A look at the Audio Entertainment market

Tuesday, April 17, 2007 at 11:31 AM
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Audio Entertainment Marketplace

Terrestrial Radio:

  • AM/FM radio is offered free of charge to all consumers and comes as a standard feature in virtually every vehicle, home stereo, and clock radio sold to U.S. consumers.
  • Nearly 14,000 radio stations exist nationwide.
  • Approximately 230 million Americans choose to listen to terrestrial radio each week.


HD Radio:

  • Over 1,200 HD Radio stations broadcasting across the nation.
  • Recent FCC decision allows radio broadcasters to provide HD Radio subscription services on an experimental basis. This allows HD Radio to compete not only for listening time, but also for subscription dollars.
  • HD Digital Radio Alliance—a consortium of broadcasters including Clear Channel Communications, CBS, and ABC Radio—the terrestrial radio industry has committed hundreds of millions of dollars to promoting this technology. 


Internet Radio:

  • 2006 Arbitron study found that weekly listenership is up 50% in one year, and now approaches 1-in-5 Americans among key demographic segments.
  • Internet radio broadcasts have no geographic limitations and can provide listeners with radio programming from around the country and the world.
  • Mobility coming soon. For example: Slacker will allow users to listen on a portable devices, including in their cars.
  • Various Internet radio offerings are already available on mobile phones, and Internet radio is expected to become widely available on portable devices, including car radios, by 2008. 


iPods and Other MP3 Players:

  • More than 116 million MP3 players have been sold.
  • A variety of accessories available to play MP3 players in cars, through the vehicle’s FM radio or tape deck.
  • Apple has teamed with Ford, General Motors, and Mazda to provide iPod integration in more than 70 percent of 2007-model US automobiles.


Mobile Phones:

  • Approximately 75 percent of all Americans currently own a mobile phone.
  • Several major carriers are now offering audio entertainment options (e.g., Sprint, AT&T, Verizon Wireless)
  • Approximately 23.5 million wireless subscribers currently own phones with integrated music players.
  • AT&T and Apple make the Apple iPhone available for sale this summer.


Adding to the above, there's a number of other companies have announced plans to deliver broadcast audio and video content through mobile phones and other wireless devices. Three companies - MediaFLO USA, HiWire, and Modeo - have acquired nationwide or near-nationwide spectrum to deliver audio/video content through existing wireless service providers and are in the process of implementing, testing, and launching service. A joint venture of Sprint and several cable companies is implementing a similar mobile entertainment platform.

Here's a key takeaway: products need not be identical, to be substitutable. If they are substitutable, then consumers have a choice.

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Comments

Whew.... Thankfully, sirius/XM don't have to compete with any of that....

give them a year or two and do that same study..

Well I'm glad that Huffy, BMX, Harley Davidson, Polaris, the metro and golf cart manufacturers can survive with competition from GM and Ford in the "mobile transportation" market.

They don't have to be identical to be competitors, right? ;)

Did you just completely miss that statement? It said the products need to be SUBSTITUTABLE. Bikes do not substitute for cars. Golf carts do not substitute for cars. A metro bus does not substitute for a car.

Free radio can substitute for satellite radio. Internet radio can substitute for satellite radio. Cell phone music can substitute for satellite radio. A personal audio collection (iPod) can substitute for satellite radio.

I certainly hope you do not require further explanation on this concept, but somehow I feel that you'll stretch for an illogical response anyway.

JB - His analogy is exactly right. Yes, you could listen to terrestrial instead of satellite - you have to deal with the narrow playlist, local-only reception and constant advertising. Yes, you can take the bus to work instead of your car - you just deal with their schedule, smelly fumes and sometimes smelly public.

It seems like all this site is lately is Ryan desperately trying to find reasons to support the merger. Yes, the NAB and FCC suck. But only ONE choice in satellite radio will suck even more. Both systems are pretty well at max and incompatible - how are they going to offer more content on either service without either removing channels or compressing them even furthur? HOW?

It just a bunch of suits looking for an easy way out of the mess they made - it's better for THEM not us. I find it absolutely amazing how Ryan was against the merger and then POOF! The next day he's seen the light and all for it. What changed your mind? Was it the same old empty promises these people make during EVERY business merger?

Think with you heads folks - how are they going to add content without cutting channels or reducing sound quality? It ISN'T POSSIBLE with the current infrastructures.

Well in that case,

Mazda is running a Rotary engined car monopoly
Saturn and Mercury should never merge because then they'd have a planetary name monopoly
Audi and Kia should never merge because then there would be a 'more-vowels-than-consonants' monopoly in the car business.

"Both systems are pretty well at max and incompatible - how are they going to offer more content on either service without either removing channels or compressing them even furthur? HOW?"

I'm glad you enrolled in the Charles Duell school of thought:
'Everything that can be invented has been invented.'

You make perfect sense.

oh and talk about thinking with your head:

Do you think the NAB is looking out for you by not comparing themselves to other forms of audio entertainment? Is it possible that SatRad puts out a better product than free shit radio already and they may have to actually start working instead of felching off the american people?

You have to be kidding me Steve.

Go take a survey among car owners and ask, "If car prices go up, would you be willing to trade your car and only ride the bus?"

Alright, now ask satellite radio owners, "If satellite radio prices go up and service quality goes down, would you be willing to switch to free radio, internet radio, or an iPod?"

Let me know how the numbers turn out. Thanks.

To address the second part of your rant, Steve, you are correct - both of the systems are pretty close to maximum. (Well, actually, they have more bandwidth available with heirarchical modulation, but I'm not sure you'd understand that.) Luckily, they're going to sell this fancy new device called a DUAL-MODE RADIO until they settle on a common broadcast system. In case you didn't know, you can pick up every channel from Sirius and XM on this radio.

I'm sorry if this fact interferes with your gut reaction that mergers are always bad.

Hey, way to not address any of my points.

Will heirarchical modulation work with EXISTING Sirius EQUIPMENT?

Will eachother's content be available ON EXISTING EQUIPMENT?

If it is, will it be done without sacrificing sound quality or channels on EXISTING EQUIPMENT?

Will ANY of the supposed consumer benefits be seen without every subscriber buying new hardware or current hardware users suffering changes?

The answer, is a big fat NO.

Yes, terrestrial radio sucks and they are CLEARLY protecting their interests, just as XM and Sirius are ultimately doing.

Yes, cell phones and MP3 players compete on the level that they are media devices. So is a TV. But what about content? Will the folks at Slacker have Millions of dollars to blow on exclusive DJ's, shows, provider deals, etc? Terrestrial ISN'T nationwide. A 30 Gig MP3 player doesn't have live content available. Even full it doesn't come close to what XM has or even Sirius as far as a playlist goes.

They DO compete, but as a replacement they will be very lacking. YES - if I didn't have my Inno I'd go back to carrying my MP3 player and torrenting/downloading shows. I don't want to have to do that though, it's technically another choice I have but not an equal one in my view.

I won't forget if this merger goes through and months from now people are bitching about the changes they have to deal with. Hey - since terrestrial is "competition" I guess you morons can just go back to that! It's all the same, right?

Hierarchical modulation WILL work on EXISTING Sirius equipment. A small amount of content from XM will be broadcast to EXISTING Sirius receivers and vice versa until there is a common system. The immediate-term benefits are small, but they exist. The bigger benefits will come after they integrate the technology. It seems to me that you would require them to immediately alter the physics of satellite transmission in order for you to accept the merger.

I will have no problem cancelling my satrad subscription if they raise prices or degrade the service. Customers will police the company. Satellite radio is a preference, not a need. If the value of the service goes down, people will stop sending them checks every month. It's that simple.

Hierarchical modulation WILL work on EXISTING Sirius equipment. A small amount of content from XM will be broadcast to EXISTING Sirius receivers and vice versa until there is a common system. The immediate-term benefits are small, but they exist. The bigger benefits will come after they integrate the technology. It seems to me that you would require them to immediately alter the physics of satellite transmission in order for you to accept the merger.

I will have no problem cancelling my satrad subscription if they raise prices or degrade the service. Customers will police the company. Satellite radio is a preference, not a need. If the value of the service goes down, people will stop sending them checks every month. It's that simple.

If the new service sucks, people will not be bitching in a few months. They will be CANCELLING.

Mel K. says there will be programing packages.. What I'd like to see is this concept.. Programing packages and the prices for these... Before I would ever concider backing the merger I would have to see a few reasons besides this will bail them out, err rather this will give the consumers more choice...

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