When Sirius Satellite Radio and XM Satellite Radio merged into Sirius XM Radio, few people noticed that the word "satellite" had been quietly removed from the new company's name. Ironically, the founder of Sirius recently made headlines in stating that Satellite Radio had missed its opportunity and that streaming free Internet radio represented the future. She may prove to be right for the wrong reasons.
"Free" Internet radio as well as terrestrial radio for that matter first have a huge hurdle to overcome in the way of performance royalties. By their own admission, this "industry" which made a total of 75 million dollars combined in 2008 will fold if it is forced to pay rates similar to what Sirius XM Radio already pays. Internet radio seems to forget that it made that money using products that it did not create and that it does not own. Its sense of entitlement when it comes to pirating the works of others for its own gain is mind boggling, and that is why it's heading to court.
When the dust settles, Internet based radio stations will be forced into adding more commercials if they wish to continue operations. Terrestrial radio is already proving that radio advertisers are few and far between. Which leads me to challenge those who would doubt Sirius XM's future.
In recent weeks we have learned that Sirius XM has plans to bring its subscription based service to electronic devices such as the iPod and iPhone. We have seen the company raise both the quality and price of its own Internet service in advance of this, citing royalty rates as the primary culprit. A new promotional event this weekend underscores the company's desire to expand itself via the Internet. It appears that Sirius XM is quietly preparing for the demise of free Internet based services, and positioning itself to be the first choice of Internet radio users worldwide.
Position: Long Sirius XM