Confessions of a Satellite Radio "Mole"
Friday, March 16, 2007 at 10:21 AM
Tags:
Hear 2.0 got ahold of an insider who spilled the beans on the initiatives behind a merged XM-Sirius.
I have a few issues with this "mole" and the information being "leaked" - primarily that each bit of info is surrounded by snarky commentary which raises an eyebrow as to any ulterior motives - so go ahead and read the post first and then come back here for my take.
...you back? Sure you are. So let's pick this apart shall we?
First, the whistle-blower says that the "pricing itself will resemble the tiered approach that cable exploits so well ... It's simple - lower subscriber fees will come with less programming choices attached." -- is this a revelation? How else are tiered subscription packages offered?
The entry level tier will consist of a "basic and limited representation of satellite radio programming: news, talk, music, and some public service" with "probably no high profile programming" like MLB, NFL, etc. This premium content will be attached to a... wait for it... a premium tier. Yet another brilliant revelation by this mole.
(Recap: So far we've learned that a basic tier will be offered, with a limited selection of programming. And a premium tier might be offered with premium programming. I hope you're still in your seat at this point.)
In all fairness, it does get somewhat interesting from this point forward:
"What's also been lost is the fact that once an aspect of the service goes to a premium teir, eventually payments to that service provider also rise."
This seems obvious as well, but not something that has been talked about much. Content providers that have a rev-share deal in their contract will see an increase in money owed to them because they're in a "premium" tier. The writer goes on to challenge the notion that subs will pay premium rates for premium content -- which seems contracting to his previous statement. Either way, premium content providers will be asking for more money, regardless of what the NY Post seems to think.
Then the mole goes on to talk about the music channels. "XM has 69 commercial-free channels. Sirius has 69. Does that mean a merged company will have 138 music channels? Of course not. A combined company would need only 70-75 music channels to cover most of the audience's appetites. And even if you plead that a merger should create more choices and end up adding another 25 channels you'd have to tack on a big number to cover the rights fees."
This obviously was my biggest fear regarding the merger. In an attempt to keep those royalty fees in check, those music channels would have to be limited. We all know that DJs don't make that much coin, but those royalty fees will be the focus of the number crunchers.
...and now the clincher. You ready for this?
"Assuming each music channel averages 40kb bandwidth, the approximate net gain from the channel consolidation is 1520kb of bandwidth. Most of that would go toward premium services.So what's the true killer app for premium services? Video, of course. Once satellite radio starts pumping video into the backseat of OEM vehicles, the real gravy will start to flow. Their automotive partners already know this is the new frontier. Satellite radio will need to come along if they plan to be part of the brave new dashboard because OEM is the future of satellite radio."
This, I have a problem with. First, the thought that bandwidth would suddenly be opened up as a result of this merger is not realistic - at least not for the short term. The 1+1=2 concept doesn't work. And I have a problem in thinking that a mole who is so "informed" would see the bandwidth benefit as such a simplistic equation. Both networks will continue to operate independent to each other for the next decade or so, and while some of the newer satellites have cross-network capabilities, these would initially be done at the chipset level. The legacy receivers would continue to be supported, meaning that XM content would essentially be simulcast to Sirius receivers, and Sirius would simulcast content to XM receivers. Can you say bandwidth hog?
So fine, the Backseat TV receivers would have the cross-network chipsets built-in, allowing for better bandwidth. Great. But I have a problem thinking that Backseat TV is the savior of satellite radio. Is Backseat Video really the roadmap for success that a combined XM-Sirius have in store? Please. I don't think XM-Sirius even have a concrete plan themselves (they still need to get the deal approved, oh and there's that little anti-trust/collusion thing), so how this informant knows the next "killer app" is beyond me. Sounds like another over-zealous fan-boy who's looking to be Internet-famous.
No, I'm calling Bravo Sierra on this "mole" and demand that he be tarred and feathered for "leaking" information that we pretty much already know. Sorry buddy, you've been called.
[Hear 2.0]
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Comments
Anybody who claims to have been a satrad exec and then writes 4 paragraphs on how a tier system means premium content will be in the premium level and a more limited selection in the entry level, is either A.) looking for attention, B.) really dumb, or C.) a fake. Hard to take this seriously.
Posted by: waterwagen ? | March 16, 2007 11:22 AM
They definately have something in store for consumers and to be on the same page holding hands in a merger (which would have been a waste of time to event talk about just a few months ago) is enough proof. Maybe it is just video? maybe its more? Personally I would not mind paying extra if I did recieve every possible technological ability like gps, weather, video, music, etc.
The bottom line is....if this whole thing goes through...they will have the market positioning and power to make anything happen. You will see greater advertising...more desirable products...new software (pandora-like)to enhance your listening...More personal downloadable content...MORE CROSS-INTEGRATION!...Possibly even a joint venture with Microsoft.
Just my two cents...
Posted by: dave | March 16, 2007 11:40 AM
No, I'm calling Bravo Sierra on this "mole"...
For those of you watching at home, the initials of Bravo Sierra are "BS". If you're looking for a phrase for the entire merger, I would go with Charlie Foxtrot... and for those of you keeping track at home, those are the same initials as cluster ... well, you get it.
Thanks for the info Ryan. As an XM sub, I can honestly say that there is nothing that Sirius offers that I want. I'm not trying to start an XM vs. Sirius thing, there are probably lots of Sirius subs that have everything they want as well. How I see it, if they merge, there are 2 options.
The customers will be screwed and the company will be better off.
The customers will be better off and the company will be screwed.
And I don't think they would merge to screw themselves. I would think that the majority of listeners would prefer to keep their service the way it is now. That's my opinion anyway... maybe it's just a bunch of Bravo Sierra though...
Posted by: Chipper ? | March 16, 2007 11:47 AM
Tiered pricing sucks. When O&A and Playboy were on premium channels you had to ask customer service to add those channels, they never asked if you would like them. I even had the customer service rep tell me he didn't know anything about either channel or how to sign me up for them. This is because they outsource all calls and no one understands anything but what's on the script in front of them. When I ask to add a premium channel I don't like to hear back "is your radio turned on?", "is the power plugged in?". These people have no fucking clue. I just want to pay one price, preferably close to what I pay now for all the channels. Basic cable only gives you the channels you get for free over the air, it's not an option at all and I don't see how a tiered system with sat radio will do anything but raise my bill.
Posted by: PFreak ? | March 16, 2007 12:09 PM
When backseat video comes, folks with single band radios will suffer. Content for the radios currently on sale will dwindle as bandwidth is taken to get Spongebob delivered to the backseat. If you want to still get 70 music channels you will be forced to buy a new radio, (Sucks for OEM)and pay a higher monthly fee.
Posted by: man_rob ? | March 16, 2007 12:30 PM
You realize that the author is a shill for terrestrial radio, don't you? Check out his company Mercury Radio Research, he gets his paycheck from terrestrial radio stations, so his agenda is pretty obvious.
Posted by: Ryan | March 16, 2007 12:34 PM
The mole's comments on bandwidth make sense to me in the sense that if both Sirius and XM "eliminate" 30 music channels and then simulcast on the various radios, it would free up some bandwidth on each side. How he jumped from that to video as the killer app is beyond me, though it's apparent that's the real point he wanted to make. Sirius has been talking about video for a while now, and Sirius is the instigator in this buyout, so video is on the table, so to speak. The mole seems to be hinting that the real motivation for the merger is video. This makes no sense. I doubt the mole was an "exec". He talks more like a middle manager who is trying to "educate" us.
Posted by: Smort | March 16, 2007 1:21 PM
Hi guys. I don't think all satrad execs are "fully informed" any more than execs from any other company are fully informed. These are his opinions based on his knowledge, that's all.
It's hard to imagine anyone other than someone with his settlement in mind would bother to type up and mail an anonymous letter. It's just satellite radio, after all. It's not Scooter Libby.
But the real issue - and you hit on it - is that it's likely there is no clear "big" plan over at XM/Sirius, all opinions aside.
And that should surprise no one.
Posted by: Mark Ramsey ? | March 16, 2007 1:33 PM
And in fairness, I was the one who labeled him a "mole." His intent was never to share confidential info - sorry about that. His intent was to give an opinion that he was being paid not to give. That's it.
Posted by: Mark Ramsey ? | March 16, 2007 1:34 PM
Hugh Panero seems really bitter...
Posted by: cfg ? | March 16, 2007 3:12 PM
I think the FCC should add a merger condition, saying that data services on *existing* bandwidth are capped at their current amount, plus any amount that XM/Sirius may be contractually obligated for at the present time. And, they should either prevent the merged provider from offering video, or explicitly require that video only be carried on "new" bandwidth such as hierarchical modulation.
Posted by: Johnathan ? | March 16, 2007 3:31 PM