4/05/2005

Satellite Radio

The article, As Satellite Radio Takes Off, It Is Altering the Airwaves, was very interesting and talks about how XM and Sirius Satellite Radio has become an alternative to commercial radio. Each company offers 120 or more channels of music, news, sports, and talk for a monthly fee between $10.00 and $12.50.

Just this last week, this industry pushed the subscriber total past five million after just three and a half years of operation. Analysts call that remarkable growth for companies charging more than $100 annually for a product that has been free for 80 years. Satellite radio is one of the fastest-growing technologies ever – faster, for example, than cellphones.

Though satellite radio is still an unprofitable blip in the radio universe, it is pushing commercial radio to change its sound. Broadcasters are cutting commercials, adding hundreds of songs to once rigid play-lists, introducing new formats, and beefing up their Internet offerings.

My question is, do you think the demand for satellite radio will continue to grow? Some satellite radio analysts are estimating that by 2010, subscriber levels will hover anywhere from 30 million to 45 million, and maybe even up to 90 million. Do you think this will hurt traditional commercial radio? And why is it that people demand this product when they can listen to traditional radio for free?

4 comments:

Chuck said...

Keston good article! I've struggled long and hard over this matter long before your post. My roommate has Sirius Satellite radio and both he and I love it! I only get to listen to it in his car, or when he brings in the portable module which is set up for the stereo in our apartment. I love the fact that there are no commercials and they play a great selection of music for whatever the occasion. But, is it worth the $10 a month? Right now for me, a college student, with a roomate who lets me freeload every so often it's probley not worth it. After I graduate college and hopefully have a decent job, I will seriously consider purchasing satellite radio.

Fred said...

Yes, satellite radio is a huge thing right now and I think it is a great idea. Well...it doesn't really matter what I think because their numbers are just soaring. But isn't this what the first idea of what FM radio was all about also? To play basically commercial-free music was first the idea of FM but it didn't end up working the way they wanted it to. Given also that they didn't charge the same monthly deal as satellite radio. I just wonder if XM and Sirius will be able to produce enough income to stay in business with the monthly fees they are currently charging. If commercial radio continues to improve because of its competition, will satellite radio continue as one of the fastest-growing technologies? I'm not so sure.

Vincent said...

Yes, I think the demand for satellite radio will increase I believe it is the wave of the future. I think it will be much like cable television is today very few people will live without it. Also satellite radio stocks are cheap with a huge growth potential, I especially like Sirius it seems more fundamentally sound than the other options in the market.

Dr. Tufte said...

I too am thinking about satellite radio - but we have Dish Network so we already get parts of it in the house.

I think the appropriate analogy here is to premium cable. HBO and others have always been about satisfying a niche market at a steep price without advertising.

This makes me think that satellite radio is not going to end up being a big success - once upon a time Cinemax and The Movie Channel were serious players too.

I think it may be even harder in radio. A lot of businesses advertise on radio to get people's attention when they are already in the car and at least potentially half-way there. I don't see satellite radio having any market like that at all.