In a move that has been a long time coming, Sirius XM (NASDAQ:SIRI) is finally taking advantage of the unlimited capabilities on the Internet side of their business, and building out an Internet radio service that adds great content to an already robust line-up of music, news, sports, and talk programming. With the latest addition of BBC Radio 1, the Internet Side of Sirius XM's business is now beginning to shape into a compelling offering.
Sirius XM's base price for satellite radio is $12.95 per month. For many consumers, this is sufficient. Those that simply can not get enough can always pay an additional $2.99 per month and gain access to Sirius XM over the Internet. Over the past year the company has been building out a content platform that now makes the Internet radio business more attractive to consumers.
For an additional $2.99 per month listeners can enjoy over 20 channels that are not available on the satellite service. The list of channels includes, The Groove, CSpan, BBC Radio 1, Neil Diamond Radio, Simon & Garfunkle Radio, Rosie radio, and more. While most of these channels could be considered niche channels, BBC Radio 1 was a compelling satellite channel that has now made the move to the Internet side of Sirius XM's content.
I have written many times that smartphone adoption will change the landscape in audio entertainment. These statements were not made only to point out that the competitive landscape has changed, but also to inform SIRI investors that the company has a serious chance to generate additional revenue of their own with the internet based feeds. To get all that Sirius XM has to offer consumers will be more compelled to get the Internet streaming option at $2.99 per month.
The combination of widespread smartphone adoption and a more robust Sirius XM Internet Radio lineup can be a great combination for Sirius XM to add more revenue from each subscriber, and reverse the trend of falling or flat ARPU (average revenue per user). These shifts may seem subtle, but they are adding up to a business model that is flexible in price while not breaking the bank.
Watch for more of these types of moves as the company gets ready to roll out Satellite Radio 2.0.
Disclosure: I am long SIRI.