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Are There Enough People Willing to Keep Paying for Sirius Content? 36 comments

by: Satwaves June 12, 2009 | about: SIRI    
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By Gino Lattarulo

While all of us so called experts obsess, analyze, and give opinionated comments about the success or demise of Sirius (SIRI), I think there is a single question that should be considered above all else. Are there enough people willing to continually pay for radio as they do cable TV? As one of the people who is willing to pay for it, and I mean forever, let me tell you why I can never go back to terrestrial radio. It boils down to one single factor; I don’t have to worry about losing content because I am too far from the transmitter. That’s it. Whether I am in NY or LA, I get the same station 24/7. Now what about other people? What winds their clock to keep them paying for it? Take sports fans for instance. If a Giants fan lives in Florida, terrestrial radio is out. Even in upstate NY you have to mess around with 40 different A.M. stations to get continuous coverage.

A lot of naysayers are condemning Sirius because of available free music via sites like Pandora and Grooveshark. In truth, I love both of these sites but free Internet music is not the death of satellite radio. Not even close. Music is only one part of the satellite model. You might as well say that free Internet music will kill terrestrial radio because of the high cost of advertising. Not going to happen. Because believe me, Internet radio may be free to the public, but it takes major revenue to pay ASCAP and BMI music royalties. Do not be surprised if you see those websites with their hands out looking for subscriber dollars in the future.

So we are back to the question. Are there enough people willing to consistently pay for the content that Sirius provides? Once the auto industry gets back on a steady path I think there definitely will be more than enough. Now, whether or not subscription rates will remain the primary source of revenue is a different story. It would not shock me in the least if Sirius changed the landscape a bit and adopted the Time Warner (TWX) and DirecTV (DTV) model by using both subscription dollars and advertising to pay for premium content. With all the content Sirius has, maybe ‘ol Mel can also start thinking about syndication resales.

Like anything else, it boils down to how much someone will or will not pay to obtain a product. I would never pay over $50 for a pair of sneakers but have no problem shelling out $200 dollars for a pair of shoes. I own a $150 pair of sunglasses and a $10 watch. $450 for a Playstation 3? No problem. You want HOW MUCH for that cell phone?? Forget it, I’ll buy one on eBay and swap the sim card. I would never pay what they are currently asking for an iPhone because I have no interest in cell phones over and above their basic function. I always take whatever free phone comes with the subscription. But that is just one person’s point of view. Obviously the iPhone is a successful product. Otherwise Apple (AAPL) would not be moving them faster than a Miami drug dealer sells yayo.

The point is that when it comes to commerce, it is all about what is important to a particular person that determines how much they will pay for a product. Many people are adamant about refusing to pay for satellite radio when they can get free music on the Internet. Others like myself pay for satellite radio because of specific content. That is what makes diversity so great. Siri just needs to find the best way to grab their chunk of the 300 million people in America to achieve what every company longs for: Growth.

Disclosure – Long SIRI, no positions in AAPL

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This article has 36 comments:

  •  
    You are right, the free streaming internet radio days are nearing an end.

    Yayo, lol...
    Jun 12 06:24 AM | Link | Reply
  •  
    Absolutely right on. The unique content of rich variety, coupled with near monoploy status, and unequalled clarity of delivery make this platform a sleeping giant. If management can finally deliver some creative thinking to the ways to monetize this combination, and expand distribution to the new generation of smartphones, SIRI's potential will finally begin to be reailized. The ageing U S auto fleet will have to be replaced in coming years, further supporting demand for SIRI as this occurs. As the stock has been building a bottoming formation over the last six months, risk/reward appears to substantially favor the upside over the intermediate to longer term. Current manipulation by shorts should ultimately get overwhelmed by all these positives. Stay the course.
    Jun 12 06:43 AM | Link | Reply
  •  
    Very good piece. You captured the essence of the issue. There are MILLIONS of sports fans who will pay for sat radio.....once they know about it. S-XM will soon launch major marketing initiatives, and that will make the difference. Music is awesome, but SPORTS is a huge motivator for spending $.
    Jun 12 08:05 AM | Link | Reply
  •  
    Gino: Good points in the article and an excellant analysis by RAF. I am holding my shares for at least five years and then we will see. I am always buying more when I can just to build a large portfolio if and when the company does the reverse split and the shares become that much more valuable.

    I could never listen to regular radio again and I think that once Sirius shows a profit and they are very close even in these tough times they will further expand the content offerings, whether it will be additional music stations or in personality driven radio. I think its possible now for Sirius to sign regionally popular DJ's and to build a mini radio station around them and have them share in the advertising revenue generated from the partnership. The best example would be Mad Dog Radio where Chris Russo is building his own "station" within the Sirius sports genre.

    I also think there will come a time when the networks will license their content to be broadcast over sat radio and its internet feed. Why shouldn't we be able to listen to David Letteman's show at night when we are driving home from a late night at the office? Sirius could sell commercials the same way a local affiliate sells its time. After all I find myself listening to CNN and Fox News in the car why not content from ABC?
    I understand that the networks are in the radio business but just how well have they done in that business siince Howard left? They could use the extra income generated from such a business partnership.
    We all know that regular free radio is a dying business, our Government and the uptight religious right killed it, a paying uncensured service is the only hope for people who truly believe in our first Amendment principles.
    Jun 12 08:14 AM | Link | Reply
  •  
    Good Article and I am right with you on your points, except I used to agree with you about the Iphone until I got one and it changed my view on what a "phone" can be.
    Thanks!
    Jun 12 08:52 AM | Link | Reply
  •  
    I make more than $100,000/yr and I was going to get the new i-phone 3GS next week for me an my wife. My friends have an iphone and I seen what it can do. The basic I-phone monthly plan for me and my wife (family plan) is costing me $150/month with AT&T adn thats with data, text for 2 lines. I am currently paying $80 with Sprint and thats for two lines including taxes, data and text.. As much I like i-phone, there is no way in hell that I will shell out $150 monthly. I will stay with sprint...
    Jun 12 09:54 AM | Link | Reply
  •  
    <<when the company does the reverse split and the shares become that much more valuable>>
    - Mel K. has repeatedly said that is only a backup option. In any case, if that were to happen your total dollar cost is still the same; less shares, higher dollar value per share. Perception wise it might make a difference if they did a split that got the price over $5/sh. I've read, don't know if it's true today, that institutional investors can't\won't touch stocks under $5.

    Like the iPhone I don't think music is Sirius' most important feature, it's just a feature you must have available. I agree that everywhere access and unique content are the key and most important issues.
    Jun 12 11:20 AM | Link | Reply
  •  
    <<I will stay with sprint...>>
    - Any chance you'll consider Palm Pre?
    Jun 12 11:22 AM | Link | Reply
  •  
    yeh, I did a double take too. ( When a co. does a reverse split the shares become more valuable). My understanding is that some institutional investors can't buy under $5 per co. rules, and others won't buy. Good Luck to All
    Jun 12 12:44 PM | Link | Reply
  •  
    should say , the shares go up in price
    Jun 12 12:47 PM | Link | Reply
  •  
    Finally, an article that really gets down to the point... are there enough people willing to pay for whatever Sirius peddling?

    I had as many as 5 subscriptions with XM... and had no problem cutting other things out of my life to pay for those subs. Then Sirius came in, trashing my favorite channels, replacing my favorite DJs and watering down playlists to the lowest common denominator with heavy repetition. 5 subs quickly dropped to 3, then to 1, then completely out. Sirius CONTENT had ruined their own revenue stream, and my listening pleasure. Final verdict: Not Worth It

    I don't believe it is prudent to write off Internet radio so quickly, especially when it was one of the reasons Sirius declared it needed to merge with XM to survive the competition with the Internet. Perhaps Pandora and others are not exactly like Sirius, but there is a market for them, and their market is directed at those who do not care for Sirius' content or pricing. The iPhone and others will exploit that whether you jump on the smartphone bandwagon or not.

    I loathe the thought of commercials on satellite radio, and nothing solidifies my decision to terminate subscriptions harder. The beauty of satellite radio was the consumer's ability to pay for commercial-free programming. The perversion of commercial-free satellite radio was the Sirius move to wrangle the Howard Sterns and the alike. I thought it was a terrible move to pay these entertainers the impossible salaries when the consumer was NOT demanding it. Howard was demanding it and Mel & Sirius bowed and turned their back on the consumer.

    They have continued to turn their back on the consumer by rate increases (plus the aforementioned programming changes), especially the nickle & diming of Internet access to satrad.

    It is my belief that Sirius will continue to struggle and falter until this old radio school of thinking management is removed.

    I agree with your point of nationwide coverage provided by satellite radio. That is very nice to have the same channel & reception anywhere in the US. But once ubiquitous broadband is in place... watered-down, commercial-riddled content and over-pricing will expose the melting wax feathers and folly of Sirius radio management, as others move into the space to provide what Sirius has been to arrogant to recognize... the financially-stricken consumer.

    For the record:
    I believe satrad will survive as a niche, but on constant life-support and always on the outside looking in, and there will be a constant, un-suppressible talk of "what could have been".... IF there is no change in how satellite radio should be managed. And until then, I will keep my money out of the pockets of satellite radio... and it appears... I am not alone.

    Thank you for writing an article that takes aim at the real problem with Sirius XM and not turning it into "stock talk" & "market speculation". I really appreciate you speaking frank on this matter.
    Jun 12 01:57 PM | Link | Reply
  •  
    I am not the only one who sees the problem is "management".

    Word to the wise... investors see this too.

    On Jun 12 06:43 AM R A F wrote:

    "If management can finally deliver..."
    Jun 12 02:02 PM | Link | Reply
  •  
    Sirius Management & Mel's Minute
    I want readers to consider this about the management of Sirius under Mel Karmazin.

    Mel's Minute
    "Mel's Minute" is a phrase from his days overseeing Clear Channel operations, in which he demanded 1 more minute per hour of commercials on broadcast radio. The phrase developed and is a mocking of just how out-of-touch he is with how to run a radio company that hinges on listeners listening without changing the channel.

    Consider how this "Mel's Minute" has translated over time. Those who despise terrestrial radio for it's barrage of commercials has Mel to thank, and you the Sirius subscriber are railing against the policies Mel implemented by making the move to satellite radio. How ironic!

    Now here's a new one for you... "Mel's Music". Consider how bland and creatively void Clear Channel's programming had become over the course of the last several years under Mel K's management. Repetitious song lists are synonymous with Clear Channel, and were ushered in by the now leader of Sirius... Mel. And the number one complaint with the merged Sirius XM music programming... repetitious airplay of very narrow play lists.

    These are the lasting terrestrial legacies of Mel K... and now he is poised to turn Sirius XM into something else you will loathe.

    Management is the problem with Sirius XM. Investors know this... and you should too.
    Jun 12 02:26 PM | Link | Reply
  •  
    At least I know there are two of us who think this way. I have 3 radios, work, car, home all listening to the same content (channel) 24/7 on siriusxm. And it is worth it ot me. I don't want it on my phone.
    Jun 12 03:32 PM | Link | Reply
  •  
    Sirius needs to raise slightly their monthly fee AND get low-cost receivers out there. I find that most people are surprised at the low cost of subscriptions, but are turned away at the idea that to merely "see if they like it" will cost them a great deal when buying the receivers. No one wants to try something out for 80-100 dollars.

    Second, I find that most people who haven't had satellite radio don't really understand the difference between it and terrestrial radio. I bought subscriptions for both my mother and wife and discovered that neither had even turned it on. When asked why, they indicated they already have a radio in their car.

    Somehow Sirius needs to convey the message to the people just what it means to have satellite radio. What the difference is. What the advantages are. You know, eliminate the skepticism.
    Jun 12 04:35 PM | Link | Reply
  •  
    Great article. Not loosing my signal when I travel is most important to me too. I only listen to 4 or 5 different channels, but I want those channels wherever I am. I'll pay to get them forever.
    If you try Sirus for 1 week you will be hooked forever.
    Jun 12 04:42 PM | Link | Reply
  •  
    Thank God I sold at .45. This stock's a DUD. I just cancelled my subscription because I was running out of money for my Starbucks. I have pandora through my Ipod anyway and just hook it up in my car if I want to listen to it.

    Sirius is just a toy, not a necessity so i don't see it strengthening subs down the road.

    People need to ride a bike more and get out of the car. Lose the weight.

    Frank
    Jun 12 05:27 PM | Link | Reply
  •  
    The auto industry will come back soon. The "cash for clunkers" has passed the house and is being pushed through in the senate. The fact of the matter is as long as cars are sold with satrad, there will be a certain percentage which will choose the premium radio service. We are approaching a time when all cars have satrad, as terrestrial stations will become obsolete, like the newspapers, and listeners will have no choice but to pay. The future is very bright for this company, but the time is not quite yet for the stock to rise. For all the ones that bash the company and its leadership, you are entitled to your opinion. However, it should be noted that there is very little downside at .35. Furthermore, Liberty will shield SiriusXM until it can show more profitability, which is just a quarter or two away. There is time to consider the options for management, and now that Liberty has assumed their seats on the board, it should be a great second half of 2009. There will always be enough people willing to pay for the car audio experience that SiriusXM brings to the table.

    Long SiriusXM
    Jun 12 09:40 PM | Link | Reply
  •  
    The company seems to finally realize that they can not rely on selling subscriptions through cars. Most people arent willing to pay premium prices for entertainment only in the car. People think pay for radio for a 1-2 hour commute a day? That would not be reasonable for the average person. However, now when they have service available on smartphones, people can have great audio at work, at the gym, riding their bike or walking down the street. I am a commuter by bus and train, so I listen to it about 3-5 hours a day. It is definitely worth about $3.00 a week. I spend more on donuts and coffee a week. The problem in the past has been, people would love to have a portable device, but Sirius XM costs were way too high. Thw Stilletto and XMP3 are out of peoples price range. Only a few would spend close to $200.00 then have to spend $12.95 a month. Only true "geeks", like myself would do that. Now, with smartphones having the capabilities people can join without the big upfront cost. Or just try it out and get hooked like i did.
    Jun 13 11:01 AM | Link | Reply
  •  
    Why pay for a prostitute if I can get it for free so why pay for Sirius if I can get other media options for FREE?

    HEHEHAHA


    Frank


    On Jun 13 02:28 AM Jesus wrote:

    > If Sirius was a girl I would Marry her, i just cant live if I dont
    > have Sirius in my life and she also gives good head. Pandora Is the
    > neiborghood slut that gives it for free to everyone.
    Jun 13 02:56 PM | Link | Reply
  •  
    I just want something clean and new Pandora sucks Its not worth its free service. Plus I would not marry Pandora I would just bust a nut on her face and Fu>>k Her sister.


    On Jun 13 02:56 PM Mr. Stupid wrote:

    > Why pay for a prostitute if I can get it for free so why pay for
    > Sirius if I can get other media options for FREE?
    >
    > HEHEHAHA
    >
    >
    > Frank
    Jun 13 07:23 PM | Link | Reply
  •  
    Pandora Is like MR. Stupid Little and Useless and probably dont get no ass.
    Jun 13 07:27 PM | Link | Reply
  •  
    In a bad economy, folks are cutting back on things are not a must. This includes cable, landphones, and probably satellite music too, except for the stead-fast listeners. A part of satellite radio growth also came from factory-built options on many of the cars. The huge slowdown of auto-industry, coupled with individual subscription cutbacks in a down economy probably doesn't bode well for satellite radio - monopoly or not. jmho.
    Jun 13 08:45 PM | Link | Reply
  •  
    Relmar2003, Where are you? Did the bashers get you? Miss seeing your comments.

    Any opinion about this article? It seems like the group has gone off topic for now.
    Jun 14 03:27 PM | Link | Reply
  •  
    Relmar2003, Where are you? Did the bashers get you? Miss seeing your comments.

    Any opinion about this article? It seems like the group has gone off topic for now.
    Jun 14 03:27 PM | Link | Reply
  •  
    Relmar2003, Where are you? Did the bashers get you? Miss seeing your comments.

    Any opinion about this article? It seems like the group has gone off topic for now.
    Jun 14 03:27 PM | Link | Reply
  •  
    WOW! YOU'RE SO INTELLIGENT

    LOL



    On Jun 13 07:23 PM Jesus wrote:

    > I just want something clean and new Pandora sucks Its not worth its
    > free service. Plus I would not marry Pandora I would just bust a
    > nut on her face and Fu>>k Her sister.
    Jun 14 05:47 PM | Link | Reply
  •  
    Thanks Mr stupid
    I Know Im Intelligent you dont have to tell me ... Mr stupid is the perfect name for you, Jerk off..Tell your Mama I said Hi .
    Pandora Sucks


    On Jun 14 05:47 PM Mr. Stupid wrote:

    > WOW! YOU'RE SO INTELLIGENT
    >
    > LOL
    >
    Jun 14 07:56 PM | Link | Reply
  •  
    you didnt sell it at .45 you sold it at .37 and .36 the last time it went up like a short seller you are too bad you are about to lose the windfall, but that is why they call you Mr. stupid always looking for the short term and always worrying like Chicken little when the sky is falling (what should I do) (what should I do) (is there bad news that the apps is not coming out)(is Jay boy billy right?)(should I sell?)( I did not make my fortune is 3 weeks this looks like a dud stock)


    On Jun 12 05:27 PM Mr. Stupid wrote:

    > Thank God I sold at .45. This stock's a DUD. I just cancelled my
    > subscription because I was running out of money for my Starbucks.
    > I have pandora through my Ipod anyway and just hook it up in my car
    > if I want to listen to it.
    >
    > Sirius is just a toy, not a necessity so i don't see it strengthening
    > subs down the road.
    >
    > People need to ride a bike more and get out of the car. Lose the
    > weight.
    >
    > Frank
    Jun 14 08:34 PM | Link | Reply
  •  
    You don't come off as intelligent at all.

    Let me guess. You're playing dumb.

    LOL


    On Jun 14 07:56 PM Jesus wrote:

    > Thanks Mr stupid
    > I Know Im Intelligent you dont have to tell me ... Mr stupid is the
    > perfect name for you, Jerk off..Tell your Mama I said Hi .
    > Pandora Sucks
    Jun 14 11:47 PM | Link | Reply
  •  
    You're MANIC.....hahahahaahah yeyeeyeye hahhahahha yeyeyeyyey

    What's all that jibberish?

    LOL


    On Jun 14 08:34 PM jmsithy wrote:

    > you didnt sell it at .45 you sold it at .37 and .36 the last time
    > it went up like a short seller you are too bad you are about to lose
    > the windfall, but that is why they call you Mr. stupid always looking
    > for the short term and always worrying like Chicken little when the
    > sky is falling (what should I do) (what should I do) (is there bad
    > news that the apps is not coming out)(is Jay boy billy right?)(should
    > I sell?)( I did not make my fortune is 3 weeks this looks like a
    > dud stock)
    Jun 14 11:50 PM | Link | Reply
  •  
    Face it people, Sirius is done. DONE.

    So many gadgets have come and gone and now it's Sirius turn.

    PANDORA ROCKS!
    Jun 14 11:53 PM | Link | Reply
  •  
    Is there more than one Mr. Stupid? Otherwise if its one guy, he had mulitiple personalities. Im right here.
    Not really sure the point of the article, why I didnt comment on it. And I havent met a basher yet that could run me off, let alone have an intelligent response. Gino says some truths. Raises questions to consider 10 years ago. These things have been answered already.
    Jun 15 03:38 AM | Link | Reply
  •  
    it is kind of strange that Mr. Stupid thinks that he knows this stock all of the sudden just after a few weeks of spewing words of whinning and not knowing what he should do


    On Jun 15 03:38 AM relmar2003 wrote:

    > Is there more than one Mr. Stupid? Otherwise if its one guy, he had
    > mulitiple personalities. Im right here.
    > Not really sure the point of the article, why I didnt comment on
    > it. And I havent met a basher yet that could run me off, let alone
    > have an intelligent response. Gino says some truths. Raises questions
    > to consider 10 years ago. These things have been answered already.
    Jun 15 08:53 AM | Link | Reply
  •  
    Lot's of intelligence in your post there. I guess when you said you were intelligent this is what you mean.

    hahahah heheheehe hahahah heeheh



    On Jun 15 01:14 AM Jesus wrote:

    >
    > Hey Mr Stupid ,
    >
    > Did Mel Fu..kk your mom too that is why you hate Sirius so much<Did
    > Mel forget to pay child support..You Fu..ken Nerd!!!
    Jun 15 12:32 PM | Link | Reply
  •  
    Good to see you back after a hiatus of a week Relmar2003! The bashers have been going crazy without you to keep them in check. You are right about the article, old news.....
    SIRI is getting back to a good buy price at $0.32. I bought some more share again today.
    Say hi to Cos1000 for me, will 'ya?


    On Jun 15 03:38 AM relmar2003 wrote:

    > Is there more than one Mr. Stupid? Otherwise if its one guy, he had
    > mulitiple personalities. Im right here.
    > Not really sure the point of the article, why I didnt comment on
    > it. And I havent met a basher yet that could run me off, let alone
    > have an intelligent response. Gino says some truths. Raises questions
    > to consider 10 years ago. These things have been answered already.
    Jun 15 11:06 PM | Link | Reply
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