Free Radio is for Wimps

There’s nothing quite like being mobbed by Wall Street investors clustering around the current consensus. That is what satellite radio providers re-discovered at the recent UBS Media conference, according to this article in the Hollywood Reporter. XM was overrun by investors, while traditional radio companies could have apparently bowled in their presentation rooms withouy knocking anyone over:

“It seems like one of the fundamental problems with traditional radio is there’s too much crap around the things you want to listen to,” one attendee [said]. “The XM (Satellite Radio) presentation just ended an hour ago, it was packed to the rim, lines out the door, and there are about 15 people in this meeting right here,”


  1. The funny thing about this is that satellite radio feels like a very interim solution to me. It used to be that free was a good thing. And come to think of it, free still is a good thing, maybe even better than ever in this Web 2.0 world. It’s very difficult to compete with free, particularly when selling to consumers.
    The reason satellite radio has an opening is because, by universal consensus, traditional radio completely sucks. And supposedly a big part of the reason traditional radio sucks is that the logic of advertising-supported content compels stations to seek broad audiences and to keep costs down through cookie-cutter formats.
    But satellite radio only partially addresses these issues. It’s certainly possible to envision an idealized service that has nothing to do with satellite radio. Such a service would be:
    1) Free, because it’s supported by ads.
    2) Local, or at least location-aware, which enables stations both to offer more targeted content and to tap into the enormous local advertising market.
    3) Personalized, so that listeners are no longer forced to hear exactly the same songs as everyone else tuned to the station.
    4) Cheap to operate, with low fixed costs of transmission and low incremental cost per listener, so that niche players can be profitable with small audiences.
    5) Monetizable via long-tail advertising services that allow advertisers to slot ads without having to deal directly with tiny, individual stations.
    Of course, all of this stuff exists in some form already on the Web. Mash together podcasting, AdSense, Rhapsody, mp3 players, mobile iTunes, etc., etc., and you’re there.
    So where does satellite radio fit in this picture? Am I the only one thinking, nowhere? Don’t technical limitations pretty much force them out of the game? Or will marquee names like Howard Stern and the relative simplicity and familiarity of satellite radio’s form factor save it from this scenario?

  2. I couldn’t have said it better myself, Adam. I was just wondering whether I was the only one who sees satellite radio as having at best a short-term, small-niche market appeal — and at worst as some kind of evolutionary oddity, like a fish with feet, halfway between one thing and another. Hasn’t anyone who is fascinated with satellite radio heard of something called the Internet? Free audio, easy to deliver, easy to track — and perhaps even ubiquitous, if we get those high-speed wireless and cell networks we keep hearing about. Now that sounds like a killer app to me.

  3. Once Apple goes subscription music, it’s buh-bye…
    I think it’s pretty simple for music. MP3 player plus subscription music = no satellite radio music. Satellite radio covers you only when you are in the car, the MP3 works everywhere and offers more choice and customization.
    The only thing that doesn’t fit that model is live news, sports, weather, and traffic. I just don’t think many people will pay for that.
    Having high quality content is the last path, provided the satellite guys can lock it in and keep it migrating. Howard Stern (not what I consider high quality, but that’s for a different blog) could have just as easily signed up for subscription podcasting and produced his show the night before. I suspect will do the same as they won’t be locked into a single network.
    In the end, why couldn’t this all be provided over a 3G network? Why does a whole parallel hardware infrastructure have to be built. It just seems silly – why bother?
    Related Facts:
    14% of American households (roughly 16MM) claim to have satellite radio today, and there are 9MM XM (XMSR) and Sirius (SIRI) subscribers. 24% of American households (roughly 26MM)have at least one MP3 player and roughly 5MM people subscribe to an MP3 all-you-can-download service (and Apple doesn’t even offer one – yet)