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iPhones, FStream and the Death of Satellite Radio
Posted by
Soulskill
on Sun Nov 30, 2008 12:07 PM
from the i-guess-music-wants-to-be-free-too dept.
from the i-guess-music-wants-to-be-free-too dept.
Statesman writes "Only a little over a year ago, the
FCC approved the merger of XM and Sirius
satellite radio companies and the combined stock was trading at $4 a share. Despite being a monopoly — or perhaps because of it — the company is failing. They are losing subscribers, the stock is now trading around 22 cents a share (a 97% decline), and they have written off $4.8 billion dollars in stock value. So, what happened? The CEO is blaming pretty much everyone except himself and his business model. But is pay-for-bandwidth even a viable business plan anymore? With millions of iPhone and gPhone users out there, free streaming audio applications like FStream, and thousands of Internet radio stations to access, the question is: why would anyone want to pay for proprietary hardware and a limited selection of a few hundred stations all controlled by one company?"
Read on for the rest of Statesman's thoughts.
Statesman continues:
"It seems like the pay-for-broadcast business model is fundamentally flawed. First, satellite radio is a misnomer; if you are listening inside a big building, chances are you're really using WiFi radio, not satellite, which requires line-of-sight to the sky. In this mode, XM/Sirius offers less selection and higher cost than an iPhone and streaming audio client. Second, a monopoly is a monopoly. Sure, you can get dozens of ClearChannel stations in some markets, but after a while it does not matter whether they are country, top 40 or easy listening. They all have the same format of hypercharged 'personalities' and lots of ads. By contrast, the iPhone and streaming client can access thousands of stations from thousands of providers worldwide. Finally, you may say that an iPhone and service agreement are expensive compared to a satellite radio subscription, but if you already have the iPhone, the cost of adding a stream audio application is zero. And the iPhone is cheap compared to a cell phone plus an MP3 player plus a laptop plus internet access. Bottom line: a year after being granted monopoly status, Sirius is all but bankrupt and the satellite radio business model is dead. Time for the FCC to think seriously about making better use of this bandwidth."
"It seems like the pay-for-broadcast business model is fundamentally flawed. First, satellite radio is a misnomer; if you are listening inside a big building, chances are you're really using WiFi radio, not satellite, which requires line-of-sight to the sky. In this mode, XM/Sirius offers less selection and higher cost than an iPhone and streaming audio client. Second, a monopoly is a monopoly. Sure, you can get dozens of ClearChannel stations in some markets, but after a while it does not matter whether they are country, top 40 or easy listening. They all have the same format of hypercharged 'personalities' and lots of ads. By contrast, the iPhone and streaming client can access thousands of stations from thousands of providers worldwide. Finally, you may say that an iPhone and service agreement are expensive compared to a satellite radio subscription, but if you already have the iPhone, the cost of adding a stream audio application is zero. And the iPhone is cheap compared to a cell phone plus an MP3 player plus a laptop plus internet access. Bottom line: a year after being granted monopoly status, Sirius is all but bankrupt and the satellite radio business model is dead. Time for the FCC to think seriously about making better use of this bandwidth."
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[+]
Sirius, XM Merger Gets FCC Approval 187 comments
Multiple readers, including koavf, have written to tell us the FCC has finally approved the Sirius-XM merger that has been in the works for quite a while now. CNN has picked up AP coverage as well. We discussed approval of the merger by the Justice Department a few months ago. From CNN:
"The Federal Communications Commission voted 3-2 to approve the buyout, with the tiebreaker coming Friday night from Republican commissioner Deborah Taylor Tate. Tate had insisted that the companies settle charges that they violated FCC rules before she would approve the deal. The companies agreed this week to pay $19.7 million to the U.S. Treasury for violations related to radio receivers and ground-based signal repeaters. FCC Chairman Kevin Martin confirmed the final vote Friday night. 'I think it's going to be, in the end, a good thing for consumers and be in the public interest,' he told The Associated Press."
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Aw... (Score:5, Insightful)
That "lots of ads" thing? Nope, no ads. That's one benefit of paying for the service. The jocks do push things they think are of general interest, like football scores and who is playing who and where, so it isn't entirely noise-free, but it is close.
Another benefit of radio over the iPod is that you're connected to the real world; if something happens, you hear about it. There are situations where that might be important, and there are situations where it certainly is at least desirable.
Satellite radio is, on some channels, uncensored. That's something I treasure. Important for listening? No, not really. But it is very nice to hear people speaking and performing without the government muzzling them. Particularly in the case of rock, where profanity keeps a very large number of tunes from ever getting on standard radio (if they ever deviated from their playlists, as if that'll ever happen.)
There are very large areas of the country where there is no service you can use to receive radio. You can't use an iPhone within hundreds of miles of where I live (they locked it to AT&T, and AT&T isn't very interested in Montana); and road trips are eight, ten, even twelve hours, during which we are almost pitifully grateful to have XM/Sirius. There's no digital service you can use to connect to the Internet barring a satellite connection on the roof of your vehicle. Which, of course, is what the XM/Sirius widget is in the first place. It just connects to them instead of the Internet, that's all.
We do have one (yes, that's *1*) FM station we can hear, as long as we're within 30 miles of town or so. We get the farm report, some country, some top 40, "auctions" of local goods and services, and the one thing I am grateful for, the lost pets report. Someone found my cat once. One of the charity things I was involved with brought PBS radio here; I contributed a few grand, they put up a translator, and if you're within, oh, five miles of it in the right direction, you can listen to PBS via FM. Having put money into it, you'd think I'd listen, but I'm somewhat conservative on many issues and frankly, they drive me a little nuts.
At night, we can hear quite a bit of the broadcast AM band, but that's really deteriorated into far left and far right and wackos, with a sprinkling of country (which you may enjoy, but no one in my family does.)
Now, I certainly recognize that if they can't make a viable business out of satellite radio, it is going to go away, but when urban dwellers generalize as if the entire country has access to the amenities they do, well, I'm afraid that's not the entire picture. It'll be a real loss for us. We have satellite radios in all our vehicles in the family, at work, and in my home. The day they go dead will be a day of mourning around here.
Re:Aw... (Score:5, Insightful)
The real problem with satellite radio is that since it competes mainly with free services (i.e. regular radio) it cannot raise its prices to bring in enough capital to cover the costs and there are not enough users, who like you and your family find it useful, to allow the service to make up the difference in volume.
While I doubt satellite radio is doomed in general, the Sirius/XM companies are. They have too much debt and don't bring in enough revenue to cover operating costs and debt retirement. I have the feeling that'll turn out like Iridium where the initial company goes bankrupt and another company steps in to buy the whole thing at some really reduced cost and then can operate the service without the debt of the initial startup costs. (Iridium was bought for $25 million after $6 billion of capital costs were sunk into it. Only then did it become profitable for the owners).
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Re:Aw... (Score:5, Interesting)
Respectfully, no, it doesn't. I'm able to hear the channel I want during a whole drive across the US and even into parts of Canada. I'm able to get traffic/weather reports as soon as I need them, instead of waiting for every 15 min (or whatever.) I have my favorite channels where I know I'm guaranteed to hear the music I want, when I want it, instead of random shuffles of what I consider to be mostly trite current hits. For example, I love classical music. I have my choice of listening to the style of classical that I want (opera, traditional, etc) instead of a melange of different types on one station. Is there a lot of repetition on the channels? On some? Yes. More now since the merger? Sadly, yeah. But satellite radio competes with free services only in terms of what I listen to. But frankly, it doesn't compete very successfully.
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Re:Aw... (Score:5, Informative)
It may not be worth it if your commute is only a half hour each way, but it's a bargain for me. My commute last week was 102 miles each way. Tomorrow it will be 95 miles each way. Plus I work out of my vehicle. I keep it on all day.
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Couldn't agree more (Score:4, Insightful)
If Sirius goes under I am going to be one seriously sad panda. Radio in my part of the country is fucking dire.
I find it hard to believe people don't think it's worth $13/mo, honestly.
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Re:Aw... (Score:4, Funny)
I'm one of those guys who just dropped XM radio. The commercials they run on may channels really pissed me off. I also got rid of my last Windows machine after Vista came out. Guess what my in-laws got me and the kids for presents this year? A Windows Vista box, and a new subscription to XM radio! Apparently, they're worried about my highly non-conformist streak.
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Re:You could say the same thing about a Jaguar (Score:4, Funny)
Stay tuned to Sirius-XM for Bollywood sound tracks and sitar music.
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Freedom to bitch. (Score:3, Funny)
"why would anyone want to pay for proprietary hardware and a limited selection of a few hundred stations all controlled by one company?"
As opposed to the freedom I enjoy of everything coming down one or more pipes controlled by either a duopoly or a monopoly.
Because we have cars? (Score:5, Insightful)
Howard Stern (Score:4, Informative)
Some people like certain media personalities and are willing to pay a premium to subscribe to their shows.
BTW, this is also why sites like Forbes, NYT, and WSJ get paid subscribers while CNN and MSNBC basically give away everything for free. You said it yourself. Clearchannel's lock on the airwaves is something that some people are fed up with, and those people are looking to XM as a means of getting other types of content.
But I don't even own a tv or a radio, so I'm just a bit better than you.
Re:Howard Stern (Score:4, Funny)
But I don't even own a tv or a radio, so I'm just a bit better than you.
I don't even have a computer (nor do I know how to use one)... I post on Slashdot by rubbing ballons against my cat's fur.
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No!? Really? (Score:3, Insightful)
Why was this suprising? Remember the days when cable didn't have any commercials? Now it's just like regular public TV except there is more "Adult" content.
This model was doomed for failure the moment it left earth.
Sigh (Score:5, Funny)
SeeqPod [seeqpod.com] is pretty cool for the iphone/ipod.
Re:Sigh (Score:5, Insightful)
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WiFi Radio, and I went to Slacker from Sirius (Score:5, Interesting)
WiFi radio? Does Statesman mean internet radio?
Sirius has terrestrial repeaters of their signal in large cities, so even in a building in Denver, for example, a Sirius receiver would get full signal strength from their transmitter on the ground. The transition from satellite to terrestrial is seamless, it is the same signal.
My main problem with Sirius is that even on the "commercial free" channels, the DJ would ... advertise for stuff going on related to Sirius, on other channels. Also, they would repeat songs at least once per day on more than a few channels, which got aggravating if you listened to it all day long.
I recently got rid of my Sirius radios and went with Slacker [slacker.com], getting their G2 portable as well. Big advantages: they will stream internet radio to a Linux computer, something that Sirius will not do. Also, Slacker's selection is much better, and the "Ban" and "Next" buttons are something that you couldn't even dream of with satellite radio. The G2 will download songs over wifi to the 4 or 8 GiB of storage, and it attempts to create an internet radio experience on the go, and it really does succeed.
XM to Sirius/XM (Score:5, Informative)
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The new Sirius lineup (Score:4, Interesting)
I remember a few weeks ago when I got the new channel update: I was freaked out. Half of my presets were gone. Not just renamed, but GONE. Yeah, I was pretty upset, and my first reaction was that I was probably going to cancel as soon as Howard Stern's contract is up (I'm a big enough fan that I consider that I'm paying my monthly fee just for his two channels, every other channel I happen to get is just a bonus).
But it didn't take me too long to figure out that my old channels has just been both renamed and renumbered, and my unit wasn't smart enough to track a change in both. Sirius' "Big 80s" was replaced with "80s on 8." Sirius "Left of Center" was replaced with "Sirius-XM U." "Buzzsaw" was replaced with "Boneyard." In short, nothing whatsoever was actually LOST, I just had to do some digging.
Sirius is guilty of failure to communicate the nature of the changes they made - but as near as I can tell they haven't dropped any content. At least, no content that I listen to... but like I said, if they drop EVERY other channel in their entire lineup and then jack up the price, I'll still pay to listen to Howard anywhere I go (a pure internet feed wouldn't cut it during my commute).
Is this serious? (not Sirius) (Score:5, Informative)
Is this serious? An iPhone able to replace satellite radio? Lets start with battery life, as in, there is none. Using WiFi to stream music on the iPhone will kill the battery in less than an hour or so depending on conditions. To solve that, I guess I could plug the thing in.
Now, let's use WiFi in my moving car. HAHAHA yeah, that's a total joke. So we'll use T-Mobiles network for $20 a month... umm, maybe not. Let's use AT&T's network. Streaming data plan? $60 a month. Better hope you're in one of the urban areas that support the high speed data! ORRRRRRR... you could buy a $50 Satellite receiver, pay $12 a month (or $6 if you know someone nice) and do away with a $60/mo data plan AND have access to the signal anywhere in the US.
Seriously... I live in a big urban area, where the idea of this would work. But the implementation would be marginally feasible at best. The battery life issue is huge. The cost is huge (but one could argue that one would already have those, making the cost a non-factor... but how many people have an iPhone + an AT&T data plan AND have Satellite radio? Not many I'll wager.). The available coverage area is absolutely tiny, microscopic really compared to satellite radio.
No... there's nothing about this idea that is even marginally viable on even a small scale.
The business model of XM/Sirius may be flawed, but iPhones and FStream are not going to be a factor in any way, shape or form, nor is WiFi and Streaming radio. Satellite radio is good for so many things that WiFi and Streaming radio can't and won't be touching anytime in the near future (remote listening, professional music selection/composition/presentation, uncensored programming, big name talk show people (bleh personally), professional sports, etc...). Streaming audio can't compete at the same level anytime soon, if for no other reason than it's not organized enough.
Re:Is this serious? (not Sirius) (Score:4, Informative)
Let's use AT&T's network. Streaming data plan? $60 a month.
AT&T's unlimited data plan is $20/month for Edge and $30/month for 3G. I have no idea where you are getting $60/month from.
Honestly though, I use my iPhone as an iPod, not as a streaming audio device. All of my music is bought and I have several different playlists for different types of music. I just plug it in to my car, start up a playlist and go. Just as good as any streaming audio in my opinion.
Oh and if I want talk radio then there are tons of free podcasts on every topic, even ones that are updated several times a day. Yeah I don't get someone talking about stuff happing right that exact second but I really don't care if the stuff I'm listening to is time-shifted a bit. The only time-sensitive thing I care about in a car is traffic and Goggle maps handles that better than the radio anyways.
Parent
XM is more than just satellite radio (Score:5, Insightful)
I've got XM weather in my airplane (via a Garmin GPSmap 496). So do lots and lots of other people. There's no terrestrial replacement for that. I won't fly without it any more, as it allows me to keep an eye on the weather myself while I'm in the air.
I also have had XM radio in my car since December 2001, and love it: you don't have to go hunting around for decent programming every time you drive out of a station's coverage area on a road trip.
XM is worth every penny of the subscription fee, to me.
Sirius XM is NOT a monopoly (Score:5, Insightful)
...a monopoly is a monopoly.
This is a tired and wrong argument. From wikipedia: "Monopolies [wikipedia.org] are thus characterized by a lack of economic competition for the good or service that they provide and a lack of viable substitute goods." There are PLENTY of viable substitute goods (iPods, terrestrial radio, etc), plenty of economic competition, and Sirius XM lacks the pricing power of a monopoly. The mere fact that they use a satellite to transmit their signal directly to customers does not make them a monopoly by itself. If satellite were the only way to reach all or even am economically significant fraction of customers then it would be a credible argument.
Our federal government took over a year (far too long btw) to review the case and came to the correct conclusion that there is no monopolistic power here. Customers are free to use any of the numerous alternatives and there is ample customer churn for Sirius XM to back this fact up. There is no compelling argument to be made against the merger and it is reasonably likely Sirius XM will go bankrupt no matter what happens thanks to the downturn in the auto industry.
Sirius XM may go out of business. Their revenue model has always been questionable and they have spent money somewhat recklessly. Their debt load is what ultimately might kill them. They have a decent product but that by itself is never enough. They are not and never have been a monopoly. There simply are too many other options.
Not so (Score:5, Insightful)
XM/Sirius' stock is trading in the trash because they have over $1 billion in debt that needs to be refinanced next year and there are substantial fears that they won't be able to obtain such financing in the current market. If they are unable to obtain the financing they need, then the stock will be worthless. It's a pretty easy explanation.
The summary indicates that the submitter has no idea about satellite radio. I don't have one, nor have I ever had one, but even I can see through the faults in his explanation. Listening in a building does invoke the terrestrial rebroadcast, yes, but only a tiny fraction of satellite radios are portable. The overwhelming number of units are permanently installed in cars.
"Proprietary hardware?" Seriously? Satellite radio gear is manufactured by Alpine, Kenwood, Sony, Pioneer, and most of the smaller car audio names and is available as OEM equipment from nearly every car manufacturer. The iPhone is, near as I can tell, available from one vendor. If subby is perhaps using the words "proprietary hardware" to refer to the encrypted stream that is beamed from XM/Sirius, I might point out that the iPhone suffers from similar problems; please tell me how to use an iPhone with Verizon, or for that matter, how I keep Apple from remotely disabling FStream if they decide to do so.
What does XM/Sirius have to offer? For one, clean integration in your car. Car interface for an iPhone involves either a crappy little FM transmitter that will inevitably result in crackly, washed out audio on any channel or hardware-specific add-ons that work with some models of stereo but not others. If you're talking about an OEM XM/Sirius-capable radio in a recent model car, getting satellite radio is as trivial as calling a phone number. If you're talking about a car that lacks XM/Sirius hardware, then we're talking about installing new gear, which is essentially the same level of cost outlay and difficulty as adding iPhone playback. There are a few cars/aftermarket car stereos that have aux-in jacks, but those are pretty unusual. I would imagine that the ease of use in finding a radio station is probably lower on, you know, a radio than on some device that needs to be plugged into my car and have special software started up before I can browse for my preferred station.
I won't even get into the comparison between the $30 data plan on an iPhone (in addition to the standard voice plan) and the $6.99 a la carte pricing on XM/Sirius (for those who aren't interested in many of the stations).
Simply put, XM/Sirius isn't a "pay for bandwidth" service any more than Cable TV is. By the article's logic, the fact that I could go hook up my computer to my TV and use YouTube and Hulu and Netflix instant play means that the cable company is trying to sell me nothing more than bandwidth (over which similar shows tend to flow). It couldn't be further from the truth. XM/Sirius made some fundamentally, seriously bad business mistakes, starting with the fact that they didn't pool their resources and launch one company in the beginning. Launching (ultimately) redundant satellites, installing (ultimately) redundant terrestrial rebroadcasting towers, bidding against each other for radio "talent," etc. didn't come cheap, and much of it could have been avoided if one company launched in the beginning. On top of that, they forced potential subscribers to sit on the sideline until they figured out who was going to "win." Now, add in the fact that a huge amount of their debt is coming due at possibly one of the worst times to try to deal with it, and you've got a recipe for disaster.
But seriously, don't try to tell me that there's no good reason to use a $7/month radio service when a $30/month iPhone is just as good if you don't even grasp why someone might choose one over the other.
My humble opinions (Score:5, Interesting)
I subscribe to SiriusXM as well as riding the 3G network, and if it's radio you want... hate to tell you guys, but you're going to pay a metric assload less for satellite radio versus 3G internet access.
My XM subscription costs $130 USD per year.
My 3G access (unlimited data with unlimited tethering) is $85 USD per MONTH, which is only the data plan portion of my phone bill.
My opinion on why SiriusXM is tanking? They looked at all their combined radio stations, separated the wheat from the chaff, and gave us the goddamn chaff. The one channel I listen to the most (XM82 The System) was nixed in favor of something called Area, which in comparison, sucks. Even my wife who is not a die-hard electronica fan said that the quality went downhill. They screwed around with Chill, nixed Chrome, and I am quite certain that several other stations have been screwed around with much to the dismay of SirXM's subscribers.
They need to realize that most of us subscribe for literally a handful of stations, and if you screw with them, we get pissed.
News flash -- it's not always the CEO's fault (Score:5, Insightful)
I know it's incredibly in vogue these days to blame everything on selfish people who make more money than you, especially the evil CEOs, but sometimes companies fail and it's not the CEO's fault. The best covered wagon CEO on earth couldn't figure out a way to beat the Model T.
Satellite radio is caught between a rock and a hard place. The RIAA wants their cut of royalties for the music XM / Sirius plays, and wants XM to police things so people don't rip music off their streams (which never happens in practice anyway because the stream quality's not good enough to incite enough people to want to do that). That costs a lot of money. XM / Sirius don't make a lot of revenue from ads, so they have to make it from subscribers. Logic dictates that one way to increase the subscriber base is to offer discounts -- but that presents them with cash flow problems while maintaining (or increasing) maintenance costs on that larger subscriber base.
Some of the subscriber attrition can be attributed to folks with multiple radios shutting one of them down to help save money in an economic downturn. I have two older radios -- one in the car, and an XM PCR in the house. Since I can get the XM stream via PC anyway, I recently shut down the PCR.
The ONLY thing keeping them afloat right now are deals with high-profile comedians and pro sports. Period. And they have to pay those folks boatloads of money to play at all. As wireless Internet becomes more ubiquitous and more and more of the premium content is available via Internet (Sunday Night Football via NFL.com is a perfect example), sat radio will finally be killed off.
It was a great idea in the pre-wireless days, but satellite radio is going the way of Iridium Phones.
Re:News flash -- it's not always the CEO's fault (Score:4, Insightful)
The best covered wagon CEO on earth couldn't figure out a way to beat the Model T.
Actually, the best wagon makers did a pretty good business building car bodies. Fisher Body (now a part of GM) started out making wagons in the late 1800s, for example.
-jcr
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