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Internet Killed the Satellite Radio Star
theodp writes "As Sirius XM faces bankruptcy, Slate's Farhad Manjoo reports that the company has bigger problems than just the end of cheap credit. While it has what seems like a pretty great service — the world's best radio programming for just a small monthly fee — Sirius XM has been eclipsed by something far cheaper and more convenient: the Internet. Load up Pandora or the Public Radio Tuner on your iPhone, and you've got access to a wider stream of music than you'll ever get through satellite. So forget the satellites, the special radios, and the huge customer acquisition costs, advises Manjoo, and instead focus on getting Howard Stern, Oprah, the NFL, and MLB on every Internet-connected device on the market at very low prices."
It was centralized anyway. However, what we need is a mesh network, because otherwise we will lose net neutrality and then you'll be back to having to listen to clearchannel because no other kind of internet radio will work on your mobile internet connection any more. WE MUST DECENTRALIZE.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
I can run flycast.fm on my office pc instead of my xm radio and they have also released a blackberry and iphone client.
The blackberry client works well so long as I'm not moving. If I am signal fluctuates and the music drops out.
Vermifax
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What percentage of radio listeners even have an iPhone, or any portable device capable of radio reception at non-extortionate rates? Too small to even matter.
Satellite radio has its own problems but the iPhone isn't one of them.
Only place I use satellite radio...
The most important part of satellite radio is *mobile* access. Automobile. Essentially the same market that AM/FM stations have.
Let's look at what he's saying one by one:
1) The bulk of the article compares the iPod with Satellite Radio and says they're competing for the same market. Hmmm. Maybe so, but how many people have iPod docks in their car?
2) The idea that satellite radio is somehow a big market when streamed over the internet. Then he compares it to the huge number of free, high-quality internet streams and declares that Satellite Radio is too expensive. It doesn't even make any sense.
3) He chooses to dismiss the payments by satellite radio to car makers. He says if they got rid of that then they could charge less for the internet streams. Seriously man, I think he's retarded.
Let's be real. The *primary market* for Satellite Radio is automobile access. You turn on the music and as you drive all around the country, you get the same music/talk/news whatever. And what's more, it's a great application, too. Everybody who gets satellite radio, if they enjoy it, never listens to AM/FM again in their car.
If Satellite Radio was all set to rely on the Internet for it's delivery mechanism, then the whole reason for Satellite Radio disappears. Satellite Radio isn't about content it's about a delivery mechanism for content that doesn't require any infrastructure beyond the satellites themselves. The problem isn't that it competes with an iPod (doubtful) or that it doesn't come over the internet (goofy), its that the infrastructure set up by Sirius/XM is too costly. These guys took a bet on an adoption rate that hasn't happened.
This article is so dumb that it reminds me of a letter to the editor (true story) about 35 years ago. We were going through an energy crisis and the local paper wrote an editorial that said we need to begin seriously moving to solar. A few days later, a woman wrote in that it seemed like a poor idea because if we used solar power, we'd simply use up the sun quicker and then it would be really dark.
It demonstrated that the person writing the letter was clueless about what solar power was or how it even worked. Farhad Manjoo makes the same mistake. He has no idea what Satellite radio is, and why people want it. So he
I had satellite radio, but ended up ditching it along with a few other things. We decided that we were being economically bled to death my numerous little services, none of which were too bad individually but collectivity they ate up our budget.
- Sirius
- DishNetwork
- Land-line telephone
- Internet service
- MMO fees
- Cell phone
- GameTap
- FilePlanet
The list goes on. Eventually we were able to eliminate, consolidate, or reduce many of these fees. We safe a lot of money each month now. I now try and avoid anything that has a recurring monthly service, at least not unless it replaces something else. Business should realize that, in these tough economic times, people are going to take a hard look at where there money is going. Month payments don't have an end in sight, there's no payoff.
Thanks,
Bruce
Yes, I have an iPhone, and yes I run pandora on it. It works great, and I enjoy it at home and in the car.
But that wasn't why I dropped Sirius.
I had two radios, and the high-quality internet subscription. After the merger, some of my favorite stations either went away, or the playlists got cut down to 20 songs.
I called and complained, but I was greeted with "sorry about that, how would you like two months free service?" Why would I want two more months of a service that sucks?
The last straw was the sound quality problems. Octane 20 sounded like it was underwater. I guess Sirius cut back on the bandwidth reserved for some channels to make room for some of the XM offerings.
In the end, it was bad music content, and terrible sound quality that killed it for me.
I do miss Howard, but I hope that he'll go online once Sirius XM goes tits up.
-ted
Not to me. Radio should continue to be free.
Radio (at least most of what is delivered over RF in the US) isn't free, you pay for it by being asked to listen to ads, most of the ads are pretty dumb too. Last I listened, it seemed like a third of the time is ads.
There isn't much by the way of "TiVo" for broadcast radio to at least pare them down a bit. There are a few devices out there, but the reviews I've seen are lackluster.
(assuming im paying lots of money for an iphone (i wouldnt i have a blackberry bold) and i have a 1 gig limit on it per month.)
All nested comments aside, maybe you should consider and iPhone. I am well beyond this mythical 1GB / month limit of which you speak, and I have not had a problem with discontinuation of service... Perhaps you chose the wrong service plan?
i leave the car to go shopping and my wife is in the car still, what will she listen to...no thanks, stupid idea.
I'm assuming that if your wife is staying in the car, that you probably aren't going to spend an hour and a half shopping. I'm going to suggest that unless you need you phone (maybe it has the list of items you wish to get), you could probably live without your phone for the ten minutes you were inside. I would also submit the question: does you wife have a phone? if yes, then is it a smart phone as well? if no, why not? valentines day was yesterday. I got my wife an iPhone, what did you get for your wife?
-=Geoskd
I wish I had a good sig, but all the good ones are copyrighted
Approximately 25% of Americans own portable standalone MP3 players, 76% of households in the U.S. own a portable electronic device many of which are capable of playing music (such as a PSP, phone, blackberry, etc.), 99% of American households have televisions in them, Americans own more than 1 billion radios with free AM/FM broadcasts to receive, Americans also play tons of video and computer games, Americans go to the movies, and the form of entertainment that Americans prefer most according to most recent studies...reading.
Sirius-XM has to compete with EVERYTHING, not just other forms of audio broadcasts like internet radio or over the air AM/FM radio. Every activity you do other than listen to Sirius-XM is in direct competition with Sirius-XM, the less you find yourself using the service, the less likely you are to renew the service, and that's if you get it in the first place.
If you have a short commute to work, is paying for a monthly radio fee worth it? Probably not if you only listen to a few minutes of radio. And if your commute is long, is satellite radio better than free radio? The talk shows have commercials on both, so unless you really want to listen to a Sirius-XM exclusive broadcaster, the answer is no again. But what about music? Sirius-XM has commercial free (for the most part) music, AM-FM does not. But with CDs and I-PODs (through car speakers) you can play your own music and audio books or whatever commercial free and you control the entire play list.
And once you leave your car, Sirius-XM offers almost nothing that is worth paying a monthly fee for, unless you crave their exclusive talk radio content like Howard Stern. All of the sports game radio broadcasts can be gotten with a superior service (like MLB.TV for professional baseball) or for free over AM-FM. And out of your car you've got the other alternatives, TV, movies, video games, reading, that studies show most Americans prefer over listening to any form of radio whether it's AM-FM or satellite.
Sirius-XM also spent enormous amounts of money securing exclusive contracts with radio businesses and entities. Howard Stern cost Sirius over $500 million ALONE and they gave him over $100 million in stocks that is now worth next to nothing. Factor in the costs of hiring Oprah, Martha Stewart, Jamie Foxx, the NFL, MLB, NASCAR, etc. and you have another major reason why the business is going under. Even more ironic was that Sirius and XM when they were competing against each other spent so money to OUTBID each other for these exclusives and now that they are MERGED TOGETHER they are stuck with each others' MASSIVE DEBT from taking on these insanely burdening contracts and the entire reason that they spent so much money in the first place is not a factor any longer. Sirius spent $500 million to get Howard Stern instead of XM (who offered significantly less according to Stern) but now Sirius-XM is the same company.
Another reason that Sirius-XM is in the tank is because car sales are down. Many car dealerships had deals with either Sirius or XM (and now with the new merged company Sirius-XM) to include a satellite radio with a new car with two or three free months subscription. The idea was that people would get used to having the satellite radio in their vehicle and they would continue to subscribe. But auto sales are down and this model of placing radio units in news cars has gone away for the most part leaving another dead end for Sirius.
With the economy going sour continually, how many extra subscribers does Sirius think it's going to get? Mel Karmazin, CEO of Sirius, keeps lowering projections of new subscribers every month. And the number of users canceling their subscriptions must also be getting higher considering the economy as well.
Fact is that Sirius has $3.5 billion in debt. If they declare bankruptcy is allows them to void their expensive c
"3G wireless works just fine in the car"
Not really. The appeal of satellite radio on car trips is that even when I can't get cell phone service at all, I can get Satellite radio. If you just drive 10 minutes to work in the suburbs near a city, then perhaps your idea is fine. But the bulk of the U.S. does not get 3G service. Then you'd have to deal with the issue of how you tie your smart phone into the sound system of your car. While this is conceptually easy, from an infrastructure standpoint, you'd have to get all cell-phone makes agree they will support bluetooth streaming of stereo sound, you'd have to get the carriers to agree to allow this to happen, then you'd have to get the automobile manufacturers to tightly integrate this capability into the sound systems. Not to mention the man/machine interface that would support tuning stations inside an automobile without fiddling with a smart phone. These problems will take years to solve.
I don't think smart phone data plans allow the kind of access that would let you stream audio hours a day. Seems to me if significant numbers of people started streaming media on their smart phones everywhere, 3G service capacity just isn't there to support more than a handful of users. You'd end up with higher rates on your smart phones, or they plans would get severely curtailed, or both.
I think what's likely to happen here is that Sirius/XM will declare bankruptcy, and force the banks to restructure the debt. I'd hate to be holding a lot of paper for Sirius/XM right now; you'll be lucky to get 25 cents on the dollar.
You were mistaken. Which is odd, since memory shouldn't be a problem for you
Don't forget the biggest mistake of all: the merger.
Had the merger not occurred, Sirius would be mostly breaking even today. Still operating at a slight loss, but its existence as a going concern would not be in jeopardy. XM, on the other hand, would have gone bankrupt a few months ago, and now be in the hands of new owners. The big debt that's coming due in a few days is *XM* debt. Sirius' original debt wasn't due to cause problems for a few more years.
Mel has destroyed Sirius as a company. He took on XM and its debt load, and achieved nothing besides alienating the customers of both networks for no good reason. The amount of money he saved by consolidating channels was literally pocket change compared to the cost of owning two sets of satellites. I'll give Sirius a pass on Howard for the moment, because he probably WAS worth it to pre-merger Sirius. Remember, before Howard, XM was clearly in #1, and Sirius was the struggling "also-ran". By the end of Year H+1, Sirius was in the lead, and almost making a profit (mostly through creative accounting, but that's still better than XM could do). He wanted XM's bandwidth to launch seatback Barney videos for kids, but ended up gutting the audio quality of both services to add more channels with lower audio fidelity.
The REAL cost savings would have been for Sirius to sell off both of XM's geostationary satellites & broadcast the two data streams formerly handled by them using Sirius' Molniya satellites(*). Rural indoor users would have either needed a proper outdoor antenna with view of the entire sky, or had to move the antenna puck from windowsill to windowsill like Sirius users do, but it would have improved XM's mobile coverage in mountainous areas (where cars were in the shadow of mountains relative to geostationary satellites) and literally saved them hundreds of millions of dollars.
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(*) Sirius has a constellation of 4 satellites in modified Molniya orbits. Basically, one satellite is a spare, and the other 3 are arranged so that at any given moment, one satellite is (more or less) "straight up" (relative to Iowa), one satellite is near the horizon, and one is on the other side of the earth. XM's constellation consisted of two satellites in conventional geostationary orbits over the equator.
Sirius and XM divided their bands into 3 slices, each of which carried the full bitstream. Two slices were broadcast by satellite, and the third slice was broadcast via terrestrial repeaters. I'd be seriously shocked if Sirius' satellites were physically incapable of broadcasting a slice of XM's band, and vice-versa. For one thing, satellite transmitters tend to be designed with fairly open-ended capabilities ANYWAY (they're so expensive to launch, with so much lead time, that the satellite's owner would be financially suicidal to not launch them with a "Plan B" in case the original user falls through. For another, I'm sure XM and Sirius both entertained the prospect that the other's satellites could be knocked out by space debris, solar flare, or some other malfunction... and faced with the prospect of shutting down or paying the other extortionate fees to carry their signal, would grudgingly pay the fees.
Yawn, who would have guessed?
Someone who fails to realize that there is no effective internet penetration into what is satellite radio's major market: automobile listening.
How many cars have internet service?
So tell us, how could internet competition kill satellite radio?