Sirius/XM: It’s Much More than a Money Issue

So we have a last minute bailout for Sirius/XM with John Malone riding in as the white knight.

Mel ends up with $530m in bailout dough, and life goes on. But satellite radio has deeper problems that begin and end with the paying customer. Because if current subscribers don’t renew, and economically challenged new customers don’t come into the slot….all the bailout money in the world will not slow the eventual demise of a technology that is already outdated. 

Creating a Technological Leap

Satellite radio has not created a technological leap for the consumer. Think of it this way. How many current subscribers could live without satellite radio? Hold onto this thought and ask yourself the same question about other technologies that may have created a technological leap for you.

Could you live without your cell phone? How about your IPod? Some refuse to ever give up TIVO or DVR technologies. Can you get by without your laptop? Compare these needs to the need for satellite radio.

Satellite radio is nice to have but not required to have for far too many current subscribers. The fact that many customers feel it is a want and not a need is going to create huge problems down the road for Mel Karmazin. I need to have my IPod, my computer, my cell phone and my TIVO. I certainly can live without a $12.95 per month Sirius invoice. The technological differential between satellite radio and other “can’t live without” technologies is just too great a divide.

I also believe satellite radio is an already outdated technology. Commercial free streaming of music via mobile technologies will one day make satellite services obsolete. Will you pay for in-car satellite service when you can plug your cell phone into your car and receive digital quality uninterrupted customized music for free? The early adopters already have their home computers wired into their home stereos. These same people will have their cell phones plugged into their cars and wired for the world wide web of music. And these early adopters are the core subscribers to Sirius/XM services. They will soon be gone.

Finally “free” is an outstanding business model. Napster created one of the largest technological leaps in history when they offered free music file sharing with a click of the button. Free radio still commands a lions share of music listening. Sirius and XM have a combined subscriber base of 20 million listeners. That reach barely exceeds the radio listenership in New York City alone. Total radio listenership in the US is around 230 million. Free music is a strong need. Paying for music is a luxury.

OK OK….before I get hit over the head from Satellite Junkies. Yes it’s great when you live on an island, or go boating, or sit in your car or truck for hours at a time. Yes it is a great place to find out about new music, or listen to sports, or go deep with Howard. The variety of programming can be wonderful.

But wonderful enough to support $ 3.25 billion in debt? Wonderful enough to create a technological leap that equals a cell phone and places you into the “I can’t live without it” world of need??? Maybe for some of you. But definitely not enough for all of us.

The business model is broken. The consumer model is broken. The technology is old.

RIP Sirius/XM. All the money in the world won’t save you from a very weak technological leap of faith.

ps…go to this link to get a feel for the consumer side of satellite radio installation. Compare these complexities to your IPod, your laptop, your cell phone, or your TIVO.

pss…John Malone has his own plans for satellites, for Sirius, for XM, and for Mel Karmazin, and I don’t think it involves a pay for the music subscription model.