Sirius XM: Growth Via Amazon

Summary

• Amazon can pave the way for more income at SiriusXM.
• As well, Sirius XM has its hefty investment in Pandora.
• It can leverage both of these to take streaming music to voice recognition devices.

by Brandon Lipani

Sirius XM (NASDAQ: NASDAQ:SIRI) has been changing the way we listened to the radio since the early days when satellite radio first debuted in 2002. The idea of streaming radio through satellites instead of using radio waves was a big game changer for the world of radio at the time.

Sirius XM's business model of being a subscription-based music service was a huge culture shift at a time before subscription services like Netflix (NASDAQ: NFLX), Spotify, and Hulu were the standard for content consumption. Sirius XM took another huge gamble investing half a billion dollars in Howard Stern to bring an audience to their new platform back in 2006. Sirius XM expanded its reach again that year with the addition of Sirius Internet Radio, being available worldwide on the internet to any of its subscribers with a valid username and password to existing radio subscriptions.

Sirius XM is a company that has always been on the cutting edge and changing the landscape of the radio business. Sirius XM noticed another changed happening when the iPhone was released and was one of the first companies out of the gate with a mobile app for iOS and Google Android.

Staying relevant.

Sirius XM is showing again they know how to stay on the forefront of radio with the new Amazon (NASDAQ: AMZN) Echo integration. The Amazon Echo is the leading smart home speaker today and is the standard for voice control using the Amazon Echo assistant Alexa. Sirius XM which has from the start been perceived as an in the car type of service is now opening themselves up to a new world of possibility’s to become part of everyone’s in home speaker system.

The Amazon Echo offers internet radio already with companies like iHeartradio, TuneIn, Pandora (NASDAQ: P), Spotify and Amazon Unlimited. Sirius XM realized that not being on the Amazon Echo speaker they were missing out on a huge portion of possible radio listeners or could even possibly lose listeners to other services because they cannot listen to their Sirius XM subscription in their home or office. Sirius XM noticed a potential problem and jumped onto the platform making themselves now an option for customers or potential customers who would like commercial free radio listening.

Sirius XM on the Amazon Echo platform now allows Sirius XM to expand their business model to grow their subscriber base. Sirius XM has always relied on expanding subscribers through car sales. Most new cars of any model come with a free year subscription of Sirius XM and most used car purchases come with a free three-month trial of Sirius XM. I expect Sirius XM will start a free trial subscription business model on the Amazon Echo similar to the way they do on Android and iOS devices on the mobile platforms.

I do believe that Sirius XM will have more to offer on the Amazon Echo platform in the near future. Last month Sirius XM announced a $480 million dollar investment in Pandora radio.

Sirius XM is now the frontrunner to buy what’s become a cheap way to get access to a large online music subscriber base. Pandora who has large name recondition in the internet streaming radio space and a large user base has much to offer Sirius XM. Pandora was one of the first music services offered on the Amazon Echo platform and comes installed by default because of its popularity and brand recondition, unlike Sirius XM which has to be added after the device is initially set up. Pandora despite having a large user base has been struggling lately selling off Ticketfly for $200 million and losing CEO Tim Westergren all in a matter of a few months’ time.

Sirius XM I believe is going to use its investment in Pandora to help them expand out their service onto other platforms to grow their user and subscription base over time. Pandora radio is available on almost every TV, speaker, media and browser platform available on the internet today. Sirius XM moving onto the Amazon Echo platform shows their dedication to providing a great radio service not just when you’re in the car or on your phone but any place where Amazon Echo Alexa is available in your home.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.