont they always do that, and yes the ARPU usually gos down when they do. The thing here is that it did not and it went up, which is what I expected it to do long before (because I was always expecting them to include that fee # in the ARPU from the start). So Tyler whats the difference?? ARPU is ARPU no matter were it comes from and if that gives SIRIXM a little more wiggle room to give some extra deals, whats the big deal.
Yup . . . same discussion I had with Spencer just a few days ago:

sirius roadkill says:
May 4, 2010 at 5:38 pm
ok-ok, but we will have to agree to disagree on this one; revenue is revenue . . why would I exclude any form of revenue from ARPU? I wouldn’t. Nor should the company. The analysts simply missed on this one.

Secondly, if the company knows that the pass-thru is accretive to the revenue line would that not possibly influence the extent to which retention efforts are increased; the two are not mutually exclusive considerations.

Spencer says:
May 4, 2010 at 5:45 pm
I agree that revenue is revenue. The royalty pass-through has, in the past, been withheld because it is pass-through. The company collects it, then pays it out. If the royalty pass-through were 1 million per sub, would you want it clouding ARPU knowing that the money is going right back out the door? This was nothing “missed” by anyone. When they first started the royalty pass-through they specifically kept it out of ARPU for the reasons I stated. This change in direction could not have been anticipated.

This quarter a metric that would have been a decline now looked positive because of the change they made.

sirius roadkill says:
May 4, 2010 at 5:51 pm
But the problem in holding it out is that you then have no offset to the expensing for that line item, no?

Isn’t it both a revenue and an expense

Spencer says:
May 4, 2010 at 6:35 pm
Yes, it is revenue. Yes, the payment out is an expense. ARPU is not a GAAP metric, and is designed to indicate the revenue that the company is deriving from the subscriber base from which they will potentially make a profit. The royalty is a pass-thru. They will never profit from it.

I was surprised to see it included in ARPU after they had previously stated it would not be included in the metric.

Spencer says:
May 4, 2010 at 9:16 pm

I said they will never profit from it…..I do not believe that to be the case. stay tuned

sirius roadkill says:
May 5, 2010 at 7:49 am
ok, you have whetted our appetites! do tell . . .