The nasty ink about satellite radio is flowing fast, and to make matters worse, it’s emanating from the one sector that once contained its biggest fans – Wall Street. A recent Wall Street Journal article (subscription required) spelled out one major problem after another for XM and Sirius, leading to more speculation that some sort of merger is inevitable. But will that sort of move stop the bleeding?
All the PR firms in the world – and it sure felt like they had hired them all – can’t spin this one. And when you look at the menu of decisions facing satellite radio, it becomes more difficult to imagine how they’re going to get out of this mess, and move to profitability:
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To generate more revenue, they could run more commercials. But of course that goes against the grain of why this medium was so attractive to listeners in the first place.
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They could give away more subscriptions. But they are already facing so many situations where free trials are not converting to paying customers.
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They could raise the prices (which XM already did a year and a half ago). But that’s only going to drive down their subscription cume, and remind consumers that satellite looks, feels, and sounds just like cable TV.
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They could sign up more big stars and big brands. But after NASCAR, all major sports, Howard Stern, Oprah, Martha Stewart, and Bob Dylan, what’s left? And are any of these major attractions moving the subscription needle anyway?
It feels more and more like XM and Sirius have painted themselves into a corner, and with iPods becoming more ubiquitous and present in more vehicles, consumers are programming their own Reggae and Blues channels.
But terrestrial radio shouldn’t be gloating about satellite’s troubles any more than Nancy Pelosi, Hilary Clinton, and Howard Dean should feel any confidence about Bush’s ongoing problems. You don’t recover or attain more power just because your competitor is damaged. Fiscal health for radio is still going to require leadership, innovation, imagination, and capital – all ingredients that are too elusive these days. Our Tech Polls have shown loudly and clearly that satellite radio is a very small slice of the consumer’s media menu. If we don’t address the more immediate digital challengers – and opportunities – our 95%+ reach isn’t going to matter.
On that note, we welcome the industry to join us for Summit 11 in Dallas on September 19th and 20th. Our all-star lineup of media/digital mavens will spend 24 hours showing us how to realize the potential of the digital landscape, and what it’s going to take for radio to turn that corner. Check out the agenda: www.ik9.5f7.myftpupload.com/summit
The future is alternately scary and challenging, but it’s exhilarating at the same time. And more and more, you have to wonder whether satellite radio will even be a part of it.
Jacobs Media has consistently walked the walk in the digital space, providing insights and guidance through its well-read national Techsurveys.
In 2008, jacapps was launched - a mobile apps company that has designed and built more than 1,300 apps for both the Apple and Android platforms. In 2013, the DASH Conference was created - a mashup of radio and automotive, designed to foster better understanding of the "connected car" and its impact.
Along with providing the creative and intellectual direction for the company, Fred consults many of Jacobs Media's commercial and public radio clients, in addition to media brands looking to thrive in the rapidly changing tech environment.
Fred was inducted into the Radio Hall of Fame in 2018.
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I stumbled across your blog while I was in the process of doing some online research. I certainly agree that jacking up the price of satellite radio would most likely backfire and drive away consumers.