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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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