In a post-merger world how much would a subscription cost? It's a question that plagues subscribers, consumer advocates and FCC Chairmen alike. But today in front of a House telecom subcommittee hearing, Mel Karmazin sought to clear the matter up.
"If our merger is approved, we will offer consumers a much more attractive choice -- the best of each service on one radio at a price well below the cost of the two services today," Karmazin said in a prepared remark.
Further into the hearing, Karmazin further elaborated, "There will be a significant discount." When asked if the discount would be either $10 or $2, Karmazin said it "looks closer to 10 than to two."
[Reuters]
I thought the more interesting revelation was Mel said they would offer a package to subscribers that would cost LESS than the current price of $12.95. (Music Only?) And of course, so those who want ONLY what they get now, Mel said that current subscribers would still be able receive their current content for $12.95.
In future news; commercials per hour will be increased from 0 minutes to 15 minutes. Playlists will be decreased by over 300%. CEO of FUBAR Satellite Radio Mel "Backseat video" Karmazin announces that the sound quality issue has been resolved by ignoring complaints or encouraging customers to try the competing satellite radio comp...err other forms of entertainment.
I'd love it if during these little hearings someone would ask Mel about how a merger would affect sound quailty, commercials, programming diversity...etc. Just asking about pricing doesn't give the total picture of how they will screw the current/future consumer. What will 'suffer' as a way to have lower subscription prices?
You guys need to realize:
1) The sound quality is good enough for most people. You folks are in the vast minority. The very existence of Microsoft, for example, is proof that people are more than willing to accept utter shit as long as you tell them it's better.
2) It will take several years and it won't happen to music stations for an even longer time, but commercials are coming.
3) Diversity shmersity. I suspect the combined company will emphasize what's most popular and add stuff as they go along. That, of course, is a guess.
He never answered the most important question. Will the discount of $2 - $10 be off the $12.95 I currently pay or off the $25.90 I used to pay for both services? Even a $10 dollar discount off the combined sub price is $15.90, more than I'm paying now.
And I don't believe for a second that commercials on the music channels are several years away. I think we're looking at 6 months to a year at most.
The Ad breaks on Stern are already getting too long! And why are they selling out so much for them, they're low-paying gambling sites and energy pills! I rarely listen without a buffer now, I refuse to hear any of that trash.
"Will the discount of $2 - $10 be off the $12.95 I currently pay or off the $25.90 I used to pay for both services? "
Your kidding, right??
I can't believe how many of you can be so clueless!
PFreak: Mel has repeated this several times now, but the discounted price would be the total price IF YOU CHOOSE to buy both services. If you stick with just the normal Sirius programming, you won't pay any more than the normal rate.
History guy: You do realize if they start trying to screw the customer, then all the customer has to do is stop subscribing. If the service level declines, the customer leaves, and Sirius loses money. Obviously they still have incentive to maintain and improve upon the current level of service.
Mike: One of satrad's top selling points is commercial-free music - if they start adding commercials to music channels, people will stop sending them checks every month, and I can guarantee the subscriber money lost would not make up for the ad money gained.
The only way they'd put commercials on music channels is if they start a free ad-supported service to hook people into paying for the commercial-free channels.
I don't see why almost none of you get this concept: not one single person has to subscribe to satellite radio, so Sirius/XM simply cannot afford to screw the customer. I can't wait until I get the XM channels in addition to my Sirius subscription, and if they start trying to pull some funny business on me, then I will simply stop sending them money every month.
JB, you don't get it do you? Cable TV started out ad free. It was one of their top selling points and all the early adopters loved it. To make more money, they started running ads. Now the masses have accepted it and don't realize it wasn't always like that. Could you stop paying for cable? Sure, but even now, 3 decades after cable became the TV standard, most cable companies have monopolies, charge way more than they used to and don't give a fuck about the customer. I don't know anyone that hasn't had a problem with their cable service at some time. Your comments about sat radio having to maintain service levels are just wrong. History shows us this is simply not true.
While you may not have a problem cancelling your sub, others want to fight to keep something that is so good from becoming just another commercial driven entity. If this merger goes through and the company suddenly has more subs, they need each individual less and don't need to listen to the consumer. They are no longer trying to appeal to the people on this board but to the masses, the stupid masses who accept commercials as a way of life. Shit, everyday people pay to go to the movies and sit patiently through ads like fucking sheep.
And Mel hasn't been as forthcoming as you think regarding pricing. He is wording it to sound to someone who doesn't know any better that they will be paying less. If they leave the current rates as they are, rates will certainly go up. The moment they offer a tiered system, the price for full access will rise.
And a $2 - $10 discount on the cost of both services doesn't take into account the cost of new hardware does it? I have top of the line receivers for both services. Over $1,000 invested in hardware. So If I want to get the full channel line-up from both services all my current radios will be useless and I'll need to go out and buy several new radio's. That sucks. That's going to cost me a lot more that I'll save in a small price break. How about they buy back all my radio's at full retail price? Even were I to just cancel like you suggest, how do I recoup the loss on the hardware I already bought? A full year subscription costs less than just one of my radio's.
Hence my argument that it will be several years before you see commercials on the music channels. It will take that long or longer for SatRad to become ubiquitous and for people to forget the original promise. It took Testical radio 60 years to get as god-awful-shitty as it is nowadays.
Don't forget, Mad Magazine, for example, finally started implementing ads after a strict no ads policy. That took almost 50 years and the death of founder Bill Gaines, but, much to my eternal sadness, it happened. The farther corporations get from their initial mission, the easier it is to ignore said mission.
In real life, the bad guys usually win in the end. That's why the world is shit.
:(
There are a lot more feasible competitive options for audio than for video entertainment, so I really don't think the cable analogy is appropriate. There is also another huge difference - Sirius controls their own music channels, whereas on cable, individual companies are responsible for each channel, and thus they need to sell advertisements to stay alive. Satellite radio does not have that obligation for music channels.
As long as terrestrial radio, mp3 players with 15 million hours of music capacity, and internet radio are still around, satrad cannot afford to put commercials on music channels. They can get away with it on the entertainment channels, since no other medium can really compete with that level of content, but there is no way that customers will put up with commercials on music channels when there are so many other options for listening to music. I'm not sure why this statement isn't already obvious, but subscription radio will never have the same kind of power as subscription video, so satrad simply cannot afford to piss off its customers.
Well put Justin. I have to totally agree. If I were to cancel my cable TV I would be left with nothing. Buying shows on itunes and watching them on line with limited commercials is not exactly the same thing as watching it on a bigger screen tv.
Pfreak, I've been around since the days you had to get up out of your chair and walk across the room to manually change to one of the other three channels you recieved using a pair of pliers that stayed on top of your American made television. I think JB is right on the money...
I was an early adopter of cable television when it first came out (a whopping 23 channel package, and I never remember cable being commercial free. The appeal of cable was not that it was commercial free, it was that you had more choices than just the only 3 networks ABC, NBC, or CBS.
Why would anyone pay for Sat radio if there were commercials??? A large majority of XM's and Sirius's playlist is available over commercial stations. The appeal is that you do not have to listen to 25 minutes of commercials. People already b**** about the Clear Channel stations with commercials on XM and the on air personalities talking too much between songs.
I highly doubt commercials will intrude much on the music channels.
I've been around since then too and cable was indeed commercial free when it began. Much like Sat Radio now, some channels had commercials but most did not. Adding commercials to the exsisting service will happen because for one, the large majority of the playlists are not available on FM radio. Sirius is the closest to that description but both services play a much greater variety of music than FM, which only plays about 20 songs over and over all day. It's not the commercials that I hate so much (although I do hate them) it's the fact that every song has been played to death. You are still getting something for your money, 70+ channels with much deeper playlists. Second, the business model of these companies is not working. They need the revenue commercials will bring. Finally, Mel is an ad sales guy. That's what he does. He sells advertising. If you've been around as long as you say then you remember going to the movies and not seeing ads. You also remember when you first saw them and thought "this sucks, people won't stand for this, the ads will go away" but instead we now have to sit through a bunch of them and the masses just sit there crunching away.