SiriusXM has many advantages when it comes to audio entertainment. The company delivers content through satellite as well as the Internet, has a wealth of channels, a plethora of content, and is free from the reigns of censorship that impact traditional radio services. There are also disadvantages to being a satellite radio service. One of the disadvantages is that the royalty costs can be expensive. SiriusXM passes much of that cost on to consumers, but one way or another, artists and performers need to get paid as well.
The royalty issue is a tricky one. There is really no parity in the field as yet. Terrestrial radio pays very little, satellite radio a low fee, and Internet radio gets clobbered. In fact, SiriusXM actually pays higher royalties when a subscriber listens via the Internet. Sort of weird, but if you and I are listening to the same song on SiriusXM, but I am listening through satellite and you are listening on a smartphone, the company is paying substantially more for you to listen than me! Where is the parity?
To make matters worse, the licenses to broadcast music content differ and have a set of rules that impact how a service is delivered. For example, under one license,playing an entire album is not acceptable, nor can a company play to many consecutive songs from an artist. Most consumers do not really notice this, but it is becoming more and more apparent as new technology develops. One way around some of these rules is for a company to negotiate direct deals with record labels. With a direct deal a company can offer any song at any time, play entire albums, and pretty much deliver instant access to a vast library of music. SiriusXM is trying to negotiate direct deals with the labels, but has hit several roadblocks. A lawsuit is currently in process regarding this very issue.
In the world of audio entertainment there are companies with direct deals. Spotify, MOG, and Slacker all have these deals in place. This allows them to offer true On-Demand service. If I want to listen to Rush’s “Time Stands Still” right now, I can do it on Spotify, but not on SiriusXM or Pandora. It would seem that the company’s with direct deals have an advantage. In many ways they do, BUT…Not so fat!
The artists have a say in this matter as well, and more and more of them are flexing their muscles. The latest is superstar Taylor Swift. Her most recent album, “RED” is not available on Spotify or MOG. She has held it back in an effort to boost sales and profitability. If you want to hear songs from “RED” you need to be on services like SiriusXM. This is happening more and more, and some of the biggest names in audio entertainment are doing similar things. This is where SiriusXM has an advantage. Read on.
The first thing we need to understand is that SiriusXM has two businesses. One delivers content by satellite and the other over the Internet. Direct deals with labels will be great, but even without them a consumer can hear all of the latest and greatest on SiriusXM, including songs from Taylor Swifts RED. On one hand SiriusXM delivers a typical radio type service over satellite, and on the other a more customized service on the net. Most consumers do not differentiate between the two types of delivery, and that can work to SiriusXM’s advantage.
You see, if you are a Spotify user you can not hear RED songs at all. If you are a SiriusXM user you can. Even if SiriusXM had direct deals, and RED was held back as an instant On-Demand song from the Internet feed, the regular channels would be playing these songs. Yes, these types of holdbacks by artists are still the exception rather than the rule, but these are also the songs that people want to hear and gain exposure to.
Some day there will be more parity and consumers will be able to get what they want when they want it, but until that day SiriusXM is uniqely set up in a manner that makes the best out of both worlds. Enjoy it, and if you want to hear songs from Red you need not stray away from SiriusXM.