The Future of Sirius XM and The Internet
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.Β 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
I think bringing Sirius XM to the iPhone and Blackberry is a major step in getting the company back on its feet. I own an iPhone and I can’t wait to access my XM radio service from it. My wife would like XM and an iPhone when it’s released.
The fact that AT&T is offering a NO CONTRACT iPhone starting tomorrow is a great move for Apple, AT&T, and Sirius XM.
David
I have not heard about NO CONTRACT Iphone. That will be huge for ATT and Apple. When Iphone app is released, huge for SiriusXM as well!!!!!!!
Free internet Radio is coming to an end and welcome to the radio of the future, Sirius XM radio.. This is going to be a huge money making company couple years down the road.
Damn good article – hopefully the light bulbs will start to light as people realize what’s on the way.
Brandon Great article! any idea how long and when these existing internet radio stations would be called out on what they are doing and when they may actually be forced to pay royalties?
Keep up the great work…
Have never had a doubt that SIRI will be the main source of media for US and perhaps globally, why, because Mel is the man that has more experience than anyone else in the radio business. People hate to admit that, but it’s true. Translating all that to common share holders PPS, etc, now thatβs a different story for NOW.
They need to move much quicker to get market share now instead of just waiting for internet radio stations to start folding and then pick up the peices.
The XM online player is very buggy for me. I have a ton of problems. I have not seen any improvement in the system in years. From what I understand, Sirius is in the same boat. Their look is old and bland. They need to spruce up their offerings, give their player and their website a new, young, happening, SEXY look to it. That would be a good start.
The car will always be the main distribution point for radio. And Sirius has deals with all the carmakers. Radio has been and will always be out of home media, where it doesn’t have to compete with TV. There are many more cars in this country than homes.
That being said home based internet has already established itself as a radio distribution point for all of terretrial radio and sat radio. It will never be a big money maker because its far too fragmented a business with hundreds of thousands of internet radio stations.
The really exciting part of internet radio is its out of home potential.The cell phone is a new distribution point of radio and thats exciting. But going from transistor radios to walkmans to boomboxes to cellphones, only about 5% of radio listening is done in handheld mobile mode. So the car will always be where radio listening is done and where the money is made. By the time the internet gets to the car Sirius will already have all the subs, the brand name and most importantly all the content. Internet radio doesn’t stand a chance against Sirius.
Brandon have you followed radio before Sirius? Just curious.
With all due respect Muscle….NOW is the time for Sirius to think BEYOND the car. Yes, the car is the “natural” home of radio.
True, there is much more competition for our attention at home.
BUT….what about local businesses? Think of all the businesses that need commercial free music pumped into their stores to create a nice shopping environment. Now that the company Musak has gone belly up…this is a HUGE market and there for the taking.
I just convinced my boss to become a subscriber.
Also the internet and global possibilities are mind boggling. Sirius has the content and the edge. Especially with the possible death of Pandora and Slacker as we know them looming. Soon they will have to pay the same royalties as Sirius and be FORCED to run commercials or charge ALOT more to stay alive. And they don’t have the content that Sirius does.
Now that Mel has some breathing room, and begins to actually MARKET this amazing product to the masses….all I can say is WOW.
Car. Internet. Local Businesses. It’s looking good. A true monopoly is forming. Me likey. π
Friggin…Good post!!
Marketing Marketing Marketing!! I agree with Newman also, they need to move as quickly as they can to put pressure on the internet radios stations and then let the royalties hit them.
If we can pick up market share in other areas, internet, phone,musak,and with Mel trying to get 70% sat radios in all new cars, when the car business does picks up the numbers will be very impressive.
imho
vaporgold
vaporgold
Portables like the XMP3 are going to get in the hands of the younger business persons. Seeing them at work, at the gym etc is going to raise interest.
Im now excited that the XMP3 has that antenae knob on top and not buried in the unit like some have asked for…it separates it from the crowd, product recognition is going to take off.
I sense people are growing tired of their ipods and the stale content….
I can record 40 hours of new content overnight to listen to at work (5 channels at once in 8 hours of sleeping) My office does not allow streaming from websites.
frigginregan – My opinion is all this other stuff is good to get people’s attention that Sirius is out there, but radio makes its money in the car. Always has and always will. Going back decades and decades. There are 240 million cars on the road in this country and once Sat radio hits used cars bigtime, there are 3 to 4 times the amount of used cars sold each year compared to new cars sold. The market is absolutely enormous.
I hope cellphone radio makes its way into the car too. The listeners and the money is on the road.
I have very high hopes for the iPhone app.
Yes, Brandon. I couldn’t agree more with this article. You have it right.
Unfortunately they have really botched up the first step by the misleading wording of the ‘lock in’ prootion. All it takes to fix this is some kind of public statement about what the online deal really is. The uncertainty is driving us nuts!
They need to not just consider the quality of the streaming, but the quality of the programming. Since Sirius took over XM the music channels have become “FM without the commercials”. Shallow playlists, motor mouth DJ’s, endless, annoying, repetitive bumpers and channel IDs… sigh. Do they really think people are going to pay for this? Why can’t we have a few “adult” channels that play 20 to 30 minute UNINTERRUPTED sets of music with deep, inspiring playlists?
Ha….Sirius XM will continue to go down the drain just like it has been. Internet radio is here to stay. Eventually, a deal will be struck and internet radio will continue to thrive. Why would I pay $$ for an online version of terrestrial radio when I have plenty of free choices on the internet from iTunes, Shoutcast, etc.
Additionally, there are many efforts to help small internet broadcasters be able to make royalties affordable to even the smallest of broadcasters.
Aaron
Why are you posting here? If you don’t like SiriusXM, why waste your time and ours? Your just another past investor who crapped his pants and sold his position. Now that the company is fixing to turn the corner, all you can do is bash, bash, bash. Hate to tell you my friend, we are laughing at you all the way to the bank. What a chicken shit! Pissed his pants when the SP tanked. Go away!!!
Awww… I am sorry that I don’t worship the ground that Sirius walks on.
There was no self promotion about that post. I was replying to the author’s comments regarding that royalties will be the demise of internet radio…which is not true at all in my opinion.
And no…I am not a past investor…I am a paying subscriber to XM which continues to see Sirius change XM to that of of a format of failed terrestrial radio. XM had it all going until it decided to sell to Sirius. One of the few outlets that were “beyond AM, FM” was now gone.
I would never invest even the meager $.37 that Sirius is worth right now. π
What about Apple? Back in 06, I thought I heard something about them buying Sirius, or XM.
Is that still a possibility? Couldn’t the outcome of streaming through the ipod, and iphone be a a test run, and a deciding factor? That would be a “sexy” new look. π
i think siri should start getting in touch with a product that is made for the american worker, a raidio built for the constuction site, hard working men and women would have one, and the can pay for it
Apple, AT&T, and Sirius Xm radio need to partner together and produce a product something like a iCar radio. The device would be a phone, satelite radio, internet access, navigation, television, wifi access, & emergency help line. This would be all on one subscription. That would sell, and would probably start the online revolution in the cars. Sirius already have the contracts with the car dealership on lock. Someone need to make this happen. I definitely would purchase that device.
Brandon, during your tour did the discussion on getting sports over to their internet feed come up? If dropping satellite from their name is going to mean anything, they need to provide all the content.
Sirius should copy Pandoras model and let their customers create their own stations in the way that Pandora does. Now wouldn’t that be cool?
Guys if today’s outage of ONLR is any indication of the future Sirius/XM we are in trouble. XM was always the better technology. Guess they fired their people with the merger
Great perspective Brandon. Thanks for writing in a way we can understand and feel confident in the future and potential of SiriusXM. My work has me on the road quite a bit and I don’t know what I would do without it!
I have been producing a documentary about this subject (as well as other SIRI issues such as market manipulation and short selling) and plan to be in Phoenix, Arizona next week to interview Sirius fans and critics. Please feel free to contact me if you are in the area and have an opinion you’d like to share! Documentary is due out Memorial Day, 2009. [email protected]
…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…
What an outrageous, inflammatory and factually inaccurate statement! Wow. That sentence alone discredits your entire story. Shame. Internet radio *does* pay royalties.
So there’s no piracy involved, and the notion that airplay does not also advertise the music and entice people to buy CDs and attend concerts is also questionable. You really should get better information before making allegations about things like piracy.
What *is* true, is that the royalties for internet radio are unfair. Let me illustrate…
Let’s say a group of 1000 people listen to music on a radio station 24 hours a day for the entire month of May, 2010.
To pay the RIAA/SoundExchange for those 1000 concurrent listeners all month long, under the rate structure as it stands right now, a radio station would owe:
$0 – if the radio station is FM/Terrestrial
$700 – if the radio station is on Satellite or Cable*
$19,152 – if the radio station is Online**
*1000 people each paying $9.95 a month subscription for the music channel, 7% royalty rate
**$.0019 per song, 14 songs/hr, 24hrs/day, 30days/month, 1000 listeners
The issue that’s the focus of disupte for Internet Radio isn’t whether or not to pay royalties. They do. The issue is the RATE, and whether it’s fair to make them so much higher than they are for other broadcast methods.
Rah Rah Rah!
Guess what? Launching a satellite into orbit is expensive. And it’s not a good way to distribute content. We know this. Even Sirius is dropping the “satellite” in its name.
You people should sell now. Get out while it’s still higher (higher than .09cents that is). Ipods, Pandora, Slacker, AOL Radio, Slacker, LastFM are all looming.
The toothpaste is out of the tube…you can’t put it back in! Face reality.
But, when is the case going to be closed? It could take forever – just like everything else, the iPhone app, etc…
They can’t get it together! and it’s really under my skin!
Get it together Sirius! We are tired of waiting, and waiting, and waiting….
This could be tied up in court for years, unless someone tells me different. The merger took only 1 1/2+… and if I remember, everyone thought that was going to happen “soon”, as well.