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SiriusXM turns a profit, plans to offer on-demand programs and personalized radio

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SiriusXM announced its 4th quarter 2011 results today, revealing that the company turned a profit and reached 8.7 million subscribers, with 1.7 net subscribers added last year. While those numbers apparently look good both to the company and investors, SiriusXM is only holding on to 44% of subscribers who get a free trial when they buy a vehicle with a satellite radio.

CEO Mel Karmazin also announced that SiriusXM would begin offering on-demand access to some programs over the internet as an add-on service. The company will also offer a personalized radio service that is likely intended to compete with Pandora and iHeartRadio.

It looks like Karmazin and the SiriusXM management are learning the same lesson that terrestrial radio had to contend with: audio media is now a multi-platform ecosystem. The largest commercial radio broadcasters were late to embrace the internet, and suffered for it. That’s why Clear Channel is putting so much into its iHeartRadio platform. By comparison, non-commercial broadcasters, especially public radio, used live streaming, podcasting and on-demand access to grow their audience.

The other big lesson that SiriusXM faces was even harder for commercial radio: good programming is more important than the delivery medium. Companies like Clear Channel quickly diluted their value by treating radio stations like commodity properties while dumbing down their chief product. SiriusXM has fared better in that regard, retaining more original programming that differs from what’s available on broadcast, even if the effects of cost-cutting have been obvious to listeners.

If SiriusXM wants to hold on to subscribers in the face of internet radio services that are invading vehicles and other mobile spaces, then the company must offer competitive options that give listeners an incentive to hold on to their subscriptions. Every minute a SiriusXM subscriber spends with Pandora or a podcast is a moment when she might question if she’s getting enough value out of her $14 – $20 a month.

However, I don’t think just offering a Pandora competitor is enough to hold onto subscribers. Again, the quality and uniqueness of programming is the key. Offering on-demand access certainly helps listeners take better advantage of their subscriptions, but that’s only attractive if the programs keep them tuned in.

I’ve been listening to a trial subscription of SiriusXM for the last few weeks. Soon I will be reporting on my impressions of the service, and whether or not it’s worth the subscription price in a multi-platform audio universe.

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5 Responses to SiriusXM turns a profit, plans to offer on-demand programs and personalized radio

  1. Jim Jahlon February 9, 2012 at 8:23 pm #

    Did you know that SIRI has been streaming nearly all its content on the internet since 2006? Of course you didn’t. Or else you wouldn’t have written what you just wrote. Learn about the service before trying to analyze it. Thanks in advance!

  2. Paul Riismandel February 9, 2012 at 8:33 pm #

    Er, yes, I do know that SiriusXM have been streaming since 2006. There’s nothing in this piece that says or implies that they haven’t. How about not reading things into an article that aren’t there? Thanks in advance.

  3. Paulette February 10, 2012 at 2:58 am #

    So now I will be able to choose which of the 650 songs that I want to listen to, after hearing them 4 times a day because they constantly play the same songs over and over. I guess it’s easier to hit replay than hire new young talent like Slacker Radio has done! I really think Sirius is getting to the party to late! Now if they bought Slacker or Pandora, they might survive!

  4. Truth February 10, 2012 at 10:29 am #

    It’s great that Sirius is adding value, but they did bump up the price. I was a subscriber for about 5 years. When I got my iphone a couple years ago, I realized there’s just no need to pay for radio.

  5. Ex-XM February 29, 2012 at 6:22 am #

    I’ve been with XM since way back. Had several radios activated and was up to about $40/month for multiple radios and online streaming. The value has gone down over the years with them charging for streaming and mobile access and increasing the rates. Along with the truly awful radio stations they’ve introduced since the merger, I was really getting fed up. Now I have Bluetooth access in my car and connect my phone through Slacker or MOG. Their on-demand services are only $10/month and I can move my device from vehicle to vehicle or use it with headphones on the go. As more people realize this option as Bluetooth becomes more implemented in even the most basic models of new vehicles, XM is dead.

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