Music listening is a very interesting subject these days. Some prefer to simply hit a power button and listen while others love to spend hours downloading songs and making their perfect playlist to fit any mood or occasion. There are even people who want simplicity sometimes and customization other times. Is there such a thing as a music company that can fill all of these needs?
In an interesting article about Spotify Swedish writer Sam Sundberg explains why he has "divorced" Spotify in favor of his new music flame WiMP, which launched last month. Sundberg felt Spotify was to simplistic. He characterizes WiMP as a "music editor" while Spotify is a "moronic robot."
Depending on who you ask, the description of Internet radio services differs. Satellite radio fans tend to label Internet radio as a simplistic "jukebox on shuffle". Meanwhile a user of Pandora loves the service for letting them experience new music without having to search for it. The truth is that different people are looking for different things. Some want simple, others want customization.
Spotify is as simple as it gets when thinking about Internet radio. Users are not directed to content, and discovery is more about searching than having a new song or genre presented to you. Pandora starts you off with a song and "learns" your likes and dislikes via computer model. Slacker uses real people to program channels yet offers customization. Sirius XM uses playlists for genres of music set to dedicated channels and has the benefit of exclusive sports, talk and news content.
Is there such a thing as a service that can appeal to almost anyone? At this point the answer would seem to be no. My personal experience is that I tend to listen to a combination of Sirius XM, my iTunes, and Slacker with a smattering of terrestrial and other services thrown in for research purposes. Which service I listen to depends on my mood, where I am, and how long I will be listening. Why is it that none of these services is my ultimate solution?
To answer this question I went back in time to a simpler era and remember what I did for music then. It was the 1980's. My car was equipped with a cassette player and AM/FM radio. Later in the decade CD's came into play. What I remember is that I had a few favorite FM channels, a few favorite AM channels, a box of cassettes, or a sleeve of CD's. The fact of the matter was that even then there was not one service that carried the day for me. Certainly I had favorites, and perhaps that is the magic key to building a successful music service that appeals to many.
The concept of satellite radio seemed to be a magic recipe to solve all of those issues. With hundreds of channels it would have been capable of delivering any type of content any type of person would want. That was before the concept of iPods or Internet radio existed. That was before people had unparalleled access to anything, and before Internet radio found its way into cars via smart phones.
In my opinion the key is a service that is programmed with every kind of content imaginable, allows for customization, and is available anywhere a person wants to listen. The biggest question is who will be that company. Investors in Sirius XM can feel great about what the company is doing. What they also need to realize is that there are many others who are stepping up to that plate as well. Clear Channels recent deal with Thumbplay offers a lot of promise but is ad supported. Internet radio is adding content like news and talk but is not yet available to the masses in a car. Satellite has all of the content, but as yet is not customizable and costs money to get.
In my opinion, a "hybrid" model may be the best way for a company to appeal to the masses while at the same time making enough money to continue to exist. Ad supported services does not necessarily mean being tortured with 22 minutes of commercials every hour. The new trend is targeted advertising. Showing or playing you ads that should appeal to you specifically. Advertising is not what it used to be. That is the first lesson everyone should learn when looking at and researching the audio entertainment landscape. For example, Pandora is bringing in $10 million per month in advertising revenue. I assure you Pandora listeners are not experiencing 22 minutes of commercials each hour. In fact, commercial interruption on most ad supported services is often described as minimal by users. On average Slacker plays just 90 seconds of commercials per hour.
What is happening is that we are seeing "hybrids" happening throughout the space. Pandora and Slacker both offer premium tiers that remove commercials. Clear Channel is promising to ad customization to their Internet side of the business. Sirius XM carries commercials on non-music channels and is moving toward added features for their Internet service. The key is understanding that audio entertainment will have several choices available to consumers and that consumers will be fickle. What the ultimate company wants to do is to maximize users and revenue. Finding the proper mix is the challenge.
Position - Long Sirius XM Radio