Can Apple Save Sirius XM Radio?

Discussion in 'SiriusXM Soundwave Cafe' started by KTMCDO, Nov 25, 2008.


    KTMCDO Member

    source MOTLEY FOOL

    High on the wish list of Sirius XM Radio (Nasdaq: SIRI) subscribers -- and no doubt battered shareholders -- is an iPhone app. With its fast-growing wireless subscriber base, Apple's (Nasdaq: AAPL) revolutionary smartphone is a natural platform.

    With shares closing at an all-time low of $0.14 last week and Sirius XM slashing subscriber targets in recent weeks, an iPhone tie-in would be just the ticket in generating buzz for Sirius XM's scarred investors as well as a great customer retention tool.

    I'm not building the hype to tease you. At least one company is working on an iTunes App that will let iPhone owners -- and Wi-Fi-tethered iPod touch jockeys -- stream their active satellite radio subscriptions through their portable devices. Surprisingly, that company isn't Sirius XM.

    Don't be a Playr hater
    StarPlayr is no stranger to riding Sirius XM's coattails. The company already offers a more advanced streaming alternative for PC and Mac users over the in-house Sirius XM solution.

    There is no firm release date for StarPlayr's iPhone application, but the developer's product list has appetizing screenshots with cool features including album artwork, song lyrics, and the monetization gems of ad serving and the ability to purchase the current track through iTunes.

    Why is a third party developer beating Sirius XM to the punch? It's a fair question. Maybe the radio giant doesn't want to devote too many of its resources toward developing platforms beyond its receivers. XM and Sirius have been providing Web streaming of its networks for a few years now. Access is included at no additional cost to existing subscribers, though the company also sells stand-alone streaming plans. Sirius XM has never bragged about its Web-only subscriber counts during its conference calls, so it's safe to assume that it's a limited audience. There is too much competition in cyberspace, with the pervasiveness of free Internet radio making it difficult to justify aggressively marketing a premium Web product.

    It's a near-sighted approach. Sirius XM should take a page out of the Netflix (Nasdaq: NFLX) playbook. Seriously.

    Nothing but Netflix
    Netflix launched a PC-based streaming service in January of 2007. It isn't a profit center. Netflix doesn't charge members for access. There is no advertising on the streams. If anything, it's actually a loss leader, since Netflix still has to foot the bandwidth tab and pay participating studios their royalties.

    So what's in it for Netflix? Member loyalty, as measured by the company's low churn rate, is solid. The on-demand streams at no additional cost also help Netflix stand apart from its media-serving rivals.

    Like Netflix, Sirius XM also leans on a Web streaming service to keep customers close and happy. However, Netflix has been raising the stakes this year by reaching out to Blu-ray player makers, set-top box manufacturers, and even Xbox 360 and TiVo (Nasdaq: TIVO) owners. Making it more convenient for subscribers to consume celluloid on their own terms is the biggest secret to Netflix's success.

    In short, SiriusXM should be all over this, even if StarPlayr has to do the grunt work.

    So much to gain and even more to lose
    The iPhone is huge. Market research firm Nielsen pegs the active iPhone user base at 3.6 million as of October, and growing. That may seem like a small audience for a platform like satrad with 18.9 million current subscribers, but let's dig a little deeper into the iPhone audience.

    Nielsen estimates that 98% of iPhone users take advantage of the smartphone's Web connectivity and that 70% consume music through their phones. Millions of influential iPhone users are streaming music on their devices. Some of the top apps include:

    Pandora's music discovery streams.
    CBS' (NYSE: CBS) Web radio.
    Time Warner's (NYSE: TWX) AOL Music.
    Sirius XM can't afford to ignore this audience. Even with a superior product, it's hard to compete against free apps pitching free music.

    There is Internet buzz building over StarPlayr's iPhone client hitting Apple's store later this week. Whether or not a Thanksgiving release is accurate, Sirius XM needs to make sure that it's actively finding a way to reach this growing audience.

    Oh, and let it do it the right way. Sirius XM has offered streamlined programming plans through conventional handsets and even Research In Motion's (Nasdaq: RIMM) BlackBerry earlier this year. The flaw in all of these seldom-discussed deals is that wireless phone users may have no problem buying costly ringtones but music subscriptions have historically been a harder sell.

    Sirius XM needs to approach the iPhone as a way to retain its existing subscribers, just like Netflix with its home-theater digital delivery invasion. The market also wouldn't mind if Sirius XM was paddling new revenue streams like online advertising and digital media sales.

    With the stock at $0.14 a share and the company only looking to add 200,000 net new subs this quarter, it's worth a shot. What does it have to lose that it hasn't lost already?
  2. semipenguin

    semipenguin Bum Looker

    I said something to the effect in this thread, but rather would Apple want to start their own satellite company...:rolleyes:

  3. Scales

    Scales Member

    I used to wonder if Apple, Google, or Microsoft would buy sirius. But with streaming internet radio that does not require expensive satellites, I can't see why they would bother.

    Streaming internet radio has been listed in a few articles as one of the things that will make satalite radio obsolete, so, I would think apple or someone would just concentrate on doing that.

    Although, for the price of Sirius right now, it could be worth it to get the subscriber base, and then shift over, and maybe even sell the satellites.
  4. mrpacs

    mrpacs Well-Known Member

    Interesting. I'd LOVE to see a Sirius app on my iPhone.
  5. ct_mike

    ct_mike New Member

    Streaming internet radio has a long way to go before it supplants the satellites. While streaming works well were cell or wifi service is available, there are still large portions of the country that are not well covered. It is in those fringe areas that the satellites are best. Are those fringe areas huge, no, but they still do exist.

  6. nightowl

    nightowl New Member

    Here's a thought, and I'm taking part of this out of another thread here, but:

    Could Apple buy the carnage of SiriusXM, offer a token audio service, cut the video/Backseat TV service, and then start offering a wireless internet receiver for vehicles? This would instantly increase the value of the iPodTouch and make them a more attractive item for on the road use, make streaming radio, including premium Apple and SXM content, right in the vehicle.

    If we already have an antenna in the car, all we would need to do is switch out the reciever for some type of small router (probably similar to what Chrysler is offering now), and now every iPhone and iPodTouch has access in the car, nearly everywhere, for a mid-bandwidth internet service intended to stream audio, make iTunes purchases, and make App Store applications function well while on the road.
  7. Casual Fan

    Casual Fan Surprisingly nice

    Sirius and XM way freaking overpaid for content in order to compete with each other. Now they're stuck with the bills.

    Satellite can be a very practical way to deliver a wonderful variety of audio. Saying it's not is kind of like saying satellite is a bad way to deliver television--that model is proven.

    But it's a very, very bad way to deliver expensive, exclusive content. You can have expensive content, or expensive delivery vehicles, but not both.

    If I were in charge, I would unload bloated, wasteful content quickly, and focus on the music (Howard Stern, I'm looking at you...).
  8. semipenguin

    semipenguin Bum Looker

    Don't forget to keep NASCAR...:)
  9. nightowl

    nightowl New Member

    But isn't that where all of this talk of iPods, Slacker, etc. is coming from? If I can plug in to Slacker for free, and program up a few channels of the music I want to listen to, why do I need to have a satellite radio system that only delivers music?

    Personally, I connect with the talk hosts and shows that either inform me or make me laugh. The best part of XM for me is Opie and Anthony, and now with Jay Thomas, and hopefully Jim Breuer soon. Stern, however, was grossly overpaid for his service to Sirius.

    I can appreciate a small staple of serious music channels from all genres, but I just don't see a music only satellite radio service if they are truly getting beat up by personal music players.

    People form a connection with talk shows and truly talented DJs in a way that just plain music listening can't do. No one in radio seems to get that right now. If you get good DJs, good talk show hosts, people will listen. Just a load of music won't get me to tune into, or pay for, a premium service.

    Bring the music channel count down to 15-20, really awesome sounding channels with deep playlists, and a good group of talk channels, but even that can come down from what they have today in order to get premium sound quality back.
  10. DAB

    DAB Mod Emeritus

    You've just caused about 80% of those that subscribe to cancel with this scenario in my opinion. SQ just isn't as important as many audiophiles would like for us to believe. People would clearly prefer variety over SQ. We have also seen since the channels changes so many Sirius subscribers complaining about the slightly deeper playlist, so having 15 or 20 channels thought they sound great playing music that is so deep that no one wants to listen wouldn't win you any subscribers. Again we hate to accept it but this thing has to appeal to the masses not just those that want deep playing list and premium SQ.
  11. nightowl

    nightowl New Member

    But if everyone (analysts, posters to forums such as this, etc.) are saying that the iPod killed satellite radio, why would a provider continue to provide the content that no one wants, and can get for free (or at least no monthly charges) on hardware they already own and can listen to easily in their car?

    It seems like they should be providing the content that you can't get on your own iPod, which would be deeper playlists and relatable DJs and show hosts. Personally, I don't need to hear the music on a Top 40 station, but if I like the DJ, I won't miss the show a single day.
  12. IdRatherBeSkiing

    IdRatherBeSkiing This space for rent

    Most of the anylists don't really know their ass from a hole in the ground. I don't think the i-pod is killing satrad. It is more successfull than satrad but most satrad subs also have an MP3 player of some sort. What is killing it is the idea most people have that they shouldn't pay for radio. Get rid of that notion, I think satrad will really take off.
  13. nightowl

    nightowl New Member

    I was one of those people. I've been playing my ipod through the car stereo for 5 years, and rarely listened to AM/FM radio in that time, other than a couple of talk shows here and there.

    Once I was provided an XM radio in a work vehicle, and gave it a listen, my iPod has been on vacation for the last 6 months. :)
  14. DAB

    DAB Mod Emeritus

    What credible analyst has said the iPod killed sat radio. I've read a few posters on here that are so pro apple when they fart it smells like Apple Blossoms. LOL Seriously iPod's have not killed sat radio, last I checked it isn't dead yet. Do they compete, absolutely to some degree. But what has sat radio in the bind they are in is management decisions early on, not the iPod, that is total BS.

    Well, I can't get live sports or news or entaintment on my iPod. Can you? The thing that folks don't seem to understand if Sirius was nothing but niche programming and only stuff you couldn't get anywhere else they would have no subscribers. I have both and I can tell you that I want Sat Radio to provide me a middle of the road experience, I want some hits based channels, some more deeper channels, along with all the talk, news, sports and other entertainment I can get. No matter where I am in the US I can get this content and I can listen to those DJ's that I learn. You can't do that with an iPod.
  15. JoeTan

    JoeTan Well-Known Member

    funny. I have 9000 songs on my IPOD and about 450 on my S50 and MOST of the songs on the S50 are NOT on the IPOD.

    Just can't get everything on the IPOD.

    The only problem with sat radio is it costs way too much to operate. The product is good stuff. Just if it costs $10 to run and you only have $5 then it can't work.
  16. nightowl

    nightowl New Member

    ...and doesn't this go to exactly what my original post was? Bring on the news and talk (and for you sports guys out there, the sports programming), but not focus as much on the mainstream music.

    I'm definitely a pro-satrad guy, it just took me 7 years to get there. But it's the personalities that I'm addicted to. I can't wait to listen to O&A in the morning, Ron and Fez mid-morning, etc. The music stations are fillers when I need a good fix, but it's not what got me to subscribe, or that will keep me subscribed.
  17. Casual Fan

    Casual Fan Surprisingly nice

    To Joe Six Pack (Joe the Plumber's cousin), toting around an iPod is a non-starter for a bunch of reasons.

    One, they're expensive. Joe is a blue-collar guy with kids who need braces.

    Two, they require computer expertise that Joe could care less about. He can put up drywall but doesn't know jack about a firewall. And his kids are always on the computer anyway.

    Three, to listen in the pickup, Joe has to bring the iPod with him to the truck, plug it in to the radio somehow, which probably means with a cassette adapter, and plug the power cord into the cigarette lighter, which he actually needs for cigarettes. And that's a non-starter.

    Then, he has to fiddle with the little screen and buttons on the iPod to play the music. And Joe has big man-thumbs.

    Finally, Joe's heard all the songs on his iPod a thousand times and just wants to hear something new. Playlists are for queers and Democrats.

    In short, he'd much rather press POWER on his Sportster and listen to Prime Country than fool with all that other bullshit.

    When broadband internet radio is available on I-81 while traveling at 75 MPH down a mountain, and able to be received by the factory unit in the dash, then, and only then, will anything come close to delivering what satellite now offers.
  18. nightowl

    nightowl New Member

    In one of my vehicles, XM was preinstalled, so there was no startup there, and I completely understand that this is the way they are counting on most of their subs coming along.

    However, I got a second radio a month ago for my other vehicle. Granted, I purchased the Xpress RC (love it, BTW), at a cost at BB of $150ish. Now, to get it installed correctly, it was another $100, since you have to include the antenna adapters and all that stuff. So, for roughly $250, my satrad is installed aftermarket, and looks and sounds great, with the required FM kit.

    My iPod cost $150, and the FM transmitter and power cradle was a total of 30 dollars. The iPod connects and cradles in the lighter plug, looks good, cost 60 dollars less total, and no monthly fees.

    But I don't get the talk shows I like live, and the podcasts of those shows are incredibly outrageously priced, so listening to them on my iPod is a non-starter. It's the talk programs and specialty DJs that make SXM special.
  19. DAB

    DAB Mod Emeritus

    The problem with your scenario is it's the mainstream music that gains and keeps the subscribers (granted maybe not you, but in my opinion your reason for having sat radio is the exception rather than the rule). While there are some that will subscribe for news, talk and sports, most wouldn't without the music. Where you are off point is that you seem to think that sat radio is should be some sort of niche music service and as I've said like 3 times now that just won't work to gain subscribers and then keep them. Just look at the threads right now complaining about the fact that just the decades channels have now gone deeper and folks don't like it. Mainstream like it or not even on sat radio is king!

    I purchased an XpressRC for $99 and installed it myself for free. So I have about $100 invested. Your case would be the worse case scenario and I think most self install, it truly isn't difficult.

    My iPod if I had purchased it would have been $500 since it is a 32gb 1st gen iPod Touch, which back then was $500 (though I got mine free). Though granted that was my choice, just as buying a higher priced XpressRC was your choice. So this is very subjective and dosn't make a very good argument.

    For YOU talk programs make SXM special, but unfortunately for your scenario that isn't the case for most subscribers. Most subscribe for the music and the talk, news and sports is just icing on the cake. Also lets not overlook the fact that for me to get all the music that I can get from Sirius, I'd end up spending a hell of a lot more than $12.95 (43 cents a day) just for music.

    Bottom line for some the iPod would be an alternative if they have a bunch of music already. But if you have to start buying music and manage the music, create playlist transfer music and do everything an iPod requires, you' not only spend a hell of a lot more time, but you to spend a hell of lot more money than sat radio. This is a no brainer.

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