Satellite Radio vs. the Competition

There has been much speculation concerning the future of satellite radio and the competition it faces from the likes of iPod and Internet radio. Lets break it down.

iPod

A music player that you can stream in your car with CD quality sound and a virtual unlimited song list unless you are obsessed with simply trying to compile every song ever recorded. It is a very nice way to have your entire music catalog at your finger tips and the sound quality through your car speakers is decent. Personally I use mp3 CDs in my car. The down side to all of this is that eventually I desire live voices through my radio. Yes even musicians get bored with music and need some talk radio to change things up a bit. Switching to Satellite financial radio is what I love to do.

Internet Radio

I very much believe it will be a major contender in the future but it is not as easy as you may think. A lot of things have to improve technology wise. For those of you who think it will be like punching up a web site from your laptop, think again. It will still be receiver based. Motorola is working on an Internet radio receiver for your car, but guess what? You will have to pay for this service also. After all it is the Internet. You will need an ISP and that ain't free. Think of the satellite card from Sprint that plugs into your laptop enabling you to surf the net anywhere. They are $40.00 - $60.00 per month.

With the receiver, it isn't as if you will be able to punch in any old web site you want to get the desired audio stream. The Internet receivers will have a set directory of music stations that are licensed to stream to them. Also, Internet radios will need a standardized way to get a list of stations which are available and that list will need a globally relevant set of sorting and grouping tags. Then you will need a way to transport that sound your radio which will probably be in the codec of mp3. Sound quality stream will be bit rates from 96kps to 128kps. This is typical terrestrial radio sound quality in comparison. For bit rate efficiency it will probably be more like the lower value 96kps which is close AM quality sound. I can go on and on but I think you get the picture.

Basically until the technology is available and affordable to have a "personal computer" type piece of equipment built into your car that you can navigate to any web site, and at a minimum provide the ability to stream the audio through your car with the same quality you get from FM, it is going to be a tough sell. I envision a little fold down table from the center of the dash with a PC (or MAC) built in, Blue Tooth sound commands for URL navigation, and endless possibilities for audio streaming. The bottom line though is that no matter how it gets to your car, you are going to have to pay for it.

Satellite Radio

The here and the now is of course our battered and bruised Sirius XM (SIRI) satellite radio.

Satellite radio is a wonderful idea that just hasn't been able to get over that hurdle that would take them from speculative to blue chip. When I first heard about a paid radio subscription service I was skeptical. But then again I thought "commercial free music and 200 channels? Oh yeah, where do I sign up?" The biggest clincher for me was the fact that I could listen to the same station no matter where I was in America. Nothing worse than riding along and hearing that old song from your past just as you are driving out of range. @!$^@&!#@**^%@!!!

But really, it is all about the subscriber base that will keep this company in business. Here are a few points I would like to mention that are important to keeping subscribers and investors happy.

1. Content. Keep transmitting content provided by the top talent in the industry and the audience will remain loyal.

2. Sound quality. Since the auto industry has slowed down to a snails pace, SIRI XM needs to devote energy to assist manufacturers in improving the sound quality of retail receivers. The factory installed radios have a fine sound quality, but the sound quality of the receivers you purchase at Best Buy with the magnetic antennae you place on your roof are mediocre at best.

3. Make available to Internet listeners all of the content, not just select channels.

4. Get those short selling traders pushed back so the stock price has a chance to breath. Without investor confidence, it will not matter how good the content is.

I know, Easier said than done right? Good luck Mel.

Disclosure: Long SIRI

Comments

[Neal Barkett:]

Great overview. Clears up a lot of questions of where sat radio is positioned. I would stress to Sirus Xm the importance of the options that are offered with different manufacturs recievers. My daughter's older reciever does not have "playback memory or favorite songs & artist alerts". Totally differant experience! These options are a must. These are not minor points they are major. It is actullay fun to hear the artist/song alert to see what song is in the offing.

2008 Aug 05 08:19 AM

[prestigeim:]

I'm long 10,000 at $2.23/2,000 at $1.70/1,000 at $1.50(didnt think it would go lower)

I love to be in a car were I choose the music, and not some DJ who you will loose in about 100 miles of travel.........and I must admit the financial programing is a close 2nd.

I feel all of the top brass should come up to the plate as did Mel and start investing their "free cash" in stock.........and were not talking about options or gifts.........How about it Howard $500 Mil for 5 years?...........Put up 10% of that in a stock purchase and then we are in it "all together".

Does this strick a tone with others?

2008 Aug 05 08:24 AM

[Landerwood:]

Your internet radio scenario is going in the right direction, but you are overlooking something crucial that does this medium a much stronger contender than you state. One word . . . SMARTphone (iPhone, Blackberry, et al).

What you are overlooking is that a growing percentage of SMARTphone users already have unlimited data transmission, as I do (BB Curve on T-Mobile). You just need a Internet Radio player. In my case, "BerryTunes".

I can grab my Internet radio from my WiFi for the home, plug it into a AVR receiver and I enjoy good quality sound. In the car, I switch over to the EDGE network and get very good streaming audio through the AUX jack. I can program ANY streaming radio station OR Podcast(!!) this way. What makes this scenario the winner IMO as I get this all for the FLAT cost of BerryTunes of $20. (There are no doubt some free players out there). Again, I have the SUNK cost for unlimited data on my BB for the medium.

The only drawback is the inability (today) to simply turn on a radio and turn a dial to get exactly what I want. However, the tradeoff of unlimited sourcess of music, informaiton, news and podcasts more than makes up that.

That beats the $8+ on my XM. That is why I have cancelled one XM subscription and foresee cancelling our second one.

2008 Aug 05 08:30 AM

[Andy Haer:]

Another potential contender is the slacker portable. It allows you to take the customizable internet radio experience with you. The only thing that I miss from my XM is the news channels - Once you get the service figured out the music selection is 10 times better than XM has been lately

2008 Aug 05 10:24 AM

[163888:]

169401, Wow, you get all that and the phone services with it for 20.00, which service is that again. I would like to sign up because I cant even get basic cell phone servise for 20 a month. Yea thats what I thought. Try adding the extra cost for that to.

2008 Aug 05 10:44 AM

[163888:]

andyhaer, Slacker is good if you like limits on what you listen to. What kind of sports you get with that. What kinds of talk, why would I spend 20+ for one thing, get another device to get another. When I can buy one device for it all which in the end is less expensive anyway.

2008 Aug 05 10:49 AM

[Landerwood:]

163888, Read post. Many of us with SMARTphones have the unlimited data plans. As such, that is a SUNK cost, or if you are not clear, a cost one pays anyways (voice, E-mail, IM, text).

Yes, all that comes for a flat $20 one time cost

2008 Aug 05 11:20 AM

[shure46:]

I am no expert here , but I do believe internet radio may be the endgame eventually.......but internet signals as of now use terestrial towers with overlapping transmissions , with some dead spots ......I wonder if the solution to that might be ........satellites ???????? Is Siri / Microsoft a possibility ?????? Oh crap , another merger fiasco !!!!!!

2008 Aug 05 12:26 PM

[163888:]

169401, So the question still remains what does (voice, E-mail, IM, text) cost you. That is the cost of getting internet radio. As I have said before it cost me 29.99 to get internet access ontop of my normal cell phone plan to get that, and that would be the second time I pay for it considering I get it off My land line at home. The 29.99 is the cost to get internet radio on the go, reguardless what else you get on the internet. The masses do not need (may want) or can afford internet radio on their phone/Blackberry at this point.

2008 Aug 05 01:49 PM

[Sirius XM guy:]

Three words-content, content, content. I like to hear the word F%ck everyonce in a while. Let's face it we need entertainment, free radio can never compare.

2008 Aug 05 02:49 PM

[Sirius Road...:]

I hear Uncle Mel was down the Jersey Shore last week looking for a modest summer cottage on the Navesink River so he can be close to his hedge-fund buddies and share their heliports for the commute to lower Manhattan . . . ohh-fah, what a life on the backs of common share holders.

Best hope now is a Bear-Stearns style dead-cat bounce on the reorganization announcement . . . or maybe the longs (i.e. the unsecured creditors) will get the rumoured class-action off the ground.

Welcome to Wall Street. Cash-out your remaining positions now and give the money to a professional manager or mutual fund. The game is rigged and you can't beat the insiders . . .

2008 Aug 05 03:11 PM

[Sirius XM guy:]

If you are not sure how well the company will do, simply think in these terms...Would you rather watch a movie the way it was intended or would you rather watch it for free, with commercials, and with the parts cut out that the FCC thinks we should not be watching? Sirius XM IS Radio the way it was intended.

2008 Aug 05 03:16 PM

[Diodebrain:]

I tried XM and Sirius but I found XM's programming on their unique music channels more my style. Some of my friends feel the same about their Sirius channels. Both groups feel that if the merger "synergies" kill too many of their favorite channels that they'll simply drop their subs. All "60s" channels are not the same. Before making any Wall Street Bean Counter Hedge Fund driven decisions about programming, SIRI-XM better poll the $13 per month listeners who really count and pay the bills.

No doubt, wireless internet as a delivery medium will eventually overtake satellite delivery. But compelling programming can be delivered by carrier pigeon on a wax cylinder if it captures the audience's attention. Sirius and XM, if they continue to offer superior content and plan correctly, can establish their loyal audience(s) with the current technology and transition to wireless internet when it becomes a mature and stable technology (2012, 2015?)--experimenting in simulcasting even sooner. They'll own the market with better programming and a large legacy audience. And the networks should become cheaper to operate than flying billion dollar space birds.

2008 Aug 05 04:38 PM

[ir_danno22:]

Just a thought, like LAN internet/wireless net and cell phone usage. Could multiple users simultaneously create an over burden situation on the internet? Could bandwidth be a limiting factor for internet transmission, or did i miss that tech solutions years ago?

2008 Aug 05 05:48 PM

[cos1000:]

Ir_Danno22, With satellites its spectrum, which is still bandwidth. With the internet it's bandwidth. I think we took the same class. Satellited, Wireless Internet, Cable, it's all about the bandwidth. Data compression technology pushes more through a smaller bandwidth. The more sophisticated the data, such as Video, or the greater the demand for sound quality, the greater the bandwidth or spectrum required. Now if you can put it all on "Fiber", using laser light technology, mmmmmm....... It's always getting that last mile of transmission the F's it all up. Verizon's Fios is about as good as it gets so far.

2008 Aug 05 06:14 PM

[163888:]

Diodebrian, you are going to be surprised they dont need a poll they now just how many users each channel has. So if you like those channels you better hope alot of other people do, because SIRIXM does.

2008 Aug 05 07:30 PM

[Diodebrain:]

1663888: I'm curious, how would they know. My little Sony receiver in the car doesn't uplink anything back to XM as far as I know. It's lucky to get and hold the downlink or find a repeater. When one of my early favorite channels was banished to XM-on-internet-only and I questioned it, I was told that its audience was estimated from old fashioned Arbitron-style audience sample ratings. Has something changed?

2008 Aug 05 11:41 PM

[163888:]

Diodebrain, there was an article on it. That they can tell howmany radios or on each channel. It talked about how barbra Walters was going to get cut because she only had 30,000 people a week. I will try and find it and give link.

2008 Aug 06 11:43 AM

[163888:]

Diodebrain, Link:

seekingalpha.com/artic...

2008 Aug 06 11:53 AM

[Diodebrain:]

163888: Thank you for the link. A very interesting discussion, but I couldn't find anything that reflected the technical ability of Sirius or XM to tell in real time or logged census what every subscriber was tuned into (a la cable companies getting real-time information from their set top boxes, or of course, cell phones). It just indicated that Sirius hadn't done internal market research into its subscriber's channel usage until recently. Apparently XM had engaged those broadcaster resources earlier. On a one way system, that has to be done with Arbitron or an equivalent service.

As a techie I'd love to know if I am missing something about the receivers phoning home. It would certainly help the satrad company to have the information. But it's kind of spooky and invasive, if it's true. My XM receiver's specs say nothing about RF broadcast output or anything that resembles what my cell phone or WiFi router has. Anyone know for sure? Links to broadcast protocols and specs for data return?

2008 Aug 06 02:10 PM

[163888:]

Diodebrain, Yea I am just telling you wait I read, I am ignorant of the tech portion, to go into the tech part on how they do it. As for the creepy part, Just look at TIVO, it does the samething.

2008 Aug 06 03:53 PM