Online Music Will Not Replace Satellite Radio

Recently, I have seen many claims that devices such as the iPhone which possess the ability to stream free online music, will somehow “kill” satellite radio. Claims such as these sound reasonable to many, yet none truly stand up to a reasonable analysis.

It is my belief that mobile devices will only supplement Satellite Radio by providing more listening options for Sirius XM subscribers. I have already argued that the content available on Satellite Radio which includes much more than just commercial free music, as opposed to ad-supported Internet music makes the case in and of itself for Satellite Radio’s dominance and longevity. Just look at terrestrial radio’s ad-supported model and it becomes clear that it just doesn’t work.

As for the delivery option of an iPhone or similar devices, one important factor seems to be overlooked… the battery itself. Cell phone users know all to well that with each charge, the battery’s capacity is lessened each time. Cell phones and other mobile devices have a hard enough time getting through a single day as a cell phone, much less a 24 hour-a-day jukebox. Until a nuclear version of a cell phone battery is introduced, mobile devices will never be able to truly replace Satellite Radio, even if they were to provide an equivalent amount and diversity of content.

There is yet another fact that makes any argument for the demise of Satellite Radio at the hands of the Internet moot. It lies in the generational gap that exists. The largest proportion of wealth and thus disposable income lies not in the twenty-something crowd which new technologies appeal to most, but in the now retiring baby boom generation, a generation that grew up with radio as its source for music, news and general entertainment. Habits are difficult to change.

To believe that this group of people will run out and buy high priced iPhones and BlackBerry’s to replace their in-dash car radios is just insane.

Position: Long SIRI.

Comments

[Ricker:]

Lets see.........I did the right thing by finally purchasing the lifetime subscription to SXM. The way I looked at it was I have been a sub for 2 years and well, it would add up to a lot of money even at my age. So at 59, I took the plunge. If I live to 78, probably not but, thats 6,935 days (yikes) divided into $399.00. which is .0575342 per day. What a bargin and a reason to stay alive!

My experience on the iPhone is Pandora is just OK. I listen to it once and a while at the gym and frankly its typicall AT&T dropped service stuff. So, I take a break and pull out the phone and "cue" it back up again. Thats not to mention the programming is limited, right? Hey, SXM has so much content, I have yet to hear most of it. When I am in my car off on a long drive, I sometimes get tired of Watercolors so I switch over to Blue Neck comedy, or over to Howard, or to CNN or Sports.

Finally, and worth noting, I have a older Starmate that works just fine. I have a computer "Altec Lansing" sound system, a Radio Shack transformer, and a outdoor antenna. I take this stuff in a cardboard box when I am on the road and presto, SXM right there entertaining me. Try to go up in the mountains at 7000 ft. and get cell service, really, good luck!

Brandon, thanks for the positive views on SXM, you know like us, we have a winner here and the real big stuff, not just what SXM comes up with but Liberty too promises to be exciting goodies!

Apr 09 06:39 PM

[relmar2003:]

What happens when you get a call on your cell phone when your in the middle of listening to a football game, or a new song, or rocking out with your friends. Battery is one problem. Coverage(as of right now its not even close to sats coverage), and interruptions.etc....
Internet wont replace sat radio. Pandora wont be in business much longer. Iphone is not a radio, but a compliment to a radio.
Good article Brandon.
This stock is still so undervalued, its not even funny. The bottom line will be seen soon enough. Positive EBITA will be reported this quarter in my opinion. They might even beat estimates. Look for this puppy to break out of its .42-.32 cent range very soon. Should be over .50 cents by the CC. DYODD. IMVHO.

Apr 09 06:45 PM

[User 391904:]

When compare Sirius XM to Pandora and other free so called "online radio" services, it's an apples or oranges comparison. Sirius XM offers so much more content. You get what you pay for and free sucks right now compared to Sirius XM.

Apr 09 08:03 PM

[User 392331:]

Damn you seekingalpha guys spend a lot of effort trying to pump this stock. Look, it's a good product and I own shares myself. It will rebound eventually when the rest of the market rebounds.

There are a lot of areas, most of the geographic U.S. in fact, that have spotty coverage from any transport medium other that satellite. Yes, I may be able to get wonderful content via my iPhone or BlackBerry, but only if I am within range of decent cell coverage. Most of the geographic U.S. does not fall under such a continuous blanket of coverage. Point taken. And the content does not match what SiriusXM has available. Another point taken.

Nevertheless, it is going to take a few items to make this stock worth anything:

1. Less debt.

2. Lesser costs for the quality content the company provides, as well as adding new content.

3. An overall market rebound.

4. The product being available everywhere, i.e. autos (covered), internet (covered), cell phones (emerging), homes (needs more work and to be cheapened), portables (needs to be cheapened), and others (muzak style, on-hold-music, cant answer to this one).

5. More advertising to bring in more subscribers.

Make this product ubiquitous and irresistible and you will have a winner. But most of all, work on the debt. Oh, and stop porking the shareholders with dilution.

Apr 09 08:27 PM

[User 386422:]

I agree, I am not trying to pump the stock. I get a kick out of people that say internet radio and podcasts are going to kill satellite radio . Bottom line it will not happen anytime soon. Ofter 15 plus years of cell phone expansion, coverage is still lacking. Any adverse impact is going to be many years down the line. Besides the fact that content is king. NFL, MLB, NHL, Nascar, ESPN, etc.. is what people want to listen to.

Apr 09 09:47 PM

[relmar2003:]

Facts arent pumping. Im all about the facts. Facts state my case. No pumping allowed. Nor will lies be allowed either.

Apr 10 01:42 AM

[vassar:]

I dumped XM-Sirius for the iPhone Apps Pandora, Public Radio, Stitcher, Ustream and RSS Player. Pandora plays the music I like, Public Radio is great for NPR talk radio and Stitcher has a little bit of everything.

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Battery life is not an issue. I have a Griffith adaptor that charges the battery and plays audio thru my car radio ( www.griffintechnology.... ).

Coverage with ATT has been fine for me, even driving from Washington DC area through rural areas to the shore. WiFi is also available in many places.

I am too cheap to pay up to $17 a month when I have better choices for free.

Apr 10 10:22 AM

[connorport:]

If internet radio will kill SATRAD then where does this hold up for SATTV. I dont see you tube or Internet radio becoming the next takeover of tv. Internet may take over satrad but i think SIRI with its content will be well positioned when that happens as they actually pay their royalties. This ha been the problem with Pandora. After Royalties came due they actually lost money. No pumping just facts. I agree with Relmor, i believe positive cash flow will be seen possibly as soon as the second quarter and news of this will break at the next earnings and guidance call. Lets see if the longs can get back in the game.

Apr 10 10:31 AM

[connorport:]

This is why you see SIRI is getting into the online game. But they actually pay their royalties and are not being sued. Its only opinion. Fortunately 20 million subs think different.


On Apr 10 10:22 AM vassar wrote:

> I dumped XM-Sirius for the iPhone Apps Pandora, Public Radio, Stitcher,
> Ustream and RSS Player. Pandora plays the music I like, Public Radio
> is great for NPR talk radio and Stitcher has a little bit of everything.
>
>
> itunes.apple.com/WebOb...;mt=8
>
>
> itunes.apple.com/WebOb...;mt=8
>
>
> itunes.apple.com/WebOb...;mt=8
>
>
> itunes.apple.com/WebOb...;mt=8
>
>
> qhttp://itunes.apple.c...
>
> Battery life is not an issue. I have a Griffith adaptor that charges
> the battery and plays audio thru my car radio ( www.griffintechnology....
> ).
>
> Coverage with ATT has been fine for me, even driving from Washington
> DC area through rural areas to the shore. WiFi is also available
> in many places.
>
> I am too cheap to pay up to $17 a month when I have better choices
> for free.

Apr 10 10:35 AM

[relmar2003:]

Here you go. Want to know why for the next 2 years Im not worried about the relevancy of SiriusXM. Here is a sampling of some excellent points others and myself have made.

Lets assume Pandora and Slacker and every other internet radio station has to pay royalties, and this enables them to no longer be a viable free service. You now have 3 choices if you are in this industry.
1. Go out of business.
2. Increase advertising on the site to compensate(never happen).
3. Charge for the service.
So if they are charging for the service, it wont be much, or why would you do it? Slacker isnt better than Sirius. Content, or anything else. The only thing it had on it it was either cheap or free. If its not free, you might as well get sat radio.
Then theres HD radio. If it takes sat radio as long to get going as this, it wont be a factor. As of right now, its going nowhere. Sirius will not be mandated to put HD radio in their radios. The FCC wording used is a clue here. They admitted that they were allowed to merge because they DID have competition, HD radio mentioned. Now.... If your the government, are you going to require Microsoft to make windows ask you if your sure you want this operating system, and wouldnt you like Mac instead? You dont ask your competitor to allow you to compete on their dime to boot. Crazy. Then theirs Iphone/Ipod music solution. Blackberry. Internet streaming. ONce again, coverage, content, and interruptions. Sorry, but a phone is still a phone, You have to use it. You cant listen to music and talk on the phone at the same time. Plus its so small, hard to use in a car. Who wants to risk their 300 dollar phone constantly with the challenge of providing music constantly, to systems that might need more juice. You going to being your Iphone into your living room and stream pandora through it, into your 100 watt speakers? Really? Whos doing that? No, Iphone is however an excellent music alternative generator, of which now SiriusXM is available.
Internet in cars? Naa, more of a visual medium. You need to see to change stations, etc... Hard to hold your laptop with a full car too. Not buying it. Sorry Im not too up too date on what the NEWEST cars support, but this is soooo untouched still, its immediate threat is not a worry. Medium term, no worries. Long term... Geez who knows, even IBM could be out of business in 5 years. How does any one know so sure whats going to happen in 5 years? But we can see 1 or 2 years away. And Homer seems to think their balance sheet is ready to shine. Dont need to add more subs, its all gravey.
Then you add deeper and deeper penetration rates, lower costs to add subs, never having to pay more for talent(old contracts will be much higher than the new ones for all their content, including Howard).

Apr 10 11:20 AM

[1more4me:]

Brandon,
Requesting more info and your take on the issue below: Felix Salmon at Rueters reported on Short intrest yesterday (4/9). SIRI was included in two list. Most Short intrest in the Market and Largest DECREASE in short intrest in the month of March. His numbers:
March 1st = 181,243,884
March 31st = 161,851,340
That's a Decrease of 11.98% or 19,392,544 shares.
This seems like the MOST SIGNIFICANT and POSITIVE news I've heard in a long time. 20 mil short shares have fled! Would seem a few folks think SIRI will move positive now and through the next QTR report. Wouldn't you think? Would sure like a seperate story with a few more details from you.
Thanks...LONG 100K shs @ .13 !!!

Apr 10 11:22 AM

[Neal Barkett:]

At 35 cents a share everyone of us is going to look back and say "Boy I Wish I Would Bought Even More Shares". It's not too late to get off the "what if" loco-motive that's heading nowhere and get aboard the bullet train. All arrows are pointing North. When this economy gets its legs watch out! The table is being set and it's going to be dinner time. When the dinner bell rings do want beans & franks or SURF & TURF!(by the way there is also no dessert w/ the beans & franks)

Apr 10 12:30 PM

[261133:]

I love Sirius and I am long Sirius and I believe it will be successful if well managed in the future, but as for the battery you are dead wrong.
MIT developed a new "system" , recharging a battery of a cellphone or a Laptop in 5 seconds, even a electric car will be recharged in about 5 minutes instead of 7 to 8 hours. It will be available in 2011 and revolutionary. Will it be the end for Satrad ? No of course not, but probably the end of oil and gasoline.

Apr 10 12:37 PM

[Neal Barkett:]

User 261133, I've seen articles on this new MIT nano battery tech, but where are you getting the info that it will be ready by 2011 and if so in what form (small electronic devices/Cars)? This would change the world. Do you have any further info you could share?

Apr 10 01:36 PM

[261133:]

Neal,we both probably have read the same articles, I've seen it in the Boston Globe and the Times, but the year 2011 was mentioned by a MIT scientist at a conference. My first thought, I believe it when I see it, but before I retired and moved to Florida a few years ago I worked 30 years for Siemens in Munich and a former colleague of mine did spend me a visit last month and we talked about that. He told me Siemens is already 24/7 working on that and they have signed huge contracts with BMW and Mercedes. GE is doing the same thing and they both trying to beat each other.
That is all I know, but good enough for me to postpone the purchase of a new car and buy some SI and GE.



On Apr 10 01:36 PM Neal Barkett wrote:

> User 261133, I've seen articles on this new MIT nano battery tech,
> but where are you getting the info that it will be ready by 2011
> and if so in what form (small electronic devices/Cars)? This would
> change the world. Do you have any further info you could share?

Apr 10 07:00 PM

[KarlRite:]

This article should have been titled, "Satellite Radio Will Not Replace Online Music"

Apr 13 09:48 AM

[SirSwingerton:]

Not practical. Yes, it may be revolutionary, if it ever takes off...and that is unlikely. It would be an EXPENSIVE technology to have every where to make oil and gasoline disappear.


On Apr 10 12:37 PM User 261133 wrote:

> I love Sirius and I am long Sirius and I believe it will be successful
> if well managed in the future, but as for the battery you are dead
> wrong.
> MIT developed a new "system" , recharging a battery of a cellphone
> or a Laptop in 5 seconds, even a electric car will be recharged in
> about 5 minutes instead of 7 to 8 hours. It will be available in
> 2011 and revolutionary. Will it be the end for Satrad ? No of course
> not, but probably the end of oil and gasoline.

Apr 16 11:44 PM

[vandalmax:]

Internet radio will complement satellite radio as you rightly put it. Demographics and battery-life/data coverage with mobiles will continue to favor Sat radio at least for the next few years. I see Internet radio as becoming a highly effective competitor to Sat radio under two circumstances - Higher data speeds on mobile networks/increase rollout of WiMax AND sales of more devices of iTouch. Personally, I prefer carrying my blackberry only with my iPod lying in the bag. What would be interesting to find out is how many people carry a phone AND a Wi-Fi/Internet enabled device like an iTouch. My hypothesis is that Internet radio will benefit in major part from the latter provided decent Wireless coverage.

Apr 27 01:57 AM

[El Qadi:]

internet radios some times streams from satellite ones,
check that
albums.fm/radio.html

Nov 17 04:31 AM