A couple weeks ago I made the statement on Orbitcast's Twitter that I was more confident about the future of satellite radio than ever before. My confidence was based off of a series of conversations I've had with insiders at Sirius XM Radio Inc.
More recently I've had conversations with other people familiar with the initiative (ranging from both "higher ups" who I generally take their input with a grain of salt, to folks further down the rungs who deserve their own brand of salt), and I can safely say that my confidence is even further reinforced.
Why?
First off, it seems like there's a paradigm shift occurring within the company. Sirius XM is in dire need of a resurgence, and what's better... they know it. Never in recent memory has a brand gone from sexy to unsexy so quickly, but yet there's so much potential to gain that all back. As a result, there's pressure from the top to push the company's brand forward, and that means innovating. Not iterating. But really and truly innovating.
That shift in management's thinking was publicly shown for the first time in the Q2 2010 earnings call. The entire structure of the call was far different than those we've ever seen before. Usually we would endure a monologue about what Sirius XM accomplished over the past quarter (new deal here, new channel there, new show here, new celebrity there), but this time around we heard none of that. Instead this call was not about the past, but about the future. Hence satellite radio 2.0.
There's also a change occurring within the company. And I'm more excited about that, because change happens from the bottom, not the top.
Before Sirius XM was very much restricted by a "corporate" mindset. The safe and conservative approach was the most preferred route... the status quo wasn't to be disturbed. This is a common attitude that happens following layoffs (not to mention threats of bankruptcy) and Sirius XM was in no way immune to that. But the corporate atmosphere is finally recovering now. There's a new shift within the company. There's actually new life.
Additionally, there's the looming deadline where the company needs to show the FCC that they are vastly improving their service. Will this mean higher prices? I'm assuming probably it will, but only in exchange for a much better product offering.
And remember my musings about what is satellite radio 2.0? It turns out that there's a patent recently unearthed that describes exactly that - similar functionality to Pandora, Slacker, Last.fm, etc.
And the technologic breakthroughs aren't going to stop there. Trust me.
So when people ask me if I'm really confident about the future of satellite radio, I say "yes." And it's been a real long time since I've felt that way.
I hope you're right that satellite radio will improve. I got XM radio five years ago for listening to music, and cancelled it after the Sirius-XM merger. Before the merger, I never considered cancelling XM because they had the best music out there and excellent sound quality. After the merger, the music was dumbed down to worse than FM, the professional DJs were replaced with motormouth "kids", the addition of many new stations made the sound quality terrible, and the price was jacked up. I may reconsider if they really do improve the music, DJs, and sound quality, and if they offer a radio that picks up every channel on both Sirius and XM. I live in the city so FM is perfect for me, but I do miss having radio when traveling in remote areas.
If they cut stern loose, they can sigb a lot more talent, who won't complain about work schedule and take off 26 weeks per year. That would be good for the company. However, Stern will never quit, he needs an outlet to plug Beth's products and if he quits, she won't be invited to EVERY red carpet and Hamptons event.
Who is going to fill his shoes? Not much out there, in case you haven't noticed. O n A are totally in the shitter. Besides if Stern quits what will those two jokers have to talk about?
Even working 26 weeks per year, he still brings in more than 90% of the "talent" they're wasting money on.
If the mindset is changing back to innovation and creativity, Job #1 is to hire back as many of the jettisoned XM people as they can. The staff there now, by and large, is from the old FM radio mentality and simply isn't capable of executing such a fresh game plan.
One way to fix things...
Bring back the magical touch of Lee Abrams.
Pretty much you guys have stated everything there is to say.
Satellite Radio hasn't gotten better. Still very poor sound quality compared to playing CDs. The music content is repetitive with small playlists. The DJs talk all over the music. If you are into music, SiriusFM is basically paid FM radio.
I cut down on my Sirius subscriptions to just the automobile and online. Most of my music listening these days is Internet radio, for music, exceeds satellite radio. Sound quality is better, the playlists are HUGE and there are no DJs. It is pretty much what satellite radio should have been. Best of all it's free! For those Internet radio channels that do have commercials, it's minimal and one doesn't really mind when you think about the payoff in quality content.
Why I'm more confident about Satellite Radio than ever? because as long as they exist Ryan (the writer of this article) has to say good things about Sirius XM radio. this website is his business and he wants the Satellite Radio compnay to continue so his website continues.
@Anon: That's hardly the motivation to write this piece, but your points are correct.... Without satellite radio, this satellite radio website wouldn't exist. I guess you could say the same about sites like TechCrunch (without Technology, TechCrunch wouldn't exist) or Politico (without Politics, Politico wouldn't exist).
My motivation to write it is to communicate to everyone some aspects of discussions I've had, discussions that I can't exactly talk openly about (yet).
My enthusiasm for the future of satellite radio has to with some of the AMAZING changes that are coming in the not-too-distant future. Am I excited about having something new, fun and interesting to write about? Absolutely!
But the key to it all is execution. How will Sirius XM execute on all this potential? That's yet to be seen, but my confidence is high right now.
I guess the question that needs to be asked is, What drew you to satellite radio in the first place?.
For me and I'm sure many of others it was the music and variety of other programming. We were tired of the endless commercials and talking heads on terrestrial radio, and were willing to pay for the ability to hear the music/programming of the type and genre we wanted without the interruptions. We also enjoyed being able to listen while traveling to music without the problems of running out of a stations footprint. It seems as though satellite radio has morphed into just another fm radio, albeit more stations. Perhaps it is because some people feel more secure operating in their comfort zone and don't embrace change very well. I for one think that innovation is a healthy thing and change can be good. Go back to the old business model and differentiate satellite radio from terrestrial radio, more music - less talk, deeper playlists, and for the other channels(comedy, sports etc.) more variety of that type also, and most of all improve the audio quality to better than dolby-fm. Then, in my opinion, they will have a product truly worthy of a premium subscription
"there's the looming deadline where the company needs to show the FCC that they are vastly improving their service. Will this mean higher prices? I'm assuming probably it will, but only in exchange for a much better product offering."
I think You hit the nail on the head with this one a few weeks ago Ryan. That's all the motivation they need.
But I hope content is at the top of the list. I am sure it's going to take a while though. The whole company is based on cash flow not tech. And that's how it should be.
Joe, you are a moron.
I'm with x-sub and Scott Greczkowski. XM had it right at one time. Can they put humpty dumpty back together again?
I'm down now to just listening to traffic/weather and a little CNBC on XM. All of my music listening is now with internet stations.
Just a few weeks ago I would have argued that internet radio is the future but with the recent stupid moves by AT&T and Verizon to stop offering unlimited data, I now have a different take on things. Sat radio now has another chance. I hope they don't blow it this time.
Howard hasn't been funny since the first year of his Sirius contract and even then, the show was ONLY funny because of Artie. O and A are MUCH better than that hack. He was edgy, but now he is concerned with fitting in with the Hamptons crowd. I love how he rushes comedians out when they are on a roll or how he interviews Joan Rivers every 2 weeks. Oh, I also love the fake phony phone calls and fake "Sal is stupid or Ronnie is p!ssed" bits. It's over Johnny.
Guys - Remember Sirius' core target audience. It is not the young early adopter techie. It is the mainstream 9 to fiver, an hour or 2 a day in the car, commuter.
Sirius growth will ONLY come from targeting the mainstream average commuter. This is where all the blogs have it wrong. Techies are not the way to go. Content to the masses is the way to go. That's media.
The more comments I see hating Sirius on the blogs the more I know Sirius is going in the right direction. Posters and commenters are not the mass audience. 100% they are not. This is media.This is not tech.
The business to imitate is not Apple or Google. The business to follow is the most successful media business ever invented - Cable TV. That's because this is the media business. They are not tech and never have been.
Mass consumer content is exactly where SXM went after the merger, and why the brand not only failed to continue growing but actually contracted for a year or so.
You won't get an ever-increasing number of people to pay fifteen bucks a month for what they can already get for free. You have to five them something more original or broader or deeper or niche-ier. That's the lesson of pay-cable TV, which had existed for two decades before the all-movie and all-news and all-music formats made it a must-have overnight, and made evangelists out of early adopters.
What's left at SXM to evangelize over? Underground Garage, and what? There's nothing for the Spanish-speaking audience left, either. Talk-radio offerings are shrinking as well (is there any point during the week when you can't hear either Mike Church or Andrew Wilkow between Patriot and Patriot Plus?), with no sign of expansion anywhere on the horizon? (And, no putting Glenn Beck on a second channel doesn't count as "expansion".)
When talk re-diversifies, when duplicative stations are folded into one another (fold XMLM and Octane together, Grateful Dead and Jam On together, Shade, Heat and Hip Hop Nation together, Loft and Coffehouse together) and niche channels are allowed to re-emerge, when playlists lengthen and deepen, when the Decades channels start playing all the music of their decades on the station for their actual decades, when the idiot jabberings between songs finally come to an end, maybe I'll start believing in satrad again.
But bringing back Abrams would restore my faith immediately.
I also agree with Doctor X ... I am considering canceling my 3 receivers myself... xm used to rock this planet... no, i just i don't know
They contracted for one reason and one reason only. Car sales plummeted to 10.4 million last year.
They are obviously going in the right direction and are growing right now while the economy is still terrible.
This is a mass consumer brand. No doubt about it. Cable TV of radio. It looks like they are going over 20 million subs this year. I see 50 million car subs within a decade. It could be that big.
Content is King
I agree with most posters here. XM Satellite Radio did it right -- deep playlists, announcers who were actually interested in the music they played, and great variety on the talk side. I almost never turn my satellite radio on anymore, and will be cancelling it this month. I gave them two years, and they continue to disappoint. I listen to terrestrial and Internet radio now, and the offering is far better than the garbage now churned out by Sirius FM.
Hey ykw, the brand failed to grow because of the worst RECESSION in decades, thanks to the liberal pigs who want to ruin our country. It didn't have much to do with content at all, except for the 0.1% of you who whine like little girls on this website.
There's a reason why XM lost the war.
Dumbass.
btw, paid tv is looking pretty bad right now. They lost 216k subs in 2nd quarter. Don't blame that on the economy---they added 378k last year 2nd. when things were even worse. Let's not repeat their blunders.
I'm not sure what satellite radio 2.0 is, but if it involves data, the bandwith for the music will be reduced again and the sound quality will take another big hit. At that point satrad will be unlistenable for music.
What are you talking about? Cable TV networks are the most successful media business ever invented. Do you know how many hundreds of Billions of dollars in EBITDA MTV networks, ESPN, Time Warner/Turner networks, Discovery networks etc have produced over the years? They have consistently produced huge cash flow for decade. Yes decades.
Sirius retention percentage rates are highest in their history. The reason for the contraction was not that people were leaving at higher rates. The reason was auto sales were plummeting.
I repeat - Content is King. People pay for content. That's why Pandora is free and Cable makes billions.
Muscle,
One of the problems is that you view things as apparently a stockholder, not a consumer, because otherwise you wouldn't talk about EBITDA. The average man on the street can't even tell you WTF EBITDA means! While on the whole, consumers would not be served well if companies died, the average client, customer, citizen, etc, doesn't give a flying frig about whether or not the company's stock price is high, they just care about how they are being served.
Cable TV is not comparible to SatRad for the following reasons.
1) Video content is far and wide superior to audio content, at least in terms of how many people pay attention to it. Most people at home will watch TV instead of listen to the radio. This has been true since the 1960s or so. Cable will always be 10 times to 100 times (or even 1000 times) more valuable than Radio.
2) Cable TV got successful due to the premium content of movies as well as having diversified specialized channels. The Cable model succeedes based on exploiting niche markets, not mass markets. ESPN, Discovery, etc., are specialized, which flies in the face of your mainstream arguments. It was because of the specialities of the marketplace that Sirius and XM came to be an alternative.
3) Radio is a different medium. There are only two real types of content. Music, and Talk. The Music format has a lot of competition, at least the mainstream. People can listen to CDs, Free Radio, and now Internet Radio. Talk is either comedy, political, or specialized.
4) Convincing people to pay for radio is going to be difficult. I believe by tightening playlists and removing niche formats, they are removing the incentive to the average customer to want to continue to pay for the format. You say "content is king", but from what I've seen, Sirius XM has been removing a lot of the content people were paying for, content that doesn't cost them much to provide. Dropping the specialize shows, for instance, removes "content".
5) If you are trying to compete with the "mass mainstream market", there is an uphill battle involved. The Sirius XM signal is not as fidelity quality as even FM radio. Why would I pay $15.00 a month for stuff I can get on my own radio. I used to like XM's decades channels for having larger playlists and more variety--and you NEED to have more variety if you pay for radio because you will listen more often. In short, they are cutting "CONTENT", which apparently is a puppet king. Heck, there's no news about special music shows anymore--a lot of the variety we had 3 years ago has fallen. You can't build content by cutting costs so much programming suffers. All these stupid stockholders talk about "CONTENT IS KING", but that's just an empty phrase unless you can name anything other than Howard Stern and the Major Sports Leagues.
6) The OEM market seems to be the "corporate welfare teat" that Sirius XM is dependent on. But this doesn't make people loyal to the product, it's just a way for Car Companies to end up paying for the existence of Sirius XM. This might be good for what you like to call EBITDA, but it's not good for brand loyalty. At some point, one of the major manufactures might decide that it's not worth having, especially if a new technology comes along.
7) The entire content industry is in a state of rapid change. The Cable Companies are getting nervous about the Internet and it's ability to disrupt industries. Music, for instance, is in a state of rapid flux, and profit is way down. A lot of people dislike Cable because of the rise of informercials, channels abandoning their formats for others (like MTV and VH1 not focusing on music anymore).
Stuff like Internet Radio, including Pandora and Slacker, as well as Apple and Amazon's ability to sell music to iPods, does compete with radio now, and while I see you dismiss it here and on other blogs, the average person looking for entertainment may not give a shit.
If more young people end up enjoying radio on the computer as opposed to over the air, there's a big risk. Even if you think "they are not profitable", Slacker and Pandora can survive on lower margins than Sirius XM, and ultimately people want to be entertained no matter WHO does it.
Right now, I am hoping SXM can look at these new trends. I've been a sub since 2006, but my 2-year sub will be up in April and for the last year, I've found the Internet alternatives to be a lot better than when I started my Sub--heck, I've even gone back to radio because of the way the decades channels have been handled. They are going to have to start competing better with these alternatives if they have a hope for me to re-sign.
People may pay for content, but they'll only play if there's no free replacement for it. (Which is why Piracy is a big problem). Pandora and Slacker allow real alternatives to music channels, and SXM ignores them at their peril.
Sorry we are looking at a real business.
Internet radio has no barrier to entry and there will be a million internet radio apps on phones in no time just as there are a million internet radio stations on pcs.
Internet radio started in 1994. It still has no viable business plan.
Broadcast.com was early to the internet radio game. It sold to Yahoo for $5 billion. It got inundated with a million internet radio stations to compete with. Where is it now? What do you think will happen with apps? You think it will be any different. Of course not.
People gravitate to unique exclusive content in media. That's what people pay for. That's what has worked and will always work in media. That's the only thing people will pay for.
Isn't it amazing with a million internet radio stations and the ipod and the iPhone selling to hundreds of millions of people that Sirius still has grown from 600,000 subs when Howard signed to almost 20 million subs?
No Its not amazing. People pay for content. That's media.
The key thing is that a lot of businesses can fail if there are free alternatives. I think one of the reasons you get so angry or upset at people like Spencer Osbourne or myself or "The Fans" is because they upset the simple stockholder view or ever onward and upward stock prices.
(I can't believe how angry stockholders get when negative articles are published. Anybody who gets mad about a single stock is pretty much the same type of person who doesn't diversify their porfolio. I'd rather have honest analysis than "positive talk".)
Internet Radio is a threat--even if it's not a real business, it can cannibalize the other businesses. Unless Sirius XM can figure out how to keep from bleeding the music fans, they could get into trouble if they don't learn to adapt. The fans and the listeners won't be loyal to a single platform.
Sirius' growth is not just from Howard Stern, and Arbitron's raitings show at most he has 1 million listeners. That means the 19 million other subs are doing something besides Howard. (And you don't mention they gained over half their audience from the merger with XM). The arbitration ratings show that people mostly listen to music, not talk. So, ignoring this important thing for celebrities is foolish. Don't let your love for Howard Stern confuse the issue.
I think at most Sirius XM is a foolish stock to hold. At best it will probably grow very incrementally. There are too many risks with competing technology and how it affects the music industry, not to mention capital issues, the risk of having their sales dependent on the strength or the auto industry, etc. This is going to be a stock that grows by pennies per year. It is not the same category as cable--radio itself is a ghetto compared to Television.
Yes I know, a 10 billion dollar current Enterprise Value is ghetto.
Look it's plain to see you are a person who doesn't follow radio or media so it is pretty much makes no sense for me to continue this conversation.
Radio's history is littered with the next big competitor from 8 tracks to tapes to CDs to the internet to the iPod to the iPhone. They all were supposed to kill radio. Even TV was supposed to kill it. Tech is always changing. Content is what people listen to. Take care man.
"My enthusiasm for the future of satellite radio has to with some of the AMAZING changes that are coming in the not-too-distant future."
Amazing as in different than the commercial FM radio sound they dumbed XM down to?
I gave when the jingles, bumpers, motor mouth kids playing DJ and shallow playlists replaced quality. Why would I pay for what I can get for free... and as the "great unwinding" continues expect fewer and fewer people being able to waste money on this crap service.
any changes they are making is pointless if they dont market their product and services.
I read an article in 12 volt news (http://www.12voltnews.com/?p=7079) about the retail team visiting a few retailers throughout the US in June 2009. "Since concluding the “Road to Discovery,” staff members have been evaluating information gathered and are aggressively moving forward on high-priority learnings / take aways to enhance consumers’ awareness of the many benefits of SiriusXM Satellite Radio."
Here we are over a year later and nothing has changed. In fact retail numbers have continued to decline.
"Roberts commented, “Just a few short weeks after our trip, I attended the Major League All Star game in St. Louis. The enthusiasm for satellite radio during that event was electric. During the four day event, our staff spoke with thousands of customers interested in SIRIUS XM. The audience for SiriusXM Satellite Radio is definitely out there.”"
Really Mr Roberts? If the audience is out there, why are they not buying? What have you done with the data that you collected during your "Road to discovery." What changes have been implemented?
"Mike Roberts, Vice President Retail Sales at SIRIUS XM told 12voltnews.com in a post trip conversation “The trip, called ‘Road to Discovery’, had multiple goals. We wanted to meet with different types of retailers and distributors with a view to asking questions and showing new technologies for both home and in-vehicle. We wanted to uncover any areas where we could improve – including product assortment, merchandising, our operational effectiveness, promotional activities or any other areas that could lead to increasing business and efficiencies.”
Let's break this down, product assortment is years outdated, i dont see any change in merchandising (in fact the satellite radio section in retail stores looks aweful), the answer to "operational effectiveness" was to lay off half the sales team that handled the accounts that were visited on this trip and the national retail rep team, there have been zero (ZERO - POINT - ZERO)compelling promotional offers for years, and to date there has not been an increase in business or efficiencies.
I don't pretend to know the ins and outs of the business, but I do know I have come to need Satellite radio. Yes, need. I can listen to baseball including my favorite teams anytime I want where ever I am traveling. I can listen to my favorite music channels wherever I am. Some of the talk radio shows I listen to are on Sat so I don't have to search around to find them when I am traveling. My point is, there is nothing at the moment that can take the place of how I use Sirius/XM. I hope you are correct on the future.