And so it is with satellite radio, specifically XM and Sirius. As I see it, they can’t make it. Now to put this in context, I am a Sirius Satellite subscriber. Why? just one reason – I am a Howard Stern fan. Without Howard I would never subscribe to satellite radio, particularly since I live in New York City, and don’t have a car. But the point is I do have and use a satellite radio service. And I have to say, it’s not bad… if it was 2000.
As a 2008 listening experience, satellite radio is sub par. Yes, Howard and other content like sports broadcasts have value, but for most people that content is the potatoes and not the meat. So as I analyze satellite I do so purely as a music listening experience.
Now you probably think what I am going to suggest is that iPods are the problem. Yes, I am sure iPods have had some impact, but for the most part, Satellite radio really addresses a different set of needs and is not directly competitive. To fully understand the issue we really need to break down the market into its constituent parts. There are three types of music listening experiences.
- Active. This is where you build your own playlists and fully control your listening experience. i.e. the iPod. CDs, etc.
- Passive. You just sit back and listen. This is where traditional broadcast radio and satellite radio are. Channel changing is your only mechanism for control.
- Interactive. Services like Last.FM, Pandora, and Slacker and many others help you with music discovery by providing a radio like experience but with added abilities like social listening, song skipping, and thumbs up/down which impacts your personal listening experience. Because you can still listen passively if you choose, you have the ability to avoid what you don’t like while still discovering new music.
Most new music discovery happens today through a blend of interactive and passive listening.
The problem for satellite radio is that from a quality of experience perspective, interactive services crush satellite radio, while the cost of operating the satellite radio services – billions a year – is one to two orders of magnitude greater than operating an Internet based interactive service. Higher cost of operations, lower quality of experience – not exactly a formula for long-term success.
The one stronghold that satellite has is that it is indeed today far easier to listen to satellite radio in your car. But most of the Internet-based interactive services either have or are developing mobile solutions. These solutions work over cell networks or, in the case of Slacker, by through wifi sync and by licensing a small slice of traditional satellite spectrum. These technology solutions are far cheaper to offer than launching and maintaining your own satellites, and yet the interactivity gives you a far better experience than Sirius/XM.
In 2000, satellite seemed like a really cool thing. But the technology landscape, and infrastructure costs have and will continue to shift unfavorably. And at the end of the day it all boils down to economics. You just can’t loose hundreds of millions of dollars a month, provide an inferior product and expect to survive.
9 comments:
I think eulogies are more appropriate than flowery praise on a site called "Why Does Everything Suck?"
:)
I dunno, man, I sure love my Sirius radio both in the car and at home. I suspect that a lot of people are like me in not wanting to spend half my life managing an MP3 collection just to have quality music with no commercials.
I've discovered more new music, even grown to appreciate new genres, through Sirius. All the interactivity I need are volume and tuning buttons. I don't have to log into anything, find net connectivity, maintain an account, rip CDs, replicate and back-up MP3 files, deal with DRM, or any of that tedious geekery.
The services you mention may ultimately offer the same product--music--but until the user experience is as easy and pleasant as satellite, and, most importantly, offers seamless access across the continent, I'm happy to ignore them and pay my $13/mo. for my orbital digital goodness.
@toddz
You may think its a good deal. Unfortunately, the problem is economic. There are not enough of you to cover the massive loss associated with operating the system. If there werent alternatives that many think are better (or cheaper) it would be great. As it is, they are hemorrhaging money and it cant continue. And its not good enough (not nearly) to kill the competitors.
The cost of one satellite subscriber runs about $6.40. Alternative platforms will cost about 40 cents per listener. With the spiraling license costs for content and the expanding new platforms, the concept of getting your entertainment of the birds which are still by a large part, geo-restricted, just is not the future.
The social concept of music and entertainment is amazing, but even in that there is a limitation as to the amount the human mind can recall. The average person is lucky if they can recall 500 songs. Get a group of friends and say there are 10 friends. 50,000 songs of which 35,000 are common. So the reality is that the base 350 songs plus 10x 150 you now have a pool of 15,350 songs. The issue is that is a small percentage of music released in one year, let alone across decades.
The concept of radio will find the evolution it needs, and it will come. The bigger question is how does it get paid for?
"Satellite Radio: RIP"? Maybe.
But I think Sirius/XM will do fine since it is both "pay radio" and "satellite content delivery" which both have bright futures.
For one-way wireless content delivery, satellite should remain viable. And Sirius/XM are really the only current solutions for "pay audio" whether it be via satellite or internet (or other).
My XM year was up for renewal, and someone turned me on to Pandora. I had more control, I was hearing all KINDS of stuff I NEVER heard on even the "avant garde" channels on XM...and gosh, it was FREE! Since I'm always in front of my computer working, it was perfect. I would agree that, once they get the mobile thing going, satellite will be history.
By the way, no one mentions how XM bought Sirius. We're down to one provider now. I would guess that's another indicator that the market isn't there.
Did anyone see stock shock?
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