Does this mean that we’ll see a unification between the two competitors, will one just fail, or will they both give it up if the losses continue?
Losses at both satellite radio companies widened during second quarter, though Sirius, reporting results today, said its advertising revenues were up. The satellite radio company, led by former CBS Radio chief Mel Karmazin, lost $237.8 million for the period compared with a loss of $177.6 million during second quarter of 2005.
XM Satellite Radio on July 27 reported a second-quarter loss of $231.7 million, up from losses of $148.8 million a year ago.
A big factor keeping the companies in the red: subscriber acquisition cost, or the money each company spends to get a single subscriber to sign up for the service. Sirius’s acquisition costs dropped to $131 in second quarter from $160 in the year-ago period. XM’s, meanwhile, rose to $64 in second quarter, compared with $50 in the year-ago period.
With HD radio, MP3 players, and phones that steam music, does the world really need satellite radio? If it provides value to the user, why is it so hard to get people to pay for premium content?
Why pay for content when you can get it for free? Duh.
Once you have satellite radio, you wonder how you ever listed to terrestial radio.
The only radio I listen to now days is NPR (National Public Radio). I don’t need satellite radio for that. My new car actually has a satellite radio but I have not activated it nor do I plan too.
How many monthly charges are people willing to pile-on?
Comcast keeps trying to entice me to spend ~$30 for VOIP, ~$30 for cable, and ~$30 for unlimited calling… Never once doing the math for me and splashing a big “$100-a-month” banner on their mailers… go figure. [grin]
People complain about an iTunes songs not being portable to other players, so why would lots of people want to buy a new radio which would stop working if they stopped paying rent on it?
TIVO offers more functionality than just skipping commercials, but it is interactive…
I agree with Sag that iPods and the “Jack” FM format [ “Charlie” here in Portland, OR] have both provided rent-free alternatives to satellite.
I too love NPR… it’s one of the very best reasons to have Sirius. You get two different NPR stations… a PRI station (with daily “This American Life”) a BBC world news channel, and a news around the world channel. Sirius is like a million times better.
For people dismssive of satellite radio because “you can just get it for free over the air” I would encourage you to talk to ANYONE who has satellite radio. At first they will sound kind of cult-like; describing how it is fundamentally different than regular radio yet unable to convince you because they can’t quite articulate why and convince you… But I’m telling you it IS fundamentally different.
The only thing I can equate it to is HBO and the like. Watching Deadwood and the Sopranos, it makes is very hard to watch plain old TV again. Howard Stern, for example, seems so real an natural; and you immediately realize how stifled regular radio is. Even if he’s not your cup of tea. the freedom to speak that he represents is pretty incredible…
I mean I hear what the commenters above are saying when they say things like “with the availability of similar alternatives” but I would posit that the commentors probably haven’t used satelitte radio; because no one that I know with satelitte calls it “similar” to regular radio.
Clear Channel came into this area a few years ago and decimated virtually every decent local terrestrial AM and FM station. 🙁
XM has been a godsend. 🙂
hire more Howeird Sterns for another gazillion dollars….idiot
satellite executives.
i have satellite radio…i would not ever go back….no anoying DJs
no commercials (you get used to that quick)…if you take long trips
the ability to lock onto a station and hold it for seven hours is great…
can listen to the Giant game when I’m driving from Buffalo..
i used to use my HD mp3 player a lot for these trips…less hassle with
the satellite
i like the 60’s station..when wcbs-fm in NYC went to Jack FM ..i subscribed
A friend got Sirius in order to listen to “The Howard Stern Show”, and I also listened to it. I preferred the show on regular radio. Listening to the swearing gets old fast. It seemed better when they were pushing the boundaries of what they could get away with. Now that they can get away with everything, it just seems too sleazy.
I believe that a test was done using the Ozzy Osbourne show, where people were able to listen to the non-bleeped versions. They actually preferred the bleeped version! I have the same feeling toward the Howard Stern show. It’s hard to describe.
For the rest of satelite radio, I just don’t get it. I’ll listen to my iPod. Unless you want to listen to baseball games, but I don’t understand how people can watch those, much less listen to them
All the world is not a major market. Radio in MANY parts of the country really really sucks. I love my XM I have two and will add a third when the airplane I’m building is finished because XM provides the BEST realtime weather information available.
Atlanta Radio is pretty bad – for sports there’s only a couple of AM stations that can’t be heard 20 miles outside the city (especially after sundown) and all the FM stations are loaded with commercials. I made the switch to Satellite years ago when nobody in North Georgia carried a single NFL Playoff game because the Falcons weren’t on while I was driving to Tennessee.
I download several technical podcasts (Twit and Cranky Geeks) and listen to them in the car sometimes now – but for up to the minute news, special content, and 70’s music nothing beats satellite radio. NOTHING!
If I was still a cross country truck driver having one of these satellite radios would be great. There are areas of the country where there is no terrestrial radio worth listing too (i.e., nothing but preachers and country music). That would be the ONLY reason to use subscription radio. Since I am now a stationary database cowboy I will stick to mp3 players and CDs. I already have too many subscriptions to other services to pay more money for “radio.”
I still can’t figure out why people will pay for television, nevermind radio!
Yeah, they lost money huh….hmmmm…could it be the half a billion (yes, half a billion) dollars they’re paying Stearn over the next 5 years?
I almost got Sirius last Christmas because I was hinting around all summer and fall about Sirius this and Sirius that. So what did I get for Christmas? You guessed it, XM radio. My wife has it now.
I just listen to NPR on the normal radio…but that only kicks in at 5 am. Overnights it’s “The Mideast Channel”….I mean “BBC World Service” (Should be changed to “BBC Mideast Service” because that’s ALL they ever talk about, but they break once in a while for the rip-roaring and totally engaging “Politics UK” which has me fighting hard not to drive my car into a ditch).
#9, Say what you want about Stern, but if it wasn’t for him, Sirius would be even worse off. Now it looks as if they are catching up to XM in subscribers. And if you want to talk about bonehead spending. XM spent quite a pretty penny on Oprah, who will only be on the air once a week for an hour or two. Talk about a waste.
This isn’t that complicated:
Anyone can listen to Rush, Hannity, Beck, or O’Riley on free radio. Those are the most popular shows. Until they jump there is no major selling point for pay radio.
As for quality, once you have an iPod, you wonder who would be dumb enough to pay for satellite radio.
Atlanta Radio is pretty bad
I used to look forward to driving through Atlanta for two reasons:
I loved driving between 90 and 100 mph in bumper to bumper traffic, and I thought the radio, especially Georgia State’s station (whatever that is) was great. Is it gone now, or have they just changed over to a 24 hour yodeling format or something?
Truth is the market is too small to support the costs of operations, much less the initial investment in hardware. I don’t doubt some people love the service. Many times readers of tech blogs forgets there’s a greater public out there that doesn’t share their enthusiasm for gadgetry. There are people like me that owns an ipod, and haven’t touched it in months. I tried it, but it was no big deal to me. I suspect a lot of customers cancel subscriptions to satellite radio because eventually they fail to see the value.
Part of the problem is exclusivee content. I was given a very nice portable XM player for a present seven months ago. I love it…largely because they carry every MLB baseball game and the Tigers are kicking butt. 🙂 But the music has FAR more variety than the Clear Channel classic rock that has taken over the world. Entire genres get no airplay on terrestrial, but I got ’em all. (and the no commercial thing isn’t entirely true…there are plenty of promos for XM)
I also enjoy NPR on the radio, but on XM all I get is Bob Edwards, over and over and over. They need to share some content.
As others mentioned, the unedited versions of some songs (and shows) aren’t as interesting when your little kids or mom is in the car.
James, Oprah is coming to XM…think that’ll help? LOL
Funny how all these people who naysay paying for radio that you can get for free are willing to pay 5-10 times as much for cable tv.
I got Sirius a while back and it is true. I can’t stand free radio. 22 minutes of commercials and our is ridiculous. I listen to metal music which gets exactly zero airplay here in Houston, yet Sirius has multiple stations for me to choose from without commercials.
My wife thought I was crazy, then after driving with me for a few weeks she made me go out and buy her a radio for her car.
People do not understand until they try it for a while.
Oh yeah…Sirius will be in the black by the 2nd quarter of 2007. Sirius publicly stated that if Howard Stern brought in 1 million subscribers in the LIFETIME of his contract then it would be a zero sum game (they would break even). In 6 months they have gone from 600,000 to 4.7 million. It was the best business decision they ever made. Like him or hate him, he saved Sirius from bankruptcy.
I hope they both fail. I had a free year of Sirius when I bought my new car. I never continued it after the free period and found myself using MP3/CD’s and FM radio more than Sirius anyway.
And don’t get me started about how much XM sucks. DirecTV replaced MusicChoice with XM radio and it’s horrible, they talk all the time and they over compress the music, sound horrible compared to MusicChoice.
I think i’s pretty simple for those that live in highly populated urban cities. A lot of us do not drive to work and take some sort of mass transit. Here in NYC, you can’t get satellite reception with the portables on the subway underground, which is pretty much all of Manhattan, most train lines in Queens, Brooklyn and the Bronx subway lines are above ground mostly.
Why would someone here in this city pay a subscription to hear only 10 – 15 minutes of satellite each way of their 30 – 60 minute commute? Better off with an MP3 player or a regular terrestial player. The beauty behind an MP3 player is being able to define what you listen to, exactly when you want to listen to it.
James, Oprah is coming to XM…think that’ll help?
LOL! I don’t think half of Oprah’s audience would know how to turn the thing on.
Funny how all these people who naysay paying for radio that you can get for free are willing to pay 5-10 times as much for cable tv.
Apples and oranges. 99% of the content on satellite radio can be found elsewhere, while 99% of the content on cable/satellite television cannot.
These guys would have better balance sheets, if from the start, they had given away sat radios like AOL gives away CDs. Sure, AOL may be circle surfing in the big drain now, but at one time they knew how to pick low fruit. Jeez, a $550 million quarterly loss for two companies. Good work. That is impressive. Normally to post those kinds of numbers you need to have a government agency involved. Roadside honey stands using the honor system of stick five bucks in the box and take a jar have a smarter business model. “Subscriber Acquisition Cost”, what a bullshit, only in the MBA mind, concept that is. Taxi drivers would have a hard time landing passengers during a hailstorm if they negotiated equipment usage for each fare.
Xrayspex, that GSU station is still around, at 88.5.
Stern will be back on terrestrial radio in less than a year. His listenership has dwindled, comparitively, and he’s not happy about that. He’s not making news any more, because nobody (relatively) listens to him. He’s disappeared, basically. And that doesn’t wash for an egomaniac like him (and I don’t use that term insultingly…just factually).
He’s gonna bail.
I have XM and love it. If they want to sell more, they need to push new generation features. Time-shifting, place-shifting, storing broadcasts to computer harddrives. Make it so people can save a show or a song to their iPod. There are plenty of ways to do this, but XM hasn’t endorsed it because the RIAA would shit a brick instead of happily collecting radio royalties like they should.
I have XM for the old radio channel (XM-164) and love Jack Benny and Burns & Allen. They get funnier as time goes on.
This is real interesting.
A few years back, they were breaking even.
Where is all the money going??
They have XM/Serius in ALOT of cars and finally made it a HOME unit.
Maybe, its the commercials??
People keep saying that 99% of the content on XM or Sirius can be found for free.
In about an hour, I’m going to get in my car and hop on the freeway. Tell me, where is that content? I want to listen to it for free on my way home.
In fact, satellite radio offers a great many benefits that cannot be found anywhere else and content that can’t be found in most markets.