Should Satellite Radio Ditch The Satellites And Go Online Only?

from the kill-two-birds dept

Fri, Feb 13th 2009 12:51pm — Mike Masnick

In discussing the troubled satellite radio business, we noted that two of the major difficulties faced by the industry were the huge capital costs required to build and maintain the business, combined with the rise of (somewhat unexpected) competition in the form of internet radio and internet downloads combined with portable MP3 players like the iPod. Over at Slate, Farhad Manjoo has a suggestion that would solve both of those issues: Sirius XM should ditch the satellites and become a web only broadcaster. It's an interesting idea, but it seems unlikely (even though they offer online streams currently). Sirius XM still remains so car focused, it still thinks that being in automobiles is a competitive advantage. However, as Manjoo points out, it's actually damaging the company, because it's had to pay large sums to automakers to get the devices installed in cars. Instead, if it went to an internet-only solution, and cut the subscription prices, it could reach a much larger audience, much more easily and cheaply. Build mobile apps, and people can use their phones to listen to content. Add downloadable podcasts of popular shows, and anyone with a portable device can time shift. It's so reasonable that it'll never happen.

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Filed Under: bankruptcy, competition, failure, satellite radio
Companies: sirius, sirius xm, xm

45 Comments

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Dan, 13 Feb 2009 @ 1:15pm

I agree totally, I have an online-only XM account and I listen all day at work, it's great. The killer app, however, would be an iPhone app. I've heard rumors of its development, but nothing has materialized yet. That would be WONDERFUL and I would gladly keep paying.
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crashoverride, 13 Feb 2009 @ 1:19pm

With Muzak filing for bankruptcy they could take on the canned music industry through there ties with satellite TV providers and/or online apps. For a much cheaper price.
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Anonymous Coward, 13 Feb 2009 @ 1:25pm

I was thinking about this the other day. "radio" as an industry seem to me to be slowly becoming a thing of the past. For example, I have almost 7,000 songs on my computer (and I have about another 75 or so CDs I haven't ripped yet) which total almost 500 hours of music (so I can go almost 3 weeks without hearing the same song by the same artist if I played them all sequentially). I can put my music player on random, and if I don't like a song I can hit skip. I can play them by genre if I only want to hear a certain type of list. I can create custom playlists.

Honestly, why do I need radio (whether FM, satellite, or internet)? The only purpose for radio would be the discovery of new music (and with 7,000+ songs/500+ hours, do I really necessarily need new music), and with the proliferation of services for matching like minded artists I don't even necessarily need radio for that either. When I sign onto a service like eMusic or Lastfm, it's usually very easy to find music that matches my tastes (and often I find music that I like much better than some of the crap I'm usually force-fed on the radio anyways).
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- Dan J., 14 Feb 2009 @ 4:13pm
  
  Re:
  In my opinion, this is precisely where satellite radio excels. Over-the-air radio has an extremely limited selection of music. I have never found an airborne radio station which plays Lucinda Williams, James McMurtry, Hank III, etc. I was turned on to a lot of new artists when I got my XM subscription. And yes, I have an 80gig iPod which is maxed out with my music but there's new stuff coming out all the time. There's no way I could buy everything that I hear on XM, nor would I want to spend money buying stuff until I know that I like it.
  
  As for Internet only, XM is right that it's all about the automobile. I get in my car and the radio starts playing. I have coverage everywhere I go, including places where cell coverage is limited or even non-existent. When there's an Internet connection option which works in an automobile, has complete coverage, is completely reliable in terms of sufficient bandwidth to avoid buffering slowdowns and stuttering, is as cheap as my XM subscription, and is available via a hardware option which is as convenient as my XM tuner, they'd better maintain their satellites if they want to keep me as a customer.
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Kharn, 13 Feb 2009 @ 1:34pm

3G car solution
They can still be in cars with 3G. I listen to pandora in my car. Simple
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- moe, 13 Feb 2009 @ 2:07pm
  
  Re: 3G car solution
  Not enough people have 3G to make this a viable option and not enough people will be interested in webstreaming only. Added to that, alot of people won't be willing to pay for the subscription in addition to the 3G data costs.
  
  If Sirius XM is looking to put the final nail in its coffin, then it should switch to web-only. I hope it doesn't because I really enjoyed it when I lived in Germany. In that case, I bought the web-only subscription because the SAT signal is only available in N. America. Being back in the states, I didn't want to pay for the hardware and the subscription right away, but in the future I think I'll end up re-subscribing.
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Anonymous Coward, 13 Feb 2009 @ 1:46pm

There's a zillion online free radio stations, so Sirius could not compete very well there, unless you're gonna fall back on the old Techdirt standby of Sirius XM T-shirts, Sirius FM coffee mugs, and, for $1,000, lunch with one of the star programmers of Sirius FM.

Satellite radio is for when you want non-crap radio stations in your car, on demand, that you can flip through. Webcast would not fulfill that.

While their current position is not tenable (at least, at this cost level), webcast isn't a solution for them, just another failure.
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Anonymous Coward, 13 Feb 2009 @ 1:51pm

I have satellite reception everywhere I drive, but very spotty 3G. Online-only would make Sirius/XM nearly worthless for me.
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- Chronno S. Trigger, 13 Feb 2009 @ 2:02pm
  
  Re:
  Same here. I don't even have anything that douse 3G. I would have to cancel my subscription if they went online only. I wouldn't be able to use it.
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Nick, 13 Feb 2009 @ 2:01pm

Are you high?
That's just the dumbest suggestion I've ever heard.

Seriously, are you high?

Cell reception isn't nearly ubiquitous enough to make it as available as a satellite signal - not to mention the how many hundreds of thousands of already deployed units?

Plus what would it cost if you didn't have an unlimited data plan?

Your remarks are so ludicrous that I seriously am asking, are you high?
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Joel Coehoorn, 13 Feb 2009 @ 2:01pm

Hybrid
To be honest, getting it in my car is the only reason I am at all interested in Sirius XM and even there it's not worth the price of admission, initial or monthly.

I don't know that an online play would help them much: there is a ton of competition in that space, and satellite is their main differentiator.

What they could do is perhaps add an online service _in addition to_ their current system, if they don't already have one. Then expand to offer an online-only service tier for a much lower price point.

This wouldn't cost them anything and could bring them new users and fans.
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Anonymous Coward, 13 Feb 2009 @ 2:04pm

www.slacker.com

Because of the amazing level of customization, Slacker currently has the best implementation of 'music on the go' that I know of. I've rarely turned on the XM in the car since getting their G1 portable, especially now that they've worked the serious bugs out of the firmware. There are still some frustrating quirks, but hopefully they'll be fixing them in upcoming releases.

The portables download 100+ songs per 'station' you set up via wifi or USB, so they're ideal for listening in the car or in any situation where a persistent Internet connection is unavailable. Sound quality is about double that of XM/Sirius if not better. There are also apps for Blackberry and iPhone, but I have neither so I can't comment on how well they work.

It boils down to to high-quality stations customized to your own musical tastes for free, VS low-quality shallow playlists for $12.95 a month.
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hegemon13, 13 Feb 2009 @ 2:04pm

Huh?
Internet radio already exists. All over. For free.

Why would anyone pay a subscription for a service they can get for free that confines them to their computer for watching? (I know there are some other options. I used to use my data plan to stream internet radio through my smartphone to an FM transmitter in my car, but the average user is not going to jump through those hoops.)
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Darren, 13 Feb 2009 @ 2:07pm

No - first off I listen to Sirius at work all day on radio, but I can't listen on-line because they have blocked sirius.com because it's uses too much band width - Boo hoo I say. Second, I have another subscription in my car - kind of hard to listen to the internet in the car - or at least right now it's hard to do! Sirius/XM needs to stay exactly where they are - I do not want to go back to listen to non-stop advertising on the "other" radio!
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- Anonymous Coward, 13 Feb 2009 @ 3:28pm
  
  Re:
  Spoken like someone who truly has absolutely no clue.
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BillG, 13 Feb 2009 @ 2:07pm

Sirius XM
I have several thousand songs on my hard drive and still preferr Sirius XM programming. They (Sirius XM) have millions of songs and I get to hear stuff I like, but don't have. I also listen both at home and in my car. The availability of satellite without commercials is great and the ability to keep a station over a long distance is also a great feature. I hope that satellite radio is able to continue.
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XPHiLtER, 13 Feb 2009 @ 2:10pm

There is no way they will ever recoup their investment for the satrilights. Either they will go out of business or will have to seriously change their business plan. You can see that they are already moving out of radio into other services like mobile TV. I don't know what they were smoking when they thought sat radio would be a sound financial decision...but I'm guessing they were as "surprised" by the internet as RIAA...
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Don Morse, 13 Feb 2009 @ 2:13pm

Should Satellite Radio Ditch The Satellites And Go Online Only?
You've got it all wrong. XM should dump that albatross Sirius and go back to what they did best. There aren't enough humans on the planet to subscribe and pay for that ridiculous contract to Stern, and those IDIOT DJ's on the music stations MUST GO.
XM was a great service, I've got 5 radios on subscription and all 5 are used constantly. An online solution is stupid, vaporous, and technically unfeasible.
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bjc (profile), 13 Feb 2009 @ 2:19pm

He's high.

Satellite radio is all about listening in vehicles. Wireless Internet service is no where near ready for something like this. 3G data plans are so expensive here in Canada that listening to streaming radio while commuting would cost hundreds of dollars per month.

Perhaps satellite radio needs to adopt the cable TV business model: charge a monthly fee for the pipe, then pay content providers for the channels. Many commenters in the previous satellite radio article had complaints about XM and Sirius playlists. Why not let third party stations compete for satellite radio subscribers?
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Chris Huff, 13 Feb 2009 @ 2:19pm

Why I like XM Radio
1) MLB Radio. The hosts are funny, engaging, and interesting, the shows have character, and they talk about baseball all day long.

2) All-Elvis Channel. For when you need that fix.

3) Theme Time Radio Hour with Bob Dylan. I am in complete agreement though with Mike that this show, the Tom Petty show, and the new Lou Reed show should all be PODCASTS. I for one can never figure out when the Dylan show is on (it's on at strange times like 10 AM and 7 PM - not during commuter hours, morning wakeup, or evening chill out), and if you miss it then it's gone.

4) Live football and baseball games. Sirius XM is making a huge mistake though charging for the NFL (or for MLB if you are Sirius).

5) Coast to Coast AM on Talk Radio. If you listen to it on regular radio driving, you have to keep switching stations. However, the ADS are interminable too! That is why I have the podcast, and no longer need this one from Sirius XM. I pay $8 a month for Coast to Coast, and it is worth it! I'd do the same for Theme Time Radio Hour.

Mike is right. Their model is flawed and needs to be revised if they are to succeed. Perhaps they could feature the best of Internet Radio? A whole channel devoted to unique web shows? That'd be great...

Generally, though, I hate listening to music on XM because of the compression and the anonymity of the shows (if I want machine-dictated music, iPod shuffle is much better). Some internet radio shows have better audio. I am an engineer/producer, though...I'm sure most people don't even notice, but once you do it ruins it. Still...sometimes I dip into the Liquid Metal, the Rhyme, and the Grateful Dead channels just to see what's going on...
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Ivan, 13 Feb 2009 @ 2:46pm

Nope...
I would cancel my service if they went to online only. I rarely listen online, I use my service in my car and with my portable station.
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Josh R, 13 Feb 2009 @ 2:51pm

Silly...
Any Broadcaster can be online anytime they want to be. Really the only reason Satellite radio is appealing is that when you are traveling, you don't have to find new channels every 50 or 60 miles.
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Anonymous Coward, 13 Feb 2009 @ 2:58pm

With such an abundance of free online radio I couldn't see paying a dime for online radio so I can't see how this would work. I'm sure some people would subscribe initially but eventually most of the would realize there are free alternatives out there that are better and cancel their paid subscriptions.
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William Dearn, 13 Feb 2009 @ 3:00pm

Internet only bad idea!
Internet only is a bad idea. Many satellite radio subscribers are truck drivers. Until satellite radio this segment of the public had to deal with no radio reception in many places now a truck driver or cross country driver can listen to the same program from coast to coast.
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Duane (profile), 13 Feb 2009 @ 3:15pm

In the year 2000...
I think most points being made here are valid, but I don't know for how long. 3G might be spotty for some people now, WiFi might not be everywhere now, but for how much longer? In the future, which is approaching at an alarming clip, the Internet is only going to be more present, maybe even omnipresent.

On the other hand, when's the last time you heard about exciting developments in the satellite industry? Are they getting better satellites? Will the satellites have stronger signals? Will satellites use cutting edge techniques that let me listen to the Verge even on stormy days? Or will they float up there getting older and less useful every year in an increasingly crowded region which might force them to be grounded for feat of damaging other more "important" satellites?

To succeed, you have to take care of today, but you must plan for tomorrow as well.
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bob, 13 Feb 2009 @ 3:18pm

gah!
I'd love them to go streaming only ... if only I could stream to my car.
Then again. If I could stream to my car I'd drop Sirius in favor of Pandora.
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Craig, 13 Feb 2009 @ 3:21pm

A must for Canucks
Satellite radio is huge in my part of Canada. Everyone around here has XM or Sirius because just getting a radio station can be tricky given our geography.

I also know plenty of people who bought life-time subscriptions for 500 bucks! They would seriously be pissed if they lost their satellite radio.

I have a transferable unit that I can move from my house to the car which really makes the subscription a good deal.

Hopefully they will figure out a business model that works for them and all of their existing and new customers.
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Anonymous Coward, 13 Feb 2009 @ 3:35pm

Who pays for radio? morons with too much money to burn, that's who.
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Frogpond, 13 Feb 2009 @ 3:55pm

Just a Thought
Maybe the idea of going internet only is just a smokescreen. Maybe it just to make subscribers feel better when they double the subscription price. Then they can say "well thank God, they didn't go internet only" Kind of like the gasoline thing, make the price really outrageous then when its only semi-outrageous, people think its a bargain.
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twowords, 13 Feb 2009 @ 4:19pm

been there done that
i have had and dumped both services. When I had XM they never played anything I liked. Sirius played what I liked but more and more started playing commercials or censoring the music and when i asked why i was told at that time because some people did not want their children to hear some of the words. Well damn i am sorry but i am paying for uncensored music and if you don't want your children to hear it don't play it or listen to clear channel radio. Also the DJ's just don't shut up. I do not care where you are going for the weekend or what you did over the weekend or on your vacation. I paid to listen to music not you talking over the music.just tell me who the artist was and the name of the song. this is the very reason i do not listen to radio any more. i liked the services because i drive all over the country and did not having to always find a new radio station but i have learnd i do not need them at all.
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- Duane (profile), 13 Feb 2009 @ 4:45pm
  
  Re: been there done that
  Amen.
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Janet, 13 Feb 2009 @ 5:58pm

RE: Love my XM
I vote they just get rid of that stupid Howard Stern & Martha Stewart. Those two things right there will save them lots of money. Because I love my XM radio in my vehicles. Definitely don't want to lose it.
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me, 13 Feb 2009 @ 6:20pm

yes the cell phone will kill sat radio
Sat radio had the advantage for many years because it was portable (mostly in the car, later as truly portable devices), and it could be received almost everywhere (excepting issues with tree cover and buildings).

3G/HSDPA coverage is expanding very rapidly and within a few years will cover the 80% of the US population that lives in cities or suburbs. It already covers about 20% of that 80%. No, truck drivers won't have complete coverage all the time, and no, the other 20% of the population will be SOL. But most of the time the 80% will be fine.

Users don't want to commit to expensive dedicated devices that are junk if XM dies - another problem that is hurting them now that they might die soon. Modern phones can do the job better than those devices using 1980's technology, and with complete 3G coverage in the near future, any streaming service, along with their portable nature... they are the future.

XM has something that Pandora or Slacker don't, content-wise. No-fuss pre-programmed content - tune in and you are done. No syncing every night, no picking your playlists, and in most cases no commercials. XM needs to advertise these benefits and then people will pay a reasonable amount vs. the free options online.
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Anonymous Coward, 13 Feb 2009 @ 7:14pm

Yes of course! Online only, that will fit SO nicely with the metered internet. I'd dump them so fast.
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Larry, 13 Feb 2009 @ 9:30pm

Satellite Radio
Yes folks you can slap me on the back as having said, "I told you so." When the whole satellite radio thing began years ago I was the first to tell all my friends, co-workers and family members that it was a waste of time. My brother-in-law argued that he would be glad to pay five bucks a month to listen to commercial free music but what he didn't understand is that people don't always just listen to music. I told him I WANTED local radio. I WANTED to hear the weather for tomorrow. I WANTED to hear that it was a big accident that clogged up my route to work. I WANTED a choice of MY favorite local DJ's that I'd been hearing on the radio for years.

He waved his hand at me and said, "you'll see." Yeah, I saw. I saw a bunch of idiots follow Howard Stern to a dead duck and.....

Geez I hate bein right all the time!
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blacksurfer, 14 Feb 2009 @ 6:48am

Like it or not, Howard Stern saved Sirius from going under a lot earlier. Sirius passed up XM because of Stern. Granted, even with the value of Stern, 500 million was excessive, but the funny part was Stern refused to pay Riley Martin, the UFO guy, $200 bucks a week!
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Anonymous, 14 Feb 2009 @ 8:48am

Why doesn't this "Farhad Manjoo" go ahead and buy SiriusXM and change it to an all internet based radio since he has such a brilliant idea??

The thoughts of this person are very dumb and stupid since it seems he has no damn clue about satellite radio.

Seriously, most people like satellite radio because they can always listen from a single station to hundreds while they commute or travel. Some areas might only get a couple of stations and to think that in such places there would be "mobile" internet?....HAHAHAHA!
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Soundhound, 14 Feb 2009 @ 3:21pm

The merger ruined a lot of the unique programming value of XM. XM used to introduce me to music i didn't own via channels like Fred, X-Country and XMU.

I liked being exposed to new music and quality sets of music that I couldn't program just with an IPod. Hosts like Jesse Scott and Lambert were informative without being annoying. Bobby Bennett on Soul Street dug up gems i've never heard anywhere else.

But thanks to Mel and his Merry Consulting Band, the special qualities of most XM music channels are long gone.

However, for those who think internet radio is the saviour, keep in mind two things:

1. wireless broadband will take a LONG time to cover the territory of sat rad. a lot of people i know can't even get wired DSL at the slowest speeds yet.

2. The RIAA and Soundexchange are bound and determined to suck the life blood out of the still young internet radio business, and make the costs per song dramatically high thus squeezing the smaller, more innovative independent streams out of the business. So look for more Siriusized internet streaming if you don't speak up about that to your representatives NOW.
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Anonymous Coward, 14 Feb 2009 @ 4:19pm

Actually I they should go to internet only. That would force them to help increase the connection methods. Skip 3G all together, and start ramping up the wimax. Then after they finish that, everyone can ditch them and go to the better free stuff like Pandora... So let's use them!
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Stuart Friedman, 14 Feb 2009 @ 7:29pm

Once you get out of metropolitan areas, you lose the 3g. I bought Sirius to listen to music in Michigan's Upper Pennisula (which I frequently have to visit), for long drives through Canada (where I'm roaming), and in numerous other places where it simply would not owrk.
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Jon Gebarowski, 15 Feb 2009 @ 6:15am

Poor sound Quality
I just wish Sirius/XM had better sound quality. I can't believe it hasnt been mentioned yet.
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- Stuart G. Friedman, 15 Feb 2009 @ 12:35pm
  
  Re: Poor sound Quality
  The Codec definitely sounds over-compressed.
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Jim Jinks, 15 Feb 2009 @ 12:59pm

Satellite Radio
I thought the original reason for Satellite Radio was to have radio that was accessible from anywhere by satellite with no commercials or did I miss something in the translation. Going to cable would be the end of satellite radio
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On-board Dave, 18 Feb 2009 @ 10:31am

There's more to this than Howard
Obviously there's a "hidden agenda" with all the 11th hour cash flying around. Why would anyone "invest" 500M if there wasn't a pot of gold at the end of the content delivery rainbow. The question is what type of content. Entertainment is fine for now, but their's gotta be a bunch more to this story "down the road". Commercial transportation applications, streaming video, vehicle tracking, homeland security... and because it's all digital, should two-way transmission be in its future !!! ET phone home.
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goodbye satellite/paid radio, 23 Feb 2009 @ 8:00am

abandoning the satellite medium would business suicide for sirius-xm. this would have made sense 5+ years ago. the competition would be far too wide spread and dominated by free radio.
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