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The decade's most important radio trends #1: The birth and troubled childhood of satellite Radio

#1 in our series on radio trends of the decade

At end of the first decade of the 21st century there are more audio entertainment options available than any time before. Even if traditional broadcast radio has a case of the doldrums, the viability of radio-like media has never been stronger. Satellite radio is one medium that entered the scene, although its long-term prognosis is still hazy.

By 2000 the perception that commercial radio had seriously declined in quality was widely held. Even listeners unaware of the massive consolidation in the industry perceived the tightening of playlists, more repetition, the inability to talk to a live DJ and make a request and an increase in commercials.

Then, with what seemed like perfect timing, two companies emerged on the scene to offer up a new radio service that promised a real alternative: satellite radio. Americans were already accustomed to receiving television by direct broadcast satellite. But satellite radio would be different. Where satellite TV mostly offered a cable-like service with the same channel, the new satellite radio companies–XM and Sirius–would offer up scores of new radio channels produced and programmed by the companies themselves.

Both companies vowed that their music channels would represent a return to the values of progressive rock radio, with programs hosted by live DJs choosing music according to their informed tastes. By the time both services were live in 2003, there were countless press profiles marveling at Sirius and XM’s array of narrow program genres and guru-like hosts. Home entertainment magazine Sound and Vision ran a lengthy cover story in June 2003 that asked “What’s so great about satellite radio?” The question was answered by four hosts from each of the services. Remarks by Lou Brutus, programmer for the XM freeform-revival station “Special X” were characteristic:

I don’t care how many CDs you have, there’s never been anything like Special X. It could be the day-to-day stuff that falls under the umbrella of “weirdness,” where you might hear “What’s He Building in There?” from Tom Waits, followed by William Shatner singing “Lucy in the Sky with Diamonds,” followed by a 28-minute Jack Kerouac piece… The people at XM are thinking all of this stuff out and putting it together in coherent neighborhoods of sound, for lack of a better term. When radio is done right, I think it’s the most personal medium of them all. *

Next to a return to freeform-style programming, satellite radio’s other great advantage was its freedom from FCC content restrictions. It’s that feature which allowed Sirius to entice self-proclaimed “King of All Media” Howard Stern to sign on in 2004. Well, Stern probably also was seduced by the $100 million five-year contract. Still, as an innovator of the so-called “shock jock” style of morning talk radio, Stern had many high profile run-ins with the FCC over the racy content. In the run-up to his 2006 debut he frequently cited freedom from indecency rules as one of his reasons to go satellite.

For its part Sirius hoped Stern would be the high-profile talent that would attract millions of new subscribers. Nearly four years into Stern’s run at Sirius, it doesn’t seem to have worked out that way. With contracts looming in 2010, Stern’s making noises about leaving while Sirius/XM is unlikely to pony up the hundreds of millions it did five years ago.

Both Sirius and XM burned through hundreds of millions of dollars over the course of the decade without scoring a profit. With over 16 millions subscribers satellite radio certainly fared better than HD Radio, but still is perceived as a niche service. These obstacles caused the two companies to merge in 2008–in the face of both public indifference and outrage, due to promises both companies made at the start of the decade that they would remain separate.

To be fair, the startup costs associated with satellite radio were enormous, requiring the launching of specialized satellites along with the deployment of additional land-based transmitters to fill in reception gaps where a sky view is blocked. Futhermore, would-be subscribers had to pony up for new receivers. The service also was launched at a time of great upheaval in broadcast media and the rise of the internet as an entertainment medium. This added up to satellite radio having much more competition at launch than if it had launched when satellite TV did a decade earlier.

But one might also argue that satellite radio did itself in, too, by quickly chipping away at many of its distinguishing features. A great selling point for satellite radio early on was being commercial free. But by 2006 music listeners started to notice very commercial-sounding “promo” announcements creeping in, and Clear Channel began demanding commercials be aired on the channels it programmed.

The merger of Sirius and XM then exacerbated growing listener discontent with many of the music channels, as a November 21, 2008 Rolling Stone article reported:

In the days since the merger has gone into effect, they say, there is a noticeable difference: the DJs talk more, often over songs, and there’s more repetition in the playlists.

I was an occasional listener to Sirius music channels over the course of 2003 – 2008 when I received the service as part of my Dish Network subscription. I turned to Sirius when I was looking for music of a particular genre with much less annoying DJ chatter and less repetition. Still, by the time I unsubscribed from Dish, I had noticed that the rotation on most of the rock channels I listened to had become much tighter. When I first tuned in 2003 it seemed like I could listen all day without hearing the same song. By 2008 that was no longer true. It also seemed like I often heard the same sequence of songs several days in a row. So I turned to online stations instead.

Here, at the beginning of a new decade, satellite radio is still alive. The emergence and spread of wireless internet looks to be the biggest threat. If listeners can get any online station in their homes, cars and mobile devices, then what incentive is there to subscribe to comparatively smaller number of channels on XM/Sirius?

For at least a segment of the audience the answer is access to particular talent and hosts, whether its channels produced by Howard Stern or Bob Dylan, or all-Springsteen or all-Sinatra radio. For others it will simply be the convenience of having all the channels packaged up together in one receiver. But it’s tough to see how long these advantages will last.

When first announced I thought satellite radio sounded like a good idea, especially for listening in the car on long trips outside major metroplexes. In fact, until wireless broadband is widely available outside major metroplexes, that is probably satellite radio’s greatest advantage. That’s why most people’s exposure to satellite radio comes from rental cars. As Craig Finn of the Hold Steady sings in their song “Sequestered in Memphis,”

I think she drove a new Mustang
I guess it might be a rental
I remember she had satellite radio

But are rental cars enough?

*The Special X channel was taken off the air in 2004. It returned as an online-only channel later that year, but without any live hosts. The channel met its end in July 2008 along with all other XM online only channels as part of the XM-Sirius merger.

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7 Responses to The decade's most important radio trends #1: The birth and troubled childhood of satellite Radio

  1. MTfan January 1, 2010 at 6:28 pm #

    The history of sirius xm is told brilliantly in the movie “stock Shock” which even includes the founder of sat rad who is a transgender woman. Amazon and Netflix have it on dvd

  2. egiscodr January 1, 2010 at 6:37 pm #

    Before ruling out Sirius XM vs Internet radio, you really need to take some things into consideration:

    1. How much will internet in your car cost?
    2. Will internet in your car be allowed or will it be deemed to distracting to drivers?
    3. How will internet radio companies support themselves? If it is just adding commercials, you are just repackaging terrestrial radio which has been to some extent abandoned.
    4. What content will internet in your car offer?

    With the price points and tons of content, I do not think Sirius XM has much to worry about from internet or terrestrial radio.

  3. Marvin January 2, 2010 at 9:07 am #

    Although I enjoy the free internet streams (Pandora. ect.. etc) and have tried to stream from the car with an iPhone and aux cable connection, I must say it was a frustrating experience. I much prefer a basic tuner and traditional station selection while driving. The internet streamiung experience is about as reliable as talking to someone in this great country of ours .. “can you hear me know” will not be solved too soon. Satellite seems to make perfect sense to me – a few orbiting transmitters unobstructed instead of thousands upon thousands of towers with cell and radio transmitters. Also, the clearity of satellite amazes me … so crisp. Then the foot print in a vehicle for satellite is small … how they transmit data via a small “dish” is also very impressive and probably will improve even more over time. I personally see satellite becoming more cost effective and a popular way to deliver communications and content as time goes on. Without question, the content quality that Sirius XM provides and the popular pop-culture support it seems to increase everyday, is a big selling point at the moment. The next important step for Sirius is to provide more portable options for home and away that work together (i.e. – not having to purchase multi-subscriptions for multi-devices). The other areas is for Sirius XM to copy the technology of the Pandora’s in the world to give more options to “personalize” content. That would put this company in perfect dominance. I think they are in this position now if they develop the proper partnerships.

  4. Marvin January 2, 2010 at 9:15 am #

    I should also add that the Pandora’s of the world cannot continue to provide content for “free”. They will never grow new opportunities in this model … and royalties will become a bigger issue for these companies. Just does not work in a business model. The content wars are just beginning about how to receive it and how it is paid for fairly (look at Fox vs. Times Warner). Subsciption based content will never go away and quality content will always win out. Subscription based companies will be offered greater opportunities and partnerships with content “owners” due to legitiment business models and revenue streams. Then you add that mobile providers are adding a premium to users with “heavy streaming” to suppliment bandwidth infrastructure adds and support, no one will want to pay multiple levels to here good content…. just will not work.

  5. Mitch January 2, 2010 at 2:57 pm #

    What’s the point of paying to receive a radio station in your car when you can either burn an MP3 CD with a hundred cuts on it or better yet jack in an MP3 player? People in cars need to pay attention to the road, not the latest song that may have influenced Dylan. I dunno about the rest of the world but a solid majority of folks in the USA barely have basic driving skills, and sure don’t need to be resetting their IP while barreling down the interstate.
    So, of course it’s just a matter of time….

  6. Charter Cable Channels November 4, 2011 at 4:35 am #

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  7. johan2 November 3, 2012 at 7:39 am #

    how about the trend of smaller radio websites, with more quality linkes like, or

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