Google Steps On Sirius XM's Toes, Pokes Pandora In The Eye, Beats Apple To The Punch

Includes: AAPL, GOOG, P, SIRI
by: Spencer Osborne

Google (NASDAQ:GOOG) stepped further into the world of audio entertainment Wednesday when the company emailed millions of Android users with an announcement of the Google All Access music service. Consumers were offered 30 days of unlimited music access where they can listen to millions of tracks any time, customize stations, and build play-lists. After the 30 day free trial the service can be continued for just $7.99 per month. Details from the email are below:

Google Music

Introducing All Access, the new music service from Google Play that lets you listen to all the music you want - on your mobile device and the web.

Try All Access for free for 30 days. After the trial, keep listening for just $7.99 per month when you start your trial by June 30, 2013.

Play anything you like. From today's hits to classic tunes, you'll find millions of songs by your favorite artists on All Access. Discover new music to love, too - browse top charts, new releases, staff picks and smart recommendations based on your tastes. Add any album to your library with a click or a touch, and listen online or offline.

Listen on mobile or the web. Whether you want to rock out on your morning jog or chill out to music at work, with Google Play, your library is always with you. Just open the Google Play Music app on your Android phone or tablet, or log in on the web to enjoy your play-lists, radio stations and more - all magically kept in sync.

No ads. No limitations. No annoying ads. No limits on playing your favorite song over and over. And when you're listening to All Access radio, feel free to skip all the songs you don't like - it helps strengthen our music recommendations.

Radio made just for you. Create a new station based on any artist, album or song. See what's coming next, skip ahead, and reorder the queue any way you like. With All Access, you can even enjoy stations that blend the best of your music library and ours. It's music that listens to you.

Google is not just dipping its proverbial toes into the water. The company is making a splash with a free trial as well. This news will certainly impact the likes of Sirius XM (NASDAQ:SIRI), Pandora (NYSE:P), Spotify, Slacker, and Apple (NASDAQ:AAPL). But in what ways? That is what investors need to know.

Stepping On Sirius XM's Toes

Sirius XM is a stable company that has a terrific service. In many ways it goes beyond the Google offering. This is because Sirius XM can boast unique content, news, sports, talk, and more. In addition, Sirius XM can boast satellite as well as internet delivery. The satellite delivery is perhaps the most efficient way to receive radio to date.

Sirius XM likely does not have to worry too much. Consumers typically get exposed to Sirius XM when they buy a new car. Roughly 67% of all new cars come equipped with Sirius XM receivers, and free trials range from 3 months to 1 year. Yes, Google can boast a massive smartphone presence, but most radio listening happens in the car. The connected car is already happening, but it will be a couple of years before it is a standard feature. Until then, most Google All Access listeners will have to stream via their smartphone connected to a car via bluetooth or a cord. This method works fine, but lacks the ease of control that a dashboard included stereo has.

The real angst of Sirius XM is that Google All Access is a high quality app that delivers the music you want with true On-Demand, and does so at a price point that is about half of the Sirius XM service. This could put a proverbial lid on price elasticity for Sirius XM. For pure music fans Google All Access is a very good deal.

Adding insult to injury, Google named its music service "All Access". Ironically, this is the same name Sirius XM assigned to its top tier of service, "Sirius XM All Access", which is the most cost efficient way Sirius XM consumers can access Sirius XM Internet Radio, as well as the company's highly customizable MySXM, which lets users control the attributes of selected channels. Thus, we have an "All Access" offered by Google at $7.99 per month, and an "All Access" offered by Sirius XM at twice the cost. Can you say consumer confusion?

Does the Google All Access make Sirius XM a sell? No. At least not yet. Sirius XM is performing very well, still has some distinct advantages, and we are not yet sure of how much muscle Google will place behind this new business model. It is worth monitoring though, and it could carry longer term impacts as dashboards get more connected and pricing plays out.

Google All Access Pokes Pandora In The Eye

While Sirius XM got its toes stepped on, Pandora got a poke in the eye. Yes, Pandora has a massive user base, but in the world of audio entertainment, it is also the least robust service. Google lets you listen to any song you want on demand, gives you unlimited skips, has no commercials, can be automated or customized, and does not have listening caps. In addition, Google has far more muscle than Pandora.

Pandora will still be very relevant because of its free listening supported by ads, but that business model has been quite challenging for the audio entertainment company. The Pandora subscription tier removes advertising and listening caps and costs about $4 per month. The big question here is whether the more customizable Google service is worth the step from $4 to $8. In my opinion the answer is yes.

If my opinion holds true, then we can expect Google All Access to put a dent into the subscription end of the Pandora platform. One advantage Pandora does have is actually the advertising model. Pandora is masterful at selling this ad space. With Google choosing an ad free subscription model Pandora avoided more than the proverbial poke in the eye.

Pandora investors need to watch for the actions of Google. Google has a massive advertising business. If Google decides to jump into a free and advertising supported model it could spell trouble for Pandora.

Do Pandora investors need to sell? Not just yet. However, investors should watch the type of traction Google All Access gets and whether the listener hours or subscriber numbers dip.

Google All Access Beats Apple To The Punch

Google and Apple are rivals of sorts. The rivalry has mostly centered around the smartphone market. Apple keeps the iPhone as an in house product and is wildly popular. Google allows many companies to manufacture smartphones with the Android operating system and has since dwarfed the sales of iPhones. Android based phones dominate the market at this point.

One other potential rivalry has been on the audio entertainment front. For about 1 year now Apple and Google have been making waves about entering the audio entertainment space. There have been various points in time when the rumor mill opened up with hints about one company or the other getting closer to launch. Well, Google has launched first. This is a leg up for Google, and a black mark against Apple. Apple will certainly develop and market its own product, but Google now has some bragging rights as well as early adopters.


The audio entertainment landscape is quickly morphing and changing. The latest is that a 900 pound gorilla, Google, is stepping into the space. With massive cash reserves Google can write its own ticket if it desires. The likes of well established services such as Sirius XM, Pandora, Spotify and Slacker need to pay close attention. This will be especially true when the other 900 pound gorilla, Apple, steps into the ring as well.

Disclosure: I am long SIRI. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I have no position in Google, Apple, or Pandora.