Sirius XM Announces Yet Another Rate Hike
Here we go again, it has only been a few months since the March 11th rate hikes that drove subscribers into a frenzy and already Sirius XM is announcing another rate increase for their subscribers. This time around Sirius XM is laying blame to the ever increasing Music Royalty Fee.
In a recently created memo posted on the XM website the company notes that, effective July 29, 2009, a U.S. Music Royalty Fee will be added to subscriber invoices. The fee is slated at $1.98 a month on their base subscriptions ($12.95) and $.97 for base plans that are eligible for a second radio discount.
Sirius XM is quick to point out that “Unlike terrestrial radio, both Sirius and XM are required to pay copyright music royalties to recording artists, musicians and recording companies who hold copyrights in sound recordings.” Sounds like the guys at Sirius XM are more then a little bitter about their current situation and for good reason. The bottom line is that both Terrestrial and Satellite Radio generate revenue by playing the works of others and the method in which they generate that revenue (whether ad supported or subscription based) should not matter.
For those of you legal buffs who might be concerned with the legality of this fee increase being consistent with Sirius XM’s merger commitment not to raise prices for three years, Sirius XM has this to say “This fee is consistent with our commitment not to raise the base price of specific service plans for three years after the merger. The FCC decision approving the merger between SIRIUS and XM permits the companies beginning July 29, 2009 to pass through to subscribers any increases in music royalties since March 20, 2007, the day the companies first asked the FCC to approve the merger.”
You can find further details on the U.S. Music Royalty Fee increase on the XM website.
Has anybody released an estimate of how much this means to the bottome line for SIRI XM. I don’t think it is just a wash. They are passing on some of the cost increase that they incurred in ’07 and ’08, so the increase in ’09 revenue should be higher than the increase in ’09 expenses. I just don’t know by how much.
I say “bravo!”. No matter how you slice or dice it, it’s a 15% increase in income per subscriber. Of course, there will be a number of subscribers who cancel as a result of this, but I don’t think it will be a large number. After all, we all pay fees and taxes we can’t even describe on our phone bills, utility bills, cable bills. Those companies do not claim to be raising rates, and the average consumer does not see it as a rate increase. They see it as a lot of taxes and fees being added on, but they shake their heads and pay it.
Unless the rate increase is disingenuous this should not add anything to the bottom line.
People do pay these fees on their utility bills and phone bills because they have no choice. This is a day an age where people don’t need to have this service and it is getting increasingly expensive every passing month. $2 bucks here and there is $48 more a year. 2 bucks is a lot of money in this economy that has starbucks sales down 75%.
The 15% decrease in subscriptions after this goes through should just about even out the gains.
oh plz james, get a fricking clue my friend. nice article charles.
Dear Mark,
I had 4 subscriptions. Due to the two price increase it would have cost me another $144/year for the additional 3 radios that i had (3 x $4 x 12 months).
I’m now down to 1 subscription. That’s a 75% reduction just for me. And how many additional subscribers were there last quarter Mark? Hint: it’s less than zero.
If you actually believe that you are smoking crack.
And just how much more do you think people are going to roll over on a luxury like SatRad????
Cable Bill: Thanks for bringing that up. Can you say “Charter is bankrupt”? Notice how a lot of of them flirt with failure a good bit of the time??
This rate increase is a nail in the coffin as far as the stock price goes.
It WILL reduce subscribers as well as revenue.
The death spiral has begun.
“This rate increase is a nail in the coffin as far as the stock price goes.” – BahBah Booey
I see, so why did the stock just shoot past .40 today then? LMAO!!!
The stock price rose on the iPhone news and the purported Sirius-XM app to be released on Thursday.
When everyone realizes what a piece of crap the application actually is, coupled with the additional price increase, watch the stock blaze its way back to 25 cents in less than week.
Interesting how these negeative articles come out right around the time (or a little after) there is a move UPWARD on the stock price. Did you guys resign from the Motley Fool and move over to this site. I’m just saying IMO
PS – Whatever happened to Brandon Matthews?
Brandon Matthews was discovered to be CRFCEO by of all people Michael Hartlieb, if I am not mistaken…took me a long time asking before anyone answered this question to me…and then a Google search…Brandon Matthews (a pseudonym) is now posting on his own Sat-Waves website…He had posted there before (and on Yahoo message boards as CRFCEO) without admitting to be the same person as Brandon Matthews.
So what is the significance of the duel personalities? Is he being contradictory? The article I read seem to be OK and he declares his position as long
I love Sirius, but this is ridicilous. If Stern leaves Sirius, Sirius will be bankrupt in 6 months. 🙁
Isn’t this OLD news, meaning that it is not news at all…
I read about this at least 2 weeks or more ago.
I have to agree with js631dp, why the bash now? Because of the imminent iPhone application release? I know you guys are not from Motley Fool, but, the play is straight out of their playbook, or you just have completely bad timing here.
That’s another problem….. I could see were someone might interpret this as “yet another rate increase” when this news came out a while ago. Seems like tactic to me…IMO
That was a rumor — this is the real announcement.
Nice Try
Nice try? He is correct, this was a rumor up until the time when the emails went out and the xmradio website page was created, which as far as I know, was late last night. This is news.
would have been nice to have this announcement a day after the iphone announcement or even better buried with that announcement ie tug on it after the hook is in place securely-not before
something very fishy here but maybe not- nothing this company has amy glimmer of human intelligence
maybe mel is an alien
Very excited about what this does to SiriusXM bottom line. Every dollar that used to be spent on their royalty fees, is now being spent on another bill. If your not making money, every dollar counts even more so.
Great news, thats for shareing Charles. I might have to change my opinion about you. You should mention how great it would have been to their bottom line.
huh?
Huh what? Did I stutter? What part didnt you understand? I just reread it. Plain as day. Care to elaborate?
Relmor
Great points! Will allow company to focus on other obligations, while they head toward FCF+ 2010.
guys for those that think this rate increase will cause as many as subs to leave as the revenue it creates are nuts. While I think it will have a worse effect on sub numbers then the other crap they did there is no fact that has to be looked at. First after they changed the content offerings and then increased the rates the first time, SIRIXM lost few subs compared to the gains made. More subs may leave this time then before but fore the most part the same will be true here as before.
John,
Learn the difference between the words ‘than’ and ‘then’.
While we’re at it, it wouldn’t hurt to brush up on the proper use of a comma.
For the record, Sirius-XM has not made ANY gains.
The company still loses money and no end is in sight.
If you are referring to the stock price ‘hovering’ at 33 cents per share from the low of 5 cents, I stand corrected.
Sirius is great, but they need to stop picking on subscribers who like the program and pay for it. Paying 16 dollars or more is too much for radio.
They need to add more radio personalities like KIDD Chris Show!!
This is OLD news. I posted on it almost two weeks ago and it has been on several SatRad sites for longer than that.
Utility fee add-ons: Yep, people shake their heads and pony up anyway. HOVEVER, this ain’t something life essential like water or really important like electricity; SatRad is a LUXURY (no matter how much I USED to think I needed it).
“Charles” failed to mention Mel’s “bait & switch”: NO charge as long as your multi-year subscription is in place. Mel sez: “Extend your multi-year subscription before July or sign up for the lifetime package and you avoid the increase”
That’s just like him & his cohorts…………. That’s one of the oldest marketing ploys in history and usually a precusor to the demise of a business in desperate need of cash.
Like I’ve read/researched one of Mel Karmazin’s favorite quotes:
“I just LOVE selling ADVERTISING!!!!!”
Let SiriusXM go BK so it can truly disappear or improve.
Anything’s better than what’s going on with Mel & his minions.
This is an old RUMOR which was confirmed in this article with an actual link to an Sirius XM webpage which confirms the actual validity rather then speculation.
Charles mentioned Mels bait and switch in an article a couple of weeks ago and has mentioned it every step of the way from the Bubba debacle to the recent rate hikes to his recent twitter article where he pointed out a customers complaint about the B&S.
Get a clue Lou.
Not seen one article from Charles and that’s that.
Plus,
I don’t twit/twat/whatever that piece of crap is and have no intention to start.
Oh, I forgot, now that the iPhone App is available I guess I’m supposed to rush right out and spend $100 on a new iPhone and then spend $70/month cellular fees then spend $3 bucks/month to get the same crap I’m paying ~$8/month now.
Man,what a deal Mel has for me!!!!!
I just can’t get over how much Mel,Zellner & Greenstein care about the superior programming they offer since the acquisition/merger. I’m truly awed by their passion for customer service and excellence in programming with great channels like “Rawdog”,”Area”, and “Soul Town”
Those guys are the Merlins of programming!!!!!
So, because you haven’t seen them, it hasn’t happened? That is crappy logic, do some research.
BTW:
Your much awaited iPhone APP will be effective tomorrow 18 June 2009.
Don’t make a hill of beans to me but if it makes y’all happy……..
Why would you want something like that??? What difference does it make? Paying $70/month for cell service and then maybe $3.00/month on top of that just to listen to programming that is inferior to what it was two years ago???
This is something to be celebrated?????
Who has that kind of money these days?????
Recondo
Still a disgruntled, whiney shareholder…Keep beating the same drum…over and over and over and over! Should have invested in the corner lemonaide stands…then when the economy hits the shits…you could have whined and cried, and kicked the crap out of a couple 6 year olds. What a freakin clown! it’s about time you come up with something new to bitch about!
Like the metoric rise in stock today since the end all to be all release of the iPhone application sans Stern?
Yeah, it sure blew the socks of the low – mid .30’s doldrums hasen’t it???
Your’re a REAL guru ain’t ya Skippy????
And yes, I’ll keep beating the drum of truth all damn day long untill they get someone who knows how to run a SATELLITE broadcasting company & NOT a REHASH of terra radio & the quality of the company improves or goes the way of analog TV(i.e. nothing but silence and 0 bars on the signal meter). These days it don’t make too much difference to me.
Anywhere,Anytime, Wheel
Doesn’t it seem as if Sirius XM is purposely attempting to ruin this company? If they can’t get enough subscribers at $12.95, what do you think will happen when they increase the price to $14.93?
They have already raised the prices for the multiple radio “discount” and done away with the free Internet listening. My favorite tactic is that now the companies are merged, I still have to pay full price for my Sirius and XM subscriptions because they don’t offer the multiple radio discount across the Sirius and XM brand names. I am failing to see where the merger helped the consumer. Besides turning off the service, how else could they discourage consumers from subscribing?
Now, why would a company want to purposely destroy itself this way? When Liberty Media was given 40% of the company for a mere 530 million dollars, (remember when the merger was valued at 13 billion dollars?) it was agreed that Liberty Media would not be able to own a majority stake in the company for three years. So why would Liberty Media want the stock price to increase when that will simply increase the cost for them to take control of the company? After Liberty Media owns a majority stake in the company, the company will be taken private and the share holders will be helpless to do anything to stop it. Better yet, if they can get the company to fail quicker, they could argue that taking the company private is it’s only hope and the share holders will have to agree to this for fear of losing every cent of their investment.
Now, after the company is taken private, this is when Sirius XM will initiate all of these great technologies that we have been hearing so much about. For instance, being able to broadcast free satellite radio and inserting advertisements into the stream, while the paying subscribers will not hear the commercials. We all know that Sirius XM has this technology because we have see the patents. For those of you that have not seen it, here is the link.
So why would Sirius XM be waiting to deploy this technology? Could you imagine the value this would bring to the company? Liberty Media and Mel Karmazin certainly can. But they don’t want the share holders to steal their profits away from them. If this technology were to be implemented before Liberty Media owns a majority stake, they may not be able to afford to purchase the additional 10.1% of the shares they will need to take control of the company.
What would a company that owned essentially 300 radio stations in every inch of every market in the continental United States (coming soon to Alaska, Hawaii and Puerto Rico) be worth? This is the reason we invested in Sirius XM, but I fear we have only paid for the development of this technology and will never see the financial benefits.
When I first wrote about Sirius three years ago I stated, “One thing is for sure…someone out there, somewhere, is scheming.” I just never imagined that the scheme would be so sinister.
“I am failing to see where the merger helped the consumer”
That my Dear Tristan28 is what a shitload of opponents to the merger were saying all along. It has materalized with a vengenence. I can’t think of too many mergers that DID benefit the consumer.
The FCC was gutless when Mel pulled his BS. They bought it and we are the victums of that injustice. That is the tragedy of this whole mess.
Both companies should have failed or succeeded on their own merit plain & simple. The original charter was for two or MORE SatRad companies and now you see where it has gotten us. Shitty programming to a great degree,management cares not a whit for its core subscribers,etc. I could go on & on………
I hate to say I told you so, but I told y’all so…….
Right On Tristan
Mel said it himself “I would love to take this company private”
it was a slip up no doubt. Mel was brought in to do just this. He did the same thing in the 90’s. Took it private, built it up, took it public again.
Watch and learn. I have never seen gross negligence as this and lack of accumen. If your eyes are open it seems clear theya re purposely holding things back.
BTW The royalty maxes out at 8% of gross revenue, yet Mel is increasing your sub price (IE gross revenue) by 15.3%……
Why can they not leave your pricing the same if you are already a subscriber? That would seem to be fair to the loyal subs wouldn’t it?
Good point.
Give Mel an call and I’m sure he’ll get right on it.
Like he & his minions really give a s**t about the base subscribers who have been around since the start or near start like myself.
You know what they say: “Actions speak louder than words”
When has Mel & his cohorts shown one bit of concern for the base?
Not one damn bit that’s what.
Prove me wrong y’all.
If you can afford it, why not go lifetime & avoid ALL those future price increases. I have had to lifetime subs for 6 years now & it has definitely paid for itself in 4 years.
As for Pandora, Slacker, & all those “free” services, I can’t see how they are not going to eventually have to also pay royalty fees. Can anyone fill me in why they would not have to?
They are already paying fees and have been for quite some time. Despite the fees Pandora is ready to turn a profit.
Can you still get the life time plan and at what price. Anybody.
Vonage just sent me an email that they are raising their 911 governmental fee…
these fees are par for the course today.
what are you going to do about it, stop listening to music and turn off your phones, get real, and the companies know this.
All you whiners can cancel. Feel free. Do it.
$1.98? You whiners probably spend more than that on bottled water each week. Something that comes out of the tap for free.
You guys are blind.
Then why don’t you walk up your street every day and throw two $1 bills in the air…its only a couple bucks right?
Mel increased you sub 15% while the fee is only 8%.
Keep drinking the koolaid and bending over taking yet another one. All I can do is laugh at you fools who believe Mel wants to make you rich. Great entertainment
Oh my god! They are passing along a huge cost increase instead of eating it when they are already losing money. Who do they think they are, businesmen? Starting to look that way. NOBODY survives by internalizing royalty increases without passing them along… This will help them quite a bit. Most of you guys that are pissed about this spend 200 a month at Starbucks. All they are doing is tweaking the business model, they would be crazy not to.
It is not unreasonable to pass on certain costs.
Ultimately, all costs are passed on to the consumer.
What is so frustrating is that Sirius-XM management treats its own customers so poorly and can’t seem to get ahead of the curve on ANYTHING.
They are ALWAYS REACTING instead of being pro-active.
They communicate POORLY with their own customers and then wonder why people get angry.
It no longer offers a clear value with its product.
This additional increase is NOT good for the bottom line due to the effect on sub numbers.
Yet again proof that Sirius-XM management should go.
So CANCEL. and quit complaining about everything. Terrestrial won’t pass on any fees to you. Nor will Pandora.
No, I think I’ll continue to post my thoughts on the failures of Sirius-XM for no other reason than YOU don’t like it. LOL!
They need to do more than tweak it, they need to change it.
The royalty fees will max out at a total of 8% yet they increased your sub 15.3%….Even worse, the sub price already included the fee which is now at 6%, so what SIRI ays is only going to increase 2% more when it maxes. The remaining 13.2% they stick in their pocket to buy more free shares for tehmselves.
Have fun when this dog goes private and you end up with your massive losses.
I figured it out. BahBahBooey is Charles.
The merger agreement allows for SXM to pass along the *increases* since March 2007. I am not sure what the percentage was in March 2007, but the current increase is from 6 to 6.5 percent. In other words, prior to this the .78 per month could be considered built into the subscription price (single radio $12.95 subscription). When it goes to 6.5 percent, this is only 7 cents increase in royalty rate. Even if subscribers paid the entire 6.5 percent rate on top of their subscription rate it would only be 85 cents!
I don’t mind supporting a company whose product I enjoy. I really mind being treated poorly by insulting my intelligence by using deceptive language, implying that the entire increase is for the royalty payment, instead of calling it what it is – a 9% rate increase plus shifting the entire royalty cost to its subscribers.
We haven’t made up our mind, yet. We will either downgrade our service, or cut it out altogether. I hope enough others are doing the same. They clearly need a wake up call.
Just canceled both of my subscriptions.
I love Stern, I will miss him alot.
The music programming has gone downhill, cheaper royalties on less than popular songs.
Then the rate increase for internet and secondary subscriptions.
This latest move was the straw that broke the camels back.
I hope Stern moves to a different medium at the end of his contract.
I am canceling. They should be absorbing the cost of these royalty fees.
Isn’t music what we where paying for in the first place? RIDICULOUS!
Ever since this Mel Karmazin took over, there are increases in subscription fees, royalty fees, and MORE COMMERCIALS!
Even on Stern they are starting to make commercial segments longer and longer… from a few minutes to ten minutes and now close to 15 minutes in commercials.
Don’t believe for one second they are not making MILLIONS annually on these new commercials. What happened to commercial free radio? Aren’t we we paying for that as well?
GOODBYE SIRIUS! GOOD LUCK WITH YOUR RATE INCREASES!
Just downgraded my services. No way will I pay additional royalties to an industry (RIAA) that sues its own customers.
I just canceled both my subscriptions. the company is pathetic and conveniently pulled this as Howard goes on yet another vacation, not that he is likely to care about all the BS he misled us with about rate hikes post merger. I will just have to live without the four days a week of even shorter show from Howard. as I mentioned in my email to Sirius (which i know was pointless) i cant wait till the company goes under when Howard leaves. Its funny how last week he was so concerned about being treated like an A-hole but that’s exactly what he does to us…and yes the $500,000M man is Sirius.
yeap I’m with you guys, I’ve been with Sirius for 5 years and I’ve seen nothing but increasing bad programming and excuses to increase rates. I’m done!
Yep I have canceled my sub! So much for not being a monopoly. After the merger they added a $3 internet fee (free to subscribers before merger… sneaky way around the anti-competitive laws). Then they finally release the iPhone app without Stern & NFL (and you know that there will be a seperate fee for that down the line). And now an extra $2 fee. I am at $18 a month. I’m out! Stern is not as vibrant as he once was, 4 days a week, more vacation time than the royals and he keeps saying that he is retiring when his contract is up. For $18 a month I could have Tivo & Netflix.
So after going back and forth for weeks, I decided to cancel after 3 years. I don’t know what they’re thinking…we are in a recession right now and people are looking for ways to save money. They way to retain your loyal customers in times like these is not by increase. I had already forgiven and forgotten about losing my internet radio, but lets be honest; this is just plain greed. Nope, I don’t think I’ll be part of this game any longer. Best of luck SXM, I hope your marketing people come up with something brilliant…
I called up to renew and add Pioneer INNO to my subscription. I always thought the service was over priced and I had almost decided to let it go. When the customer rep told me about the Music Royalty fee I said just forget it. I am not paying anymore money. The rep instantly waived the Royalty fee for both receivers and she also waived the setup charge for the Pioneer INNO.
This is all a bluff. If you tell XM you are going to cancel they will waive these new fees. They cannot afford to loose subscribers.