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Sirius XM in Perspective
by
Paul Resnikoff, Publisher
Digital Music News, August 7,
2008
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The freshly-combined Sirius XM Radio shifts the radio landscape
somewhat, though the broader impact on the music and media terrain will
be modest. The days of four TV channels and ten radio stations is over
- consumers now have more options than they can possibly handle, and
that makes it difficult for any one company to dominate.
Ultimately,
that massive and super-competitive arena paved the way for a regulatory
approval, despite nearly 18 months of waiting. And now that approvals
have been granted, there are more winners than losers.
(1) Winners: XM Satellite Radio, Sirius Satellite Radio
Obviously...
though both companies needed this merger to buy breathing room on their
cost-heavy, profit-empty existences. A merged entity offers the hope
of generating enough subscribers and cost savings to create a
profitable scorecard. But both companies approached this merger from a
position of weakness and survival, not from the perspective of an
ambitious land-grab.
(2) Winners: Satellite Personalities
Whether
Howard Stern, Opie & Anthony or Eminem, a combined dial means more
subscribers and greater reach. And in turn, more relevance for the
personalities involved.
(3) Winners: Consumers and Music Fans
Sure,
the dial gets more complicated, and so do the packages. And it remains
unclear what music programming approach will ultimately emerge. But
forget about choosing Howard or hockey; the NFL or Opie & Anthony.
Decisions are now more properly based on the possibilities, not missed
opportunities.
Pricing becomes more complicated, and probably
more expensive over the long-term, though consumers have plenty of
options for entertainment outside of the satellite radio. That
includes a growing number of HD options, iPods, iPhones, and a myriad
of streaming radio choices. And healthy, open market competition makes
gouging unwise.
(4) Loser: Terrestrial Radio
The National
Association of Broadcasters (NAB) lobbied heavily against this merger
for a reason. The successful merger means better programming
competition, longer satellite staying power, and continued inferiority
of the current terrestrial dial - analog or HD.
(5) Winners: Automakers
In
the short term, automakers will be forced to navigate a bumpy
transition. Every automobile in the lot carries either an XM- or
Sirius-compatible receiver, and integrated solutions remain
forthcoming.
But from a broader perspective, automakers have
collectively made a serious commitment to the format, and the merger
extends against a near-term burnout from either provider - and a
resulting dud dashboard.
(6) Winner: Kevin Martin
History
is the ultimate judge, and regulators are sometimes afraid of making a
legacy-soiling mistake. Perhaps that's why the approval took forever,
and shorter decision windows are certainly needed. But FCC chairman
Kevin Martin and the Department of Justice properly contextualized
satellite radio into a very broad, very competitive media terrain.
(7) Tough Call: Emerging & Catalog Artists
Satellite
radio plays music that traditional stations wouldn't touch - even HD2
channels. That goes for newer artists, and older songs that appeal to
niche audiences. More exposure is always good, but how do you get a
newer - or otherwise obscure - song onto the dial? And are enough
people listening during the right five minutes, at least at current
subscriber volumes?
(8) Does It Matter? Major Labels
A
more powerful satellite radio gives majors a platform to promote their
signings. And major label promotional teams have traditionally
excelled with bigger, consolidated radio outlets. But how long will it
take for satellite radio to scale to something truly massive? And even
if this does occur, labels currently have problems capitalizing on
successful exposure campaigns.
(9) Who Cares: iPod, iPhone, Cash-Strapped Fans
Like
to tune out, and tune into your iPod or iPhone? A large percentage of
consumers are discovering content online or through conventional radio,
downloading through LimeWire, or ripping dusty CDs.... for free. A
bigger, badder satellite radio ultimately costs money, and that kills
the deal for millions of music fans. In the end, everyone is competing
with free.
-----
Paul Resnikoff is the founder and publisher of Digital Music
News (www.digitalmusicnews.com), a premier industry source for news,
information, and analysis. Digital Music News has quickly grown from its humble
roots as a small, executive news service to the most widely read information
source in the field. |
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