Writing about satellite radio can be an exercise in futility. Sirius XM has very passionate fans, and they have those passionate fans for a reason. Getting commercial free music and unique content anywhere in the nation is outstanding, and satellite radio created a revolution in how we listen to and obtain audio entertainment. The merits of satellite radio stand alone. In covering this sector, I am perhaps sometimes remiss in pointing that out. Being around it so long, you can sometimes fall into a trap of thinking that everybody already knows this.
In covering satellite radio, I inevitably follow pretty much anything that has to do with satellite, media, and the Internet. I have seen start-ups come and go. I have seen terrestrial radio shift their business model. I have seen Internet come and go. Some “competitors” have weathered the storm, and the shifting dynamics of technology always keep me on my toes as to what services are viable.
Yes, I write about Pandora, Slacker, Apple, Google Music, and several others. I find these services have some compelling things that attract the attention of consumers. This is not to say that they are better than Sirius XM, it is only sating that they have facets of what they do that are compelling. In some areas these services outshine satellite radio, while in other areas they fall short. My focus has always been that Sirius XM should try to appeal to any market segment possible. My philosophy is that as good as satellite radio is, it is not perfect. I know that saying this is not the popular thing, but I try to deal in reality.
If I were to gauge my own audio listening in the car I would say that I spend 70% to 75% of my time listening to satellite radio, 20% of my time listening to my iTunes, 5% of my time listening to Slacker, and about 5% listening to terrestrial radio. Clearly I have a preference. Clearly there is something unique about satellite radio that compels me to listen to it more than all of the other competitors combined. I would say that it is a combination of unique content, ease of use, and the ability to simply turn it on and go. My habits are probably not unlike the habits of the average person in my demographic that has satellite radio.
In my house, things differ. I listen to probably 50% satellite radio and 25% Itunes, and 25% Slacker. What is the difference? Simply stated it is the quality of the internet connection, and my selected device. In my house I use a Logitech Squeezebox. All of the services are easy to navigate and use on the remote. Perhaps it is this reason that I find myself not underestimating the impact a higher quality Internet connection or integrated ease of use in a car would have. Most people probably do not use a Squeezebox, so their listening habits may differ in their own home.
Satellite Radio’s distinct advantage at this point is in the car. They have contracts with OEMs that ensure the availability of satellite on a large scale. Satellite radio in the car is easy. No plugging in, syncing, or remembering to refresh your Slacker channels is required. That advantage that satellite radio has will last for a few more years at least. My point in bringing up other services such as Google Music is that the road these services have to play through a car stereo are not as difficult as the road satellite radio had to travel. I am thinking longer term, and my only point is that satellite radio needs to have a strategy in place. Anyone who disagrees with that assertion is being short sighted. Cell signals and Internet coverage will improve over time. I do not think anyone would argue that.
With that being said, Sirius XM has some compelling advantages over other services. Some were brought up in the comments to my latest article about Google Music. The reliability of satellite delivered audio content can not be debated. It does indeed have better coverage than content over cellular networks. Opinions on this will vary though. I live in Massachusetts and use Verizon. I get a terrific signal in the areas I spend 75% of my time in. However, if I drive thirty minutes away, I would be very frustrated if I was trying to listen to streaming content over my phone. In fairness, I do have a couple of dead spots right out of my driveway with satellite radio. I can drive a mile in either direction and am lucky to keep my XM satellite signal for 100 feet. After that though, all is fine. At this stage the signal availability on a national basis goes to satellite radio by a wide margin. It is a distinct advantage that satellite delivered audio content has over anything else. Whether you are in the middle of Death Valley, driving down the PCH, or somewhere on Interstate 95, satellite radio has you covered. Ever see those maps Verizon and At&T pull out on their commercials? Don’t believe the hype. There definition of coverage means you can hear every other word on your conversation! That does not translate well to music.
I think that consumers look for some key elements when considering their listening habits:
The saying that content is king has been bandied about quite a bit. It is certainly true that content is what brings people to the plate. The advantage satellite radio has is that they offer a wide range of content in not only music, but talk and sports as well. I feel that it is the talk, and sports that offer the biggest advantage here. Sirius XM simply has content that is not available anywhere else. From Martha Stewart to Howard Stern, to the CNBC, the service simply delivers more unique content than anyone else. This will be the case for quite some time, but as we all know, there will be a day where that could change. The advantage Sirius XM has is that they already have relationships with the cream of the crop. It is now their job to keep those relationships going. With music, the gap is narrower, but Sirius XM is still easier than the others to use, thus will carry an advantage for some time to come.
Ease of Use
This is just now becoming an issue in audio entertainment. In particular this is the case in the car. Sirius XM is as easy to use as an AM/FM radio. For the average person, That is a HUGE advantage over iTunes, Slacker, Pandora, etc. People do not want to take the time to plug something in, load an app, and figure out which playlist they want to hear. There are people who’s idea of a cell phone is for phone calls. Going beyond that simply is not an option for these people…they have not even attempted texting yet. This is more a generational issue though. The younger crowd is far more willing to go through some steps to get what they want. Personally I do not even bother to create playlists on my iPod. All of my music is there in one big playlist. However, I do know people that have dozens of playlists, and love it. The average person though, probably wants simple, and Sirius XM has that in spades over any other service.
This is another aspect that was non-existent until satellite radio came along. Satellite Radio proved that people are willing to pay for a superior service. While the number of subscribers is not as high as we would like, the audience is large enough to be viable and good quarterly reports from Sirius XM will bear that out. Satellite radio fans see a great value for what they get. Some would even be willing to pay more. However, we need to consider the average person. The price point of Sirius XM being in the sweet-spot is a question that has yet to be confirmed. There are still plenty of people happy with free terrestrial, about 12 million happy with a modest fee on Slacker, and 60 million who take advantage of Pandora. Price will be a key component over the next few years. Sirius XM is still adding subscribers at current pricing levels, so they can compete at these prices. The real key will be if and when the ease of use and content offerings of other services improve.
The main advantage that Sirius XM has is that they are established. They are a known brand, and have deals in place with OEM’s that deliver more and more satellite radios to the consumer. These advantages will last for quite some time. These advantages can also stay in place if Sirius XM maintains the pressure that they have applied over the last few years. My opinion is that there are aspects of other services that Sirius XM should consider matching. I think that Sirius XM needs to improve their Internet service, and be ready to implement a viable competitive plan against the other Internet services. By doing this Sirius XM could further exploit the current advantages they already have, appeal to a wider demographic, and secure the future of the best radio on radio.
Sirius XM is by far my preference, and will be for a long time. I love the service. I simply don’t want to settle for what we have now. I want the best to stay the best. There is ALWAYS a way to improve and grow.
Position – Long Sirius XM Radio