SIRI Intraday Thread Thursday May 14, 2009

[tim wallick]

I've always wondered how the internet ad model works. I know how it is designed, with advertisers paying per click or ads served, whatever. But what I don't get is how legit it really is. Maybe it's just me, but I rarely click on internet ads. They annoy the sh$t out of me. And, a lot of annecdotal evidence seems to indicate that a lot of people feel that way. I spend a ton of time on the internet every day as part of work and just lookin' up junk like everyone else. I practically NEVER click on ads. So, money is coming in from advertisers, but, are they really getting true conversions to actual sales?

heres a link in which ken does a pretty good job showing how targeting and tracking the ad placement online works for radio. and can be tracked to and exact roi, vs the older methods used by radio and at a small fraction of the cost.

[underway]

[QUOTE=SiriusBuzz;32801]Without getting too detailed? They are able to take away from the Sirius XM userbase or potential future userbase. That would be the threat to a shareholder. We already know based on comments and other forums that people actually do switch from Sirius to Slacker and Slacker to Pandora (and all of the other possible combinations), I mean it is happening. I use to listen to Sirius exclusively and that is no longer the case.
QUOTE]

There's no doubt, as I said earlier, there is some overlap in the market between S-XM and internet radio. That's true of all entertainment media. There's intersection throughout. The issue is how much overlap there is and how many subs would drop Sirius for internet radio, or how many non-subs forego Sirius in favor of internet radio. I don't know the answer, but, I'm guessing not enough to matter, because they really are different products in a significant number of areas: sports, etc, and of course Howard, PLUS, Sirius much more convenient for use in a car.

[relmor2003]

No, they are different. In addition to their regular programming, you can actually define your own channel with whatever artists you please. I have my own custom station with about 30 different bands and between all of their music and live music that you wouldn't hear on any other radio station, it never gets old.[/QUOTE]

Do you think Slacker and Pandora could survive IF they had to pay royalties similar to what SiriusXM pays? If they charged 3.99 is it? for everyone, do you think they could make money? (meaning if they were forced to charge for everyone due to royalty raises, do you think that same million would pay, vs. the ones that pay now and dont pay) Seems like they have few expenses other than what they would need to pay royalties? Ive hear rumors that if they had to pay royalty rates that could be coming soon, they would be put out of business, and some big label online music stores and services are fighting to shut down these types of companies by making them have to charge...

[relmor2003]

I have no thoughts on slacker right now, never used it. I have used Pandora extensively, and I do say its a free option, and it works. but as a main tool of music discovery, or what i would choose to listen to if i didnt have too...
no never, its inferior to sat radio. In fact, its so inferior, its like comparing a pinto to a porshe.
if slacker is better, thats a different story. Why I asked about the program used to generate music... if its better than Pandora, then it might be viable to a user... I still could see someone choosing to use both....
like you say you do...

[underway]

heres a link in which ken does a pretty good job showing how targeting and tracking the ad placement online works for radio. and can be tracked to and exact roi, vs the older methods used by radio and at a small fraction of the cost.

Thanks Tim. Interesting article, but it leaves me with the same question. I know how the ads work and how they charge advertisers. I've used Google adwords and Yahoo's and eBay ads. In my own case, I found Google and Yahoo worthless, but eBay on the other hand seemed to bear more fruit...because people on eBay are BUYERS, whereas people on other websites are there for info, discussion, etc, and are not pre-disposed to purchase something, like on eBay. So, this is where I don't get the model: so you pay for ads and pay by the number of impressions or clicks, but so what? Unless you are bringing people to your web store to then buy something, so what? In other words, a lot of the advertising is not necessarily for direct online sale. How many people by a house or a car online? Yet, the web is loaded with ads like that. And the list goes on. I just don't see how it pays off or how it can be measured really. Sure, if you click on an ad for a toaster and you land on the webstore and buy it online, that is a real hard stat that is very measurable. If you click on an ad for a car that lands you on a dealer's website, in theory you might hang around on there and look at their cars.....a success in the sense you are now exposed to advertising. But, again, who the hell is really clicking on this crap? I don't buy it. I'm a skeptic I guess.

[TSavery]

No, they are different. In addition to their regular programming, you can actually define your own channel with whatever artists you please. I have my own custom station with about 30 different bands and between all of their music and live music that you wouldn't hear on any other radio station, it never gets old.

Do you think Slacker and Pandora could survive IF they had to pay royalties similar to what SiriusXM pays? If they charged 3.99 is it? for everyone, do you think they could make money? (meaning if they were forced to charge for everyone due to royalty raises, do you think that same million would pay, vs. the ones that pay now and dont pay) Seems like they have few expenses other than what they would need to pay royalties? Ive hear rumors that if they had to pay royalty rates that could be coming soon, they would be put out of business, and some big label online music stores and services are fighting to shut down these types of companies by making them have to charge...[/QUOTE]

Relmor.....

They actually pay higer royalties than Sirius XM! Internet radio has the highest roya;lty rate there is.

[TSavery]

No argument about the interface being superior to S-XM internet app. That was apparent after 2 minutes. But, you are also making a huge assumption that the 'ad supported model' is making money for them. They could be bleeding cash in an attempt to buy business, a very common startup tactic, and can be successful....or not. But, as you said, they're private company, so who knows. Time will tell. We can both speculate all we want, but have no way to know whether this internet model will monetize. As an example, I've read about YouTube model as not generating enough revenue. Founders got rich by selling the company to Google but now Google isn't making money off of it. They may eventually, who knows. But, I guess my point is that just because something's 'free' on the internet and is 'way cool', it may not monetize. That's the hard part!

I've always wondered how the internet ad model works. I know how it is designed, with advertisers paying per click or ads served, whatever. But what I don't get is how legit it really is. Maybe it's just me, but I rarely click on internet ads. They annoy the sh$t out of me. And, a lot of annecdotal evidence seems to indicate that a lot of people feel that way. I spend a ton of time on the internet every day as part of work and just lookin' up junk like everyone else. I practically NEVER click on ads. So, money is coming in from advertisers, but, are they really getting true conversions to actual sales? It's weird. I guess they are, but, something about it smells, especially the 'per click' model. Obviously, ad revenue is paying for much of the internet web presence. but it seems strange. TV ads support broadcasting, but I think there's been a ton of statistical evidence proving the value of TV advertising because your eye is on the screen and not diverted to another part of the screen. Sure, you flip channels or walk out of the room to get a snack, but, think of all the thousands of ads you actually watch. A lot. When on internet pages, I avoid looking at the stupid ads to get to the content I'm looking for. Again, it's weird. just sayin'

Underway.....Sites get paid a very very very very small amount of money for each impression. By inpression, it means that you came to the site and at least saw the ad. If you happen to click on the ad, you can remove one of those "very's".

It is how Sirius Buzz generates revenue. We also generate reveniue from sponsors such as TSS Radio, our sole sponsor.

[imromo24]

anything interesting to say about the after hours today? and what we might expect tomorrow?

[relmor2003]

Do you think Slacker and Pandora could survive IF they had to pay royalties similar to what SiriusXM pays? If they charged 3.99 is it? for everyone, do you think they could make money? (meaning if they were forced to charge for everyone due to royalty raises, do you think that same million would pay, vs. the ones that pay now and dont pay) Seems like they have few expenses other than what they would need to pay royalties? Ive hear rumors that if they had to pay royalty rates that could be coming soon, they would be put out of business, and some big label online music stores and services are fighting to shut down these types of companies by making them have to charge...

Relmor.....

They actually pay higer royalties than Sirius XM! Internet radio has the highest roya;lty rate there is.[/QUOTE]

Ahh, thank you. Can we expect updates on all siriusxm competition in the future or just slacker on the sirius site?
I hear there a new HD radio coming out...
you should do a nice write up on that too...
Pandora has some new features...
you should highlight those too...
like the commericals they started playing in between songs...

[LIBOR/TED SPREAD]

Tyler,

I have always heard intrnet has the "highest paymets" however of the $25M in REV pandora brought in 2007 $17M was royalty cost. YES higher PERCENTAGE of revenue but on a nominal basis I don't see it??????? I would also bet Pandora actually plays MORE songs per hr then SIRIXM does (skipping feature & so many flippen people love their free music THEIVES) . Ofcourse I am only speculating. What idiot would PAY to advertise to A. people that only want FREE B. most NEVER see the add as they are listening on their IPHONE!!

P.S. Your audio adds are killing me