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Satellite Radio in Fiscal Trouble
prostoalex writes "It looks like Sirius Satellite Radio is going through its worse times. From the same article XM Satellite does not seem to be doing well either, even with 200K customers. Will it signify the end of the satellite radio?"
You mean "worst".
I hope.
Sure satellite radio seems nice, but everything's too expensive to be worth the trouble. $299+ for the receiver, then another $10/mo for the service. Not a good business model when your competiton is free.
Maybe people are feeling the squeeze on their wallets from all the market problems we've been having, and are unwilling to commit to something that seems to be almost 100% luxury.
I know that if I were concerned about my retirement fund, I'd be cutting back where I could to put more money there.
When this thing came out, many people didn't say "can't" or "shouldn't" when it came to luxury purchases. Now, though, people are keeping their wallets in their pockets a bit more.
You mean satellite radio ever began? I mean, sure, I've seen commercials for it, but I know of no-one who has it, and I know so many tech-geeks who go out and buy the latest and greatest just because it's new (well, okay, not so often in this economy), and yet none of them have it.
I can think of a lot of reasons why it wouldn't be doing so well though... how much does it cost to put a satellite into orbit or "rent" one of the ones already up there? And how much are they charging customers per month for the service?
200,000 customers? In a major metropolitan area, like New York City, one radio station can have that many listeners. It sounds like a lot, but it isn't.
Kierthos
Mr. Hu is not a ninja.
Comment removed based on user account deletion
1. I mostly listen to the radio when I'm in my car. Since I live in a big city, I'm rarely in my car.
2. And when I am in my car, I listen to traffic, weather, or my own music collection or local radio.
3. The exception is long distance trips. Perhaps one multi-hour drive a month.
4. At home, I have a big music collection. Stuff I actually bought over the years. (Don't blame MP3s in my case). I also have digital TV, with it's music channels. Plus a collection of reasonable local radio stations (and many more unreasonable ones)
So! Someone has to remind me why I should spend $$$ for this service. I can see why some people would spring for it. Just not me.
Damn, it's snowing... there goes summer...
I'm pretty sure with all of the deals these companies have signed with auto makers, all the customers they already have, and most importantly the millions of dollars in satellites overhead, they wouldn't just let them crash into the ocean because their revenues are starting out low.
Even a massive project like Iridium eventually found a buyer. Even if both of these companies go bankrupt it would be an attractive purchase for some investor.
I am personally kind of surprised that they were even able to get online. Sure there's a market for coast-to-coast single channel coverage, but how much of the market can truck drivers cover?
Most people spend 99%+ of their time driving within 50 miles of home, where one radio station will cover them. Anyone who's all that picky about what they listen to will probably want to listen to CDs anyway. Personally I'm probably going to get a car MP3 player (I was waiting for an OGG player but I'm tired of waiting).
I spend $120 a year but I send it to public radio.
The sat radio services have been live for what, less then two years? It seems disturbing that a venture of this size wouldn't have had a longer term plan.
Sat radio is a great idea, and an idea that I have held off embrasing due to too many uncertianties. Why they chose to go with propritary hardware for their services is beyond me. $200-400 for the setup, and if the service goes out of business, you can't just call up the compitition to reprogram the radio.
This can, and should be able to work in the long run; It's just that good of an idea.
The Internet is generally stupid
Satellite Radio and XM will basically become options on luxury cars so that those companies can get paid up-front for service. The manufacteurer will then pass off the cost to the consumer, and most likely the monthly fee will disappear. Or, they maybe just make it standard in luxury vehicles. The possabilities for markets for their products are there. I just don't see them using those markets.
Zech Harvey, MCSE, MCDBA, CCNA
I think you guys forget the number of people who drive most of everyday. Think Semi Drivers. Think Delivery Trucks. Think Tow Trucks. A lot of those guys own their own trucks, and travel across 'radio borders'. We all know how limited radio is, and how statios in different cities are all copycats.
Satellite Radio gives you more choice, and you don't have to worry about 'blackout' areas between major cities. I actually listened to AM one morning driving I-65 bewteen Indianapolis and Chicago when I was 18. How many 18 year olds (who don't get their asses kicked) listen to AM radio?
Some places are just that barren.
"I can't give you a brain, so I'll give you a diploma" - The Great Oz (blatently stolen sig)
What does XM offer that traditional radio doesn't?
Let's see, no subscription - no wait, I have to pay a per-month fee. Traditional radio is free.
I don't have to listen to ads? No, wait, I am paying for my airtime to listen to people trying to sell me stuff. Same as t-radio.
Quality of music? I must be able to listen to indie artists and hard-to-find cutting edge stuff, right? Gee, that doesn't seem to be the case either.
Static free? Hmm, most of the time my FM is static free, too.
So I'm just not seeing the value of paying $300+ for a receiver and $120/yr for the service. The cost-to-benefit ratio is just to high.
If they got rid of *all* the ads, I would probably do it in a heartbeat. But I'm not paying to have someone push product on me. (Note that I don't have cable TV either...)
Matt
I don't know about anything else, but the attempt to shift everything from a "purchase" to "rental" model bothers me enormously.
s is one thing. Sure, inkjet consumables are a ripoff, but at least the thing doesn't eat money when I'm not using it. But if someone tried to sell me a printer for $150, plus $20 per ink cartridge, PLUS $5.99 PER MONTH, I would behave badly.
I don't mind in the least paying $300 or $400 for a nifty gadget.
I have VERY HIGH SALES RESISTANCE to anything that carries a "monthly" fee for anything. My nifty gadgets OFTEN last for, say, 100 months (a bit over 8 years) and I am quite capable of multiplying a monthly fee by 100.
When I buy a $20,000 car, I'm quite agreeable to considering a $300 or $500 add-on.
But a MONTHLY fee? Forget about it.
Give-away-the-razor-and-make-money-on-the-blade
Perhaps I'm not the only consumer who can multiply by 100 in my head.
"How to Do Nothing," kids activities, back in print!
I see this as the major fault of the DR plan. Why would I pay for a service that uses advertisements to suppliment income? By the way, I don't use cable for the same reason. I believe if you pay for a service, you should exclusively get what you pay for and no extra baggage. If the service has ads, then the service should be free or public. I think a better plan for DR would be to incorporate multimedia broadcasting. You know, like what 224.0.0.0 nets were reserved for (but not used anymore). I think it'd be great to have an on board computer that gets continuous weather updates and news reports (like what I have on my pager, but more detail). So you could get updated weather maps and news with some live video. Yes, maybe not today, but the service definitely has promise. Just drop all that ad crap. I won't pay for ads!
But how do you find out about new music? I like my music collection, but I don't fool mysef into thinking that I've already discovered everything that's good. To everyone who's saying local digital broadcasts will take this market - Clear Channel already owns all the radio towers in my area. I don't think digital clarity will make their content sound any more original.
Having said that, I'm holding off on sat radio until the receivers aren't proprietary.
The FCC adopted the wrong model for satellite radio. The pigopolists pretty much got what they wanted, and are suffering for it.
For technical reasons, there are only two satellite radio networks, Sirius and XM. Both have capacity for a lot of channels. The FCC decided to use a "market" approach and allow each company to choose details of its own technology, so their radios are incompatible. Imagine how well TV or FM radio might have done if different stations required different receivers! Consumers are locked in. Sure, it's nice work if you can get it, but consumers aren't quite as dumb as the companies wanted them to be.
Even worse, the duopolists were not charged as common carriers, but as programmers. So XM and Sirius determine what they will carry, and if they don't want something run, it won't run. Sure, they've figured out that they have to offer some kind of musical variety, so they have country & western streams, '70s rock streams, '80s rock streams, sports streams, etc. But the plain fact remains that they control the horizontal, they control the vertical, and a Sirius or XM subscriber won't be exposed to anything that the suits at Sirius or XM don't want them to hear. I guess to them, a stream playing Wilco and an NPR stream are radical enough.
So if this turkey fails, maybe somebody else will try again. If an operator were less greedy, and leased enough channels to independent programmers, then a workable business might be found.
Satellite radio's problem is the cost of the receiver. Getting people to pay for another piece of equipment is the issue. I think they'd have more success "renting" the equipment as part of the monthly fee.
--*Rob
I'd pay twice as much for the service just to keep it alive.
Don't worry about satellite radio as the providers have some large pockets to draw upon - the auto makers. Next year, GM will offer the service as standard equipment on some of the vehicles - with a free year of service. If only a small percentage renew, then the satellite providers will be listening to satellite disco. If a significant percentage renew, then you are looking at a threat to FM.
On that note, with all these satellite head units running around in the new autos, it would make financial sense to provide some publically funded stations free-of-charge. That would be the largest opportunity.
$0.02
Life is the leading cause of death in America.
I've been itching to buy one of these as of late because I live in an area with poor analog radio reception. Personally, there are a couple of reasons I've been holding off buying one of these...(hope you're listening sirius/xm)
First of all, you can only get a receiver for your car! Is this really the only place they expect people to listen to the radio? Sony makes a unit for the XM systems that is car removable, but I have been told that is just the headset and the "base unit" which mounts somewhere like under a car seat is separate.
Secondly, they need to come up with something better than "just tear out your factory deck". I LIKE my factory deck, and for those who don't know this already, you get better resale on a car that has the factory deck in it. Tearing out a custom unit when it comes time to sell a car is a pain.
Third, and probably most importantly for the prudent consumer, "Will I make the right choice?" The topic of this thread alone should be enough to convince most that this isn't a device you want to run out and spend $300 on. I want a little bit of a guarantee that my nifty new receiver isn't going to become a useless box less than a year after I buy it because the network is no longer in business.
Which brings me to point four: "Why can't I have a receiver that works on both Sirius and XM?" Yes, I realize they are competing for the same market segment. I DON'T CARE. I am a consumer. I want some guarantee that if Sirius(the network I'd probably choose due to a choice of programming) ends up in bankruptcy court, I want to know I have the option of getting service with XM. These devices are just too much money to be throwing away. And I want one that works in my car as well as my home.
Sirius seems to offer a bit higher quality programming than XM. XM seems like a whole lot of the shit that is on television, only now I can listen to it. I can pretty well guarantee that most consumers who are willing to shell out $10 or more a month for this type of service, which is basically radio(something we're accustomed to getting for free), aren't going to willingly listen to a bunch of damn commercials. This is in fact the reason I would choose Sirius over XM. Because they have NPR. No commercials. I get to listen to the news in peace. Commercials are just plain annoying.
Russian Russian Russian RussianDollSig DollSig DollSig DollSig
I just want to say that if you really like NPR you should consider giving that $10 a month to the public radio station you listen to instead of XM.
$120 a year isn't much to most upwardly mobile middle class Americans, and I believe public radio is worth at least that.
I listen almost exclusively to North Dakota Public Radio. Even here in ND the radio market is saturated with Clear Channel crap. I've found NDPR, to be informative, entertaining, and to have regional content that the now Clear Channel stations no longer carry.
obviously no deficiencies vs. no obvious deficiencies
It wouldn't surprise me if their finanical trouble started relatively small and then snowballed. My boss just had XM installed in the Company Pimp Van, but he we originally looking at Sirius. Our city was one of the initial test markets for Sirius, and the store he went into was covered in Sirius promotional propaganda. When he asked about it though, the salesmen wouln't even demo it, saying "Nah, you don't want that. They may be gone in a year - You want XM." I can't help but wonder if their sales reps aren't partially to blame for the decline.
I recently purchased a car stereo, and noticed that most of the $300+ (USD) head units that handle satellite also play MP3. Satellite radio requires $10/mo service fee, and the purchase of a $150+ reciever.
Given the choise of spending at least $160 for satellite radio, or to just dump a few hundred tracks onto a couple of CD-Rs, I think I know which option most people will go with
I never liked the idea of satellite radio from the start? Before you start sniffing for troll aroma, let me say I already HAVE a form of Satellite radio - DirecTV. Since I mainly listen to pop/rap/top-40 stuff, DirectTV's digital audio-only stations play the same songs I listen to on FM, but guess what - I only listened to them maybe once or twice as a novelty.
Yea, commercial-free radio is neat... But some commercials are actually entertaining, Bennigans for example comes to mind. Yesterday, I heard a commercial for Time Warner Roadrunner service and the spokesperson was mouthing modem tones ("I no longer have to hear those bleeep beep blah pbpbpbpbpbpb dialup sounds") - it was hilarious. Do I like all commercials? No, certainly not - but missing the good ones would really suck.
I don't know about XM or Sirus, but the local stations all have DJs that put people from the area on the air to give shout outs, talk about things happening in the area and take requests. I don't care if the actual station is run out of a closet in Bumfsck, Alaska, as long as they're still Central Florida-centric, it seems more "personalized". Stations seem to realize that part of getting people to listen is listener participation. Hell, I've even called in a few times to vote for songs and make requests.
The other major problem with satellite radio is you can only listen to it where the equipment is. Yesterday, I was working on my moped (yes, I have a car too, the moped is NOT the reason for not liking satellite radio) in the garage - there's a boombox in the garage with a FM tuner, a tape player (what the hell are those things again?) and a CD player. I wanted to listen to music and didn't feel like getting up every 74 minutes or so to change CDs - so I put on the radio. If I had a satellite radio service in my car, I'd feel like I'm wasting my money since the majority of the time I listen to music (while working in the garage, mowing the lawn or in front of the computer) I wouldn't be able to use it. If I want to hear high quality commercial free music with just the songs I want - well, I can just bring my hard drive based MP3 player with me...
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DRM is like antifreeze, to the MPAA/RIAA it's sweet, to the consumers it's poison.
Currently XM and Sirius are almost exclusively available as high-end aftermarket add-ons. Obviously this isn't conducive to helping the satellite radio companies reach their break-even points (if memory serves me correctly from other articles I've read, the break even point is either 500,000 or 1,000,000 customers).
Sirius is partnered with Ford (Ford, Lincoln, Mercury, Land Rover, Jaguar, Aston Martin, Mazda, Volvo), Audi, BMW, DaimlerChrylser (Mercedes, Chrysler, Dodge, Plymouth, Jeep), and Nissan (Infiniti and Nissan). XM also has an impressive partnership list, including GM and more.
Once these OEMs start selling cars with satellite equipped radios from the showroom, sales are going to skyrocket.
I used to think this way about inkjets too (they don't eat money when I'm not using it), but then I discovered that if I leave an inkjet unused for too long, the ink nozzles gum up, rendering the ink cartridge and all its overpriced ink completely useless. So the cost is more like $150 for the printer, then $20 per month because the cartridge has to be replaced every time it gums up. I've since sworn never to buy another inkjet. Laser toner doesn't do this.