iPhones, FStream and the Death of Satellite Radio

Statesman writes "Only a little over a year ago, the FCC approved the merger of XM and Sirius satellite radio companies and the combined stock was trading at $4 a share. Despite being a monopoly — or perhaps because of it — the company is failing. They are losing subscribers, the stock is now trading around 22 cents a share (a 97% decline), and they have written off $4.8 billion dollars in stock value. So, what happened? The CEO is blaming pretty much everyone except himself and his business model. But is pay-for-bandwidth even a viable business plan anymore? With millions of iPhone and gPhone users out there, free streaming audio applications like FStream, and thousands of Internet radio stations to access, the question is: why would anyone want to pay for proprietary hardware and a limited selection of a few hundred stations all controlled by one company?" Read on for the rest of Statesman's thoughts. Statesman continues:
"It seems like the pay-for-broadcast business model is fundamentally flawed. First, satellite radio is a misnomer; if you are listening inside a big building, chances are you're really using WiFi radio, not satellite, which requires line-of-sight to the sky. In this mode, XM/Sirius offers less selection and higher cost than an iPhone and streaming audio client. Second, a monopoly is a monopoly. Sure, you can get dozens of ClearChannel stations in some markets, but after a while it does not matter whether they are country, top 40 or easy listening. They all have the same format of hypercharged 'personalities' and lots of ads. By contrast, the iPhone and streaming client can access thousands of stations from thousands of providers worldwide. Finally, you may say that an iPhone and service agreement are expensive compared to a satellite radio subscription, but if you already have the iPhone, the cost of adding a stream audio application is zero. And the iPhone is cheap compared to a cell phone plus an MP3 player plus a laptop plus internet access. Bottom line: a year after being granted monopoly status, Sirius is all but bankrupt and the satellite radio business model is dead. Time for the FCC to think seriously about making better use of this bandwidth."

Comments

Howard Stern

[BadAnalogyGuy]

Some people like certain media personalities and are willing to pay a premium to subscribe to their shows.

BTW, this is also why sites like Forbes, NYT, and WSJ get paid subscribers while CNN and MSNBC basically give away everything for free. You said it yourself. Clearchannel's lock on the airwaves is something that some people are fed up with, and those people are looking to XM as a means of getting other types of content.

But I don't even own a tv or a radio, so I'm just a bit better than you.

Location, location, location!

[Anonymous Coward]

I live in West Texas. My XM radio has been fantastic during the times when I have to drive to Dallas or San Antonio. The radio stations out in some of the areas are very local. They have things about Billy Gonzalez's goat winning the 4H competition or Jim Brown lost his dog, has anyone seen it? Satellite radio offered a great choice.

Is this serious? (not Sirius)

[NitroWolf]

Is this serious? An iPhone able to replace satellite radio? Lets start with battery life, as in, there is none. Using WiFi to stream music on the iPhone will kill the battery in less than an hour or so depending on conditions. To solve that, I guess I could plug the thing in.

Now, let's use WiFi in my moving car. HAHAHA yeah, that's a total joke. So we'll use T-Mobiles network for $20 a month... umm, maybe not. Let's use AT&T's network. Streaming data plan? $60 a month. Better hope you're in one of the urban areas that support the high speed data! ORRRRRRR... you could buy a $50 Satellite receiver, pay $12 a month (or $6 if you know someone nice) and do away with a $60/mo data plan AND have access to the signal anywhere in the US.

Seriously... I live in a big urban area, where the idea of this would work. But the implementation would be marginally feasible at best. The battery life issue is huge. The cost is huge (but one could argue that one would already have those, making the cost a non-factor... but how many people have an iPhone + an AT&T data plan AND have Satellite radio? Not many I'll wager.). The available coverage area is absolutely tiny, microscopic really compared to satellite radio.

No... there's nothing about this idea that is even marginally viable on even a small scale.

The business model of XM/Sirius may be flawed, but iPhones and FStream are not going to be a factor in any way, shape or form, nor is WiFi and Streaming radio. Satellite radio is good for so many things that WiFi and Streaming radio can't and won't be touching anytime in the near future (remote listening, professional music selection/composition/presentation, uncensored programming, big name talk show people (bleh personally), professional sports, etc...). Streaming audio can't compete at the same level anytime soon, if for no other reason than it's not organized enough.

Re:Is this serious? (not Sirius)

[Graff]

Let's use AT&T's network. Streaming data plan? $60 a month.

AT&T's unlimited data plan is $20/month for Edge and $30/month for 3G. I have no idea where you are getting $60/month from.

Honestly though, I use my iPhone as an iPod, not as a streaming audio device. All of my music is bought and I have several different playlists for different types of music. I just plug it in to my car, start up a playlist and go. Just as good as any streaming audio in my opinion.

Oh and if I want talk radio then there are tons of free podcasts on every topic, even ones that are updated several times a day. Yeah I don't get someone talking about stuff happing right that exact second but I really don't care if the stuff I'm listening to is time-shifted a bit. The only time-sensitive thing I care about in a car is traffic and Goggle maps handles that better than the radio anyways.

Re:Is this serious? (not Sirius)

[Cyberllama]

I can stream music just fine over EDGE on my iphone, who cares if the 3g in a particular area is good or not? 3g is overkill for all but the highest quality streams.

Also, my battery life while streaming is more along the lines of 5-6 hours. Now this is a big hit to my normal musical battery life, I'll admit. The iphone can play mp3's continuously for somewhere in the neighborhood of 20 hours (though I think they advertise it as 12, all the battery life tests confirm that it goes 20-24).

The iphone simply has a bigger battery than most music players so it can take the hit and still offer *almost* enough battery life while streaming to get through the work day. If you mix it up, and go half and half, it works just fine.

Re:Is this serious? (not Sirius)

[acroyear]

Streaming audio can't compete at the same level anytime soon, if for no other reason than it's not organized enough.

And once it gets organized (Live365, for example), it immediately gets attacked by the RIAA and the publishers (ASCAP, BMI, etc) for royalty rates that are set relative to the average audience size (just like broadcast radio), at which point most internet radio is also a "loss-leader" for nothing.

Free is relative: the music industry refuses to let anything be free for long. So either internet radio (REAL internet radio, not just internet relays of broadcast signals with commercials) is going to have to go commercial itself or work on the donations model, or it is going to find itself shrunk down to the very same mainstream channels we see everywhere else (broadcast, HD, Sirius XM).

Worst part about all that is, of course, that for minority stations, the musicians and songwriters on those stations don't get paid a dime. All of that general license fund money is divided up by broadcast airplay statistics, no matter where it came from (this is the same for the business licenses that stores, bars, and restaurants all pay). So I can play 100% Ozric Tentacles all the time, but almost every dime I pay ASCAP goes to the songwriter for "I Kissed A Girl".

Re:WiFi Radio, and I went to Slacker from Sirius

[Anonymous Coward]

hmm I'm streaming sirius to my linux box right now...might want to use google before showing the world how much you don't know.

rental cars

[savuporo]

I did a coat to coast roadtrip last year and Sirius in a rental car was basically the only thing there was to listen to. Sad if that goes away.

XM to Sirius/XM

[p51d007]

I'm thinking about dumping it next year. Now that the merger is over, the Sirius "jocks" WON'T SHUT UP! The main reason I went with XM radio 5 years ago was NO TALKING, NO COMMERCIALS. The decades channels and some of the rock channels have "DJ's" which have to talk over the music, yack yack yack. If I wanted that, I could listen to FM for free. Fix that, I'll keep it, don't, and I'm outta here. Back to FM, CD's & MP3's

Re:XM to Sirius/XM

[grotgrot]

I just dumped Sirius after being a subscriber for many years. The ultimate reason is that they are an exceptionally poorly run company. After hearing my tale, any shareholder should be pissed.

I had two radios with annual subscription. The first subscription is about $140 and the second about $80. For the latter the antenna on the car had cracked and stopped working. We had a Sirius Boombox and so were using the antenna from that inside the car but it didn't work too well. A replacement car antenna is sold for $40 which is as expensive as many complete kits. The electronic music channels were getting repetitive so I called up to cancel.

Sirius outsources their call center to India. (Nothing wrong with that). But it does tell you that their customers are so important to them that they pay another company in another country half way around the world the least amount of money possible in order to avoid talking to their own customers. On trying to cancel you are eventually forwarded to a US based retention team. So they gave a $10 credit. And a whole new radio. And free installation. Yes, they spent almost $200 to "fix" a broken antenna when the antenna costs a few bucks to manufacture. Oh and in reactivating that second radio, they managed to terminate the first one. I had to call to get them to turn it back on again.

The credit card they had on file for me expired in October and my subscription was due in November. They sent an email pointing that out and asking me to call to update. Instead I used their web interface. So on November 12th my radio shuts off. Their system didn't do a renewal. So I call again. They fix it and charge me the second radio amount ($80) for the first radio subscription (should have been $140) and charge me $20 activation, but give a $15 credit for that. I accept the deal even though it is ludicrous.

November 12th also happened to be the day they changed the lineup. 4 electronic music stations went to 3 with those 3 having more talking and playing more "poppy" music. Needless to say the cancelled channel is the one I listened to the most (~95% of my listening). I give them a few days and then email complaining about the music change. A snotty email comes back explaining that "people like me" wanted these changes! I had to respond that people like me would not want my main channel killed and more talking on music channels playing more music like the crap ClearChannel does.

I gave them another week to fix the music but they never did. So I called up to cancel the main radio. The CSR suggested giving me two free months in case they fix the music issue. He had no more clue than me if they would actually fix it. I said to cancel and he had to put more on hold to do the refund. A few minutes later he had done it but had refunded about $160. This was for a $140 subscription plus activation but the subscription had only been $80! I explained how he had refunded way too much, but he didn't want to fix it and said it was okay because the error was in my favor. (My best guess is that as a CSR his metrics would be time per call and least number of mistakes.)

So the net effect has been that Sirius lost one subscriber, got $5.16 for a second subscription that they paid over $200 to address a broken antenna. 100% of the time I talked to them on account issues they made mistakes. And had that first subscriber tell everyone about the crappy experience.

Re:The new Sirius lineup

[LWolenczak]

I'm really quite upset with how many of my favorite XM stations are now their serius counterparts instead of what was there... I was a big fan of Squizz, Ethel, Fred, now we have the closest thing Sirius had to the content, and frankly its far from the same. How in the hell do you go from RATM to Ozzy? And why in the !@#$ do I have to listen to some DJ talk about his other show?!? The rock stations just... suck.

I went shopping for FM transmitters for my iPod last night.

To be honest, I want a giant undo button and I want XM back. I'm likely going to drop the service though, which is sad because its a great idea.... at least I have BPM for now.

Re:The new Sirius lineup

[Anonymous Coward]

Not so, friendo... A *lot* of stations were disappeared during the lineup. All but two of my presets are left standing, the two that I rarely listen to.

Boombox = gone, NO alternative
Backspin = gone, NO alternative
Strobe = gone, NO alternative
Punk = gone, NO alternative ... list goes on and on.

I've already discontinued my service as of the end of my yearly subscription on December 31st and am going the Slacker route.

Re:Freedom to bitch.

[Anonymous Coward]

The days of someone else controlling what I listen to are done. I bittorrent my television (no commercials) and use an iPod or burned CDs to listen to music. Radio, satellite radio, and realtime television are unbearable to listen to once you're used to (a) having all the control over what content you see and hear and (b) cutting out commercials.

Re:Aw...

[reboot246]

I agree. I drive constantly on my job across four states. XM/Sirius lets me listen to what I want to listen to regardless of where I am on the road. I go places where decent AM or FM stations are nowhere to be found, and a lot of my driving is at night when nothing much is available over the air.

It may not be worth it if your commute is only a half hour each way, but it's a bargain for me. My commute last week was 102 miles each way. Tomorrow it will be 95 miles each way. Plus I work out of my vehicle. I keep it on all day.

Re:Aw...

[Anonymous Coward]

"Keith and the Girl" is the best example you could come up with to promote podcasts? I agree that podcasts are fantastic. I commute about 3 hours per day. I listen to audio books and podcasts. You want some good podcasts?

Distored View Daily (This is a show worth paying for, really)
Indiefeed: Blues Channel (all of them actually, but I'm kinda going through a blues phase right now)
The Roadhouse
This Week in Science (not to be confused with what the waste of air that is Laport calls "This Week In Tech" or TWIT for short, yeah, he calls it that)
CNET's daily podcast

for free audio book content, check out podiobooks.com

Re:Aw...

[Anonymous Coward]

I don't know how you manage to get across the country and think that XM/Sirius has good coverage. Perhaps you don't stay in any of the places I have which for all outward appearances should have great sat coverage, (flat land and in the southern portion of the US), yet for some reason I consistently find these places where I cannot get reasonable reception (Palestine, TX being a checker board of coverage). While it is nice being able to travel long distances without changing the channel, if I am paying money each month for a service then I would prefer to not have so many dead areas.

Re:Aw...

[reboot246]

I work in Alabama, Georgia, Mississippi, and Tennessee. Never found a place where I didn't have a good signal. Tunnels are a problem, but we don't have very many of them around here. Oh, and the cover over the drive-thru at the bank blocks the signal, too. :) I've driven nearly 300 miles nonstop without losing one note of a song or one word in a sentence.

ROKU, Streamtuner, Audacious

[SCHecklerX]

The only place XM/Sirius is even remotely worthwhile is where I don't have some form of internet access, and with 3G getting more prevalant, that's going away. I just wish more portable players, like the sansa e280 (rockboxxed, baby!) had 802.11 capability, without restrictions on where you go to get your streams. That would be really nice at the gym. Yeah, phones can do it, but I really prefer having a cheap device that is really good at that one thing that I don't worry about breaking.

At home I use my roku soundbridge, which provides a great streaming interface. On the road, I use streamtuner to 'dial in' my internet radio stations from shoutcast. Audacious, I just discovered while trying ubuntu as a good xmms replacement.